Overview

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.

Services

• Full limited company formation
• Payroll
• Company and simple personal tax returns
• Annual accounts / year end
• Routine tax queries and administration
• Processing of expenses
• IR35 contract reviews and advice though PCG
• VAT returns and registration
• Company secretarial duties
• Companies House returns
• Invoicing services to your end user clients
• Payments to HMRC (tax, NIC)
• Day-to-day assistance with your PSC
• Corporation tax returns

Benefits

• Full National Insurance savings - direct dealings with the Personal Service Company and invoicing company.
• No employer / employee responsibilities.
• 1st class customer service - one point of contact.
• 48-hour set-up for Contractors.
• Full taxation support and an IR35-friendly contracts
• Easy invoicing (HMRC approved) - 1 weekly schedule - 1 weekly payment
• Reduction in VAT outlay saving 17.5% on cash flow - (many PSCs won't qualify for VAT registration)
• Guaranteed payment dates - (we have never missed a payment!)

Overview

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

Services

Contractors can delegate all administration to their PSC

• Full limited company formation
• Payroll
• Company and simple personal tax returns
• Annual accounts / year end
• Routine tax queries and administration
• Processing of expenses
• IR35 contract reviews and advice though PCG
• VAT returns and registration
• Company secretarial duties
• Companies House returns
• Invoicing services to your end user clients
• Payments to HMRC (tax, NIC)
• Day to day assistance with your PSC
• Corporation tax returns

Benefits

• Full National Insurance savings - direct dealings with the Personal Service Company and invoicing company.
• No employer / employee responsibilities.
• 1st class customer service - one point of contact.
• 48-hour set-up for Contractors.
• Full taxation support and an IR35-friendly contracts
• Easy invoicing (HMRC approved) - 1 weekly schedule - 1 weekly payment
• Reduction in VAT outlay saving 17.5% on cash flow - (many PSCs won't qualify for VAT registration)
• Guaranteed payment dates - (we have never missed a payment!)

WHAT IS IR35?

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.

HOW DO I DECIDE IF I'M SELF-EMPLOYED FOR IR35 PURPOSES?

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.

SECTION 1

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.

• Does your contract state that you are an employee of the client?
• Is it intended that you should become an employee of the client?
• When you commence your assignment, do you have good reason to believe it will be for a long period (say over 19 months) of time?
• Does the client usually request you provide services through your PSC?
• Are you a member of the client's pension scheme?
• Does the client pay you sick pay if you are off work? Does the client pay you holiday pay?
• Are your terms and conditions the same as the permanent employees of the client?
• Does the client give you a company car or van?
• Have you the authority to hire and fire the client's staff?
• Does the client have an obligation to offer you regular work?
• Do you have to accept work from the client if you're offered it?
• Are you eligible for redundancy notice or redundancy payments from the client?
• Do you use the client's letter headings and business cards, and claim expenses on the clients claim form?

It will help your case for self-employment for IR35 purposes if you can answer YES to the following questions:

• Could you (or your agency) find a substitute to undertake your work if you cannot undertake the work yourself?
• Having been allocated your assignment, you are given reasonable freedom as to how you complete it?
• Do you take any financial risk and use your own equipment on each assignment?
• Is your contract for as long as your services are needed, rather than for a fixed period?
• Do you regard yourself as being independent from the client and do permanent employees of the client regard you as independent from the client?

WHAT HAPPENS IF I CONSIDER THAT IR35 DOES NOT AFFECT ME - AND THE TAX INSPECTOR DISAGREES?

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.

WHAT IS THE TAX THAT THE INSPECTOR COULD WANT ME TO PAY?

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.