Susan's Legal Bits

In July 2010 Susan was interested in...

...to Limit or not to Limit

Hello everybody.

This month I've heard from a number of people who are sick and tired of running their own limited companies - have been stung by horrendous paperwork and received communication from HMRC about tax and nic due (this is almost certain to raise the stress levels of anyone!). These people are seriously considering coming back to the umbrella product so they don't have to worry about anything going forward, apart from finding the work and doing the work. It's been lovely to welcome these individuals back to Gabem and hear their stories of their time away from us.

On the other hand I've also heard from a few of you who have been approached by tempting offers from accountancy firms who will happily set you up in a limited company and allow you to claim all sorts of amazing expenses.

This has led me to some extremely interesting conversations and those of you who have spoken with me over the last month will know that I am not exactly known for any 'sales' technique! In reality I am more interested in knowing about what's best for you and will only give advice about certain pieces of legislation that you may not have heard about.

Of course running your own limited company as a contractor is a perfectly legitimate way of conducting your affairs. It was however clear from the MSC legislation in 2007 that using another party to 'run' your entire limited company (set up, administration, returns etc) for you could see you and your 'business' fall foul of tax regs. The legislation specifically stated that Managed Service Companies had to deduct full PAYE tax on all earnings - in legitimate limited companies dividends are paid and these are allowed to attract corporation tax.

So if you are tempted down the route of limited companies rather than full employment status through an umbrella company my advice is to always understand what the relationship is going to be between you, the limited company set up for you and the company that is offering to 'help' you run it. Find out why the service they offer you does not fall under the MSC legislation and be assured that you are always complying with the law as set out. If all that sounds too complex then of course staying with an umbrella product is the safest and most compliant option you could find out there at the moment. It allows you to have employment status, claim legitimate expenses and continue to have the freedom you want when choosing where and when to work.

For those of you off on hols now the summer weather is finally here - don't forget to ring us and request holiday pay - what you have accrued through working for us is available to be requested anytime you take your break from the daily grind... I must book mine!!

Have a great June everyone!

All comments provided on my blog are for informational purposes only. My thoughts and opinions are my own with agreement from my employer as being suitable for sharing with the wider world. Any advice, or writing that might be taken as advice, should not be deemed in any way as professional Legal advice and are only the musings of a HR practioner whose sole aim is to help where she can.