Sole Trader question : Mon Nov 05, 2012 9:51 am  

Hi, anyone on here know anything about being a sole trader and the tax man?. I've recently had an opportunity to start up on my own (I'm a Graphic Designer), I've been offered a six month rolling contract to work 4 days for one company, now obviously my intention is to get other clients in swell but if this didn't happen and over the course of the year I had just had this one contract for one client, is this OK with the Tax Man or would I be on dodgy ground with regard to the Tax breaks available to a sole trader?

Cheers in advance

Re: Sole Trader question : Mon Nov 05, 2012 10:26 am  

You need to register with them with the requisite time limit: http://www.hmrc.gov.uk/selfemployed/reg ... elfemp.htm You need though to be sure that your 4 day status is genuinely self-employed.

You need to register with them with the requisite time limit: http://www.hmrc.gov.uk/selfemployed/reg ... elfemp.htm You need though to be sure that your 4 day status is genuinely self-employed.

[Sadfish]

Re: Sole Trader question : Mon Nov 05, 2012 11:09 am  

its going to be difficult to get many tax break if you are on a 4 days contract for 6 months, thats sounds a lot like a full time job to me, however, if you squeeze in lots of other contracts and dont work set hours in your contract, oh and don't get greedy with the tax man you should be ok.

Re: Sole Trader question : Mon Nov 05, 2012 11:16 am  

Get an accountant and ask questions.

I'm going back a bit but I used to be "freelance" and was entitled to claim all sorts of things. Travelling expenses to and from that job, subsitence (food when working late). A percentage of your mobile. Post, Stationery, Print. Equipment. Computer Hardware & Software. If you use a car for work related stuff. All manner of things. But that was 13 years ago and all manner of things may have changed.

Re: Sole Trader question : Mon Nov 05, 2012 11:28 am  

Cheers guys

Ive got a meeting with an accountant tomorrow to see whats what, I'm not out to fiddle the tax so to speak but obviously I will want to claim back what I can within the rules.

Dally, I'm unsure what you mean by genuinely self employed?

I will basically be contracted for a set number of hours per week and I will invoice them either every week or every month for those hours, as I say I will hopefully be using the hours I'm not there to generate other work.

Re: Sole Trader question : Mon Nov 05, 2012 12:06 pm  

A few of their favourite questions when they're deciding on employment status:

Are you paid per task or per hour?
Can you substitute somebody else to perform the work?
Do you provide your own working materials/equipment?
Can you choose not to come in?
Where do you carry out the work, is it fixed or of your own choosing?

Re: Sole Trader question : Mon Nov 05, 2012 12:12 pm  

carl_spackler wrote:

A few of their favourite questions when they're deciding on employment status:

Are you paid per task or per hour?
Can you substitute somebody else to perform the work?
Do you provide your own working materials/equipment?
Can you choose not to come in?
Where do you carry out the work, is it fixed or of your own choosing?

Yes I would be paid per hour.

Not sure about substituting someone, I could arrange to get another freelancer to go in if I couldn't make it.

Yes and no, I would take a laptop but they have a mac available to use.

I could choose to change the time and hours I came in but I would have to do the set hours per week as stated in the contract.

I would mainly be working on their premises but would work from home sometimes as well.

Re: Sole Trader question : Mon Nov 05, 2012 12:36 pm  

Ask the accountant about IR35 and how to avoid it. It may be that there are a few subtle changes you can make to the arrangement with the company so that you don't fall foul of the tax legislation. You might struggle with the arrangement as it is now, particularly if you used to be on their payroll.

Re: Sole Trader question : Mon Nov 05, 2012 12:44 pm  

Saddened! wrote:

Ask the accountant about IR35 and how to avoid it. It may be that there are a few subtle changes you can make to the arrangement with the company so that you don't fall foul of the tax legislation. You might struggle with the arrangement as it is now, particularly if you used to be on their payroll.

I was on their payroll but that was about a year ago.

Re: Sole Trader question : Mon Nov 05, 2012 12:59 pm  

christopher wrote: Yes I would be paid per hour. Not sure about substituting someone, I could arrange to get another freelancer to go in if I couldn't make it. Yes and no, I would take a laptop but they have a mac available to use. I could choose to change the time and hours I came in but I would have to do the set hours per week as stated in the contract. I would mainly be working on their premises but would work from home sometimes as well. Sounds like you're possibly a borderline case, but being honest I think you're probably open to the revenue saying that you're employed if you don't pick up other work as well. Have a bash at this. We had a PAYE inspection last year and they picked up on somebody we had a few years ago who used to work a bit for us and was a borderline case. Because it was small sums and he had not done any work for us for a while and was unlikely to in the future they left it as it was, but said that had it been more current they would probably have looked at it more closely. Also, if it's an arrangement the company are making with several other people this could have an impact.

christopher wrote: Yes I would be paid per hour. Not sure about substituting someone, I could arrange to get another freelancer to go in if I couldn't make it. Yes and no, I would take a laptop but they have a mac available to use. I could choose to change the time and hours I came in but I would have to do the set hours per week as stated in the contract. I would mainly be working on their premises but would work from home sometimes as well. Sounds like you're possibly a borderline case, but being honest I think you're probably open to the revenue saying that you're employed if you don't pick up other work as well. Have a bash at this. We had a PAYE inspection last year and they picked up on somebody we had a few years ago who used to work a bit for us and was a borderline case. Because it was small sums and he had not done any work for us for a while and was unlikely to in the future they left it as it was, but said that had it been more current they would probably have looked at it more closely. Also, if it's an arrangement the company are making with several other people this could have an impact.