Designed for those individuals who wish to form their own limited company, RACS PSC offers a comprehensive range of services via professional third parties that are integral to running a successful business.
The contractor or freelancer has complete control over the limited company as they remain the sole director, only shareholder and signatory on their company bank account.
A central facet of the PSC offering is the independent provision of professional services via various business specialists including accountants, payroll bureaus, tax advisors, insurance companies and auditors.
Fully compliant with MSC (Managed Service Company) legislation, RACS PSC fully demonstrates that full company control remains with the contractor and is therefore most suitable for ambitious individuals committed to running their own business.
Working with RACS and its 'third party' independent professional service providers will ensure compliance and qualified professional advice is achieved at all times. In keeping with new legislation around the contractor market place, offering contractors a PSC could realise an array of benefits.
Contractors do not want the hassle of dealing with invoicing, chasing payment, filling in tax returns etc but they do want the extra take-home pay that comes from the tax advantages of self-employment. They will therefore happily hand over control of this to a company that promises them less hassle and more cash
Contractors can delegate all administration to their PSC
IR35 is tax legislation introduced in the 2000/2001 tax year. Its purpose is to ensure that those individuals who work through a limited company and who therefore treat a portion of their income as salary and a portion as dividend are entitled to do so. This largely hinges on the basic question “are you self employed or employed?”
Unfortunately, there are no hard and fast rules on this and it is initially the Tax Inspector and ultimately the courts, to consider each case that comes before them. As the legislation is still new, there are relatively few court rulings to help us, so the best you can do is to take reasonable precautions to consider whether the legislation could affect you. If the Inland Revenue decides that you should be regarded as “employed”, then you would potentially be liable for the tax that should have been paid had all your income been treated as subject to PAYE and NIC. This is largely the PAYE and NIC that you saved by working through your Recruitment and Services allotted PSC, subject to certain allowances.
You could also be charged interest on the amount you have been found to have underpaid – and possibly penalties as well, if the Inspector feels you are at fault.
Unfortunately, this is far from simple as there are so many possible interpretations that can be put on how you work, as each assignment can differ. However, there are some pointers that can help. Please consider the following sections carefully.
If you answer YES to ANY of the following questions, you are most likely NOT operating as a self-employed person for the purposes of IR35 and would not qualify for RACS Group to allocate you a Personal Services Company (PSC).
The 'client' means the business you are providing your services to.
It will help your case for self-employment for IR35 purposes if you can answer YES to the following questions:
If the Inspector challenges your interpretation of how you work and how your tax should be assessed, you have two options. You can either accept this ruling or pay the tax that the Inspector considers that you owe, and any interest and penalties that may be imposed, or you can challenge his opinion by taking the case to court. RACS Group Limited is here to offer you reasonable help and assistance in the unlikely event your tax return is challenged.
If the Inspector believes that your employment comes within the scope of the IR35 legislation, he will want to assess your income as though you had been an employee and therefore subject to PAYE and NIC (both employee's and employer's) on your entire income. As you both wish to be, and consider yourself to be, 'self-employed' you wish to become director of your PSC for tax purposes, by dividing your income into salary and dividends, this could involve you having to effectively repay the tax you believed you had saved. You could also be liable for the interest and penalties on the underpaid tax as well. However, to do this the Inspector would have to show that the conditions of 'employment' were true for each and every assignment.
Simply click on any of the above links to view the 2010/2011 self-assessment forms & guides from HMRC (all in a the new flip book style). Once opened, you can review, print, email or just zoom into the various sections for reference. RACS PSC will also provide you with specific year-end information concerning you and your company. Please log in to your secure client portal to access this information.
