Tax advice for freelancers, contractors and consultants

Tax helpline for PCG members

PCG members have free access to a tax helpline provided by Abbey Tax.

What is IR35 and how does it affect me?

PCG was originally formed in response to IR35. It is unfair and unnecessarily complex and it remains the biggest single grievance for freelance contractors. As the only organisation putting the views of freelance contractors and consultants to Government, PCG continues to lobby for the reform or abolition of IR35.

IR35 Status Check

There has been concern that HMRC has updated the employment status manuals (ESM) on its website (www.hmrc.gov.uk) to reflect recent ‘IR35 victories’ - namely Dragonfly Consultancy Ltd and Larkstar Data Ltd. This indicates that somehow the status arguments are flowing its way. Even allowing that HMRC only tends to publish cases that support its views, let us consider what has changed in recent status cases.
There has been rumour that the right to substitute as an argument to deny personal service was dead.

PCG's Guide to IR35

PCG has published an extensive guide to the legislation, available exclusively to members.

What to expect from an enquiry into IR35

Life has become easier for HMRC with the introduction of the Service Company question on the Self Assessment Return and Question 6 on the P35. The Service Company question will be relevant to virtually every freelancer and will help determine the split between salary and dividends. The two parts of Question 6 on the P35 are “Are you a Service Company?” and  “Have you operated IR35 or MSC legislation?”

Changes to HMRC assessment time limits - April 2010

On 1st April 2010 new rules came into force in respect of the time limits for HMRC raising assessments for earlier years. These new rules apply to both Tax and VAT.

Dealing with VAT and pitfalls to avoid

The merging of the Revenue and VAT departments means that HM Revenue and Customs (HMRC) looks at data from both regimes to ensure compliance and consistency across the taxes. You may not have realised the need to register for VAT, but if your income tax return shows a turnover in excess of the VAT registration limit this may be enough to prompt a call from a VAT inspector. Therefore you need to keep a keen eye on your turnover to avoid falling foul of the VAT authorities.

New VAT Flat Rate Scheme

Since 1st January 2010, there have been some changes to the flat rate scheme percentage rates for some businesses such as financial services, architects & Structural Engineers.

Important changes for the payment of VAT from 1st April 2010

From 1 April 2010 all cheque payments for your VAT liability sent by post will be treated as being received by HMRC on the date when cleared funds reach their bank account – not the date when the cheque is received, which was the previous standard used to determine when payment was received by HMRC.  

What is the 24-month rule on travelling expenses?

The legislation relating to travelling expenses is to be found at Sections 337, 338 and 339 ITEPA 2003. HMRC also provide examples of when travelling and subsistence expenses are or are not allowable on their website in the Employment Income Manual, including specific information regarding the ‘24-month rule’.

Taxation of Limited companies

The way tax is paid on limited companies is different to the way that non-limited companies pay tax. 

Taxation of sole traders, partnerships and LLPs

Sole traders, partners and members of limited liability partnerships are classified as self‑employed and must complete a self assessment tax return annually.

What is Family Business Tax and how does it affect me?

This legislation was introduced to prevent people who own businesses jointly from sharing the profits in the traditional way. Income tax must be paid on profits without regard to the ownership split between the business.

PCG opposes this proposal. We believe that when two people are exposed to the risk of running a business, they should be entitled to share the reward.  We also believe that this measure will be unworkable: it will require all affected businesses to keep a record of every single contribution, of whatever kind, made to a business: this will result in a crippling level of red tape.

PCG's Guide to Family Business Tax

PCG has published an extensive guide to the legislation, available exclusively to members.

Budget 2010/11 Tax tables

The information in each of the categories here is based on proposals set out by the Chancellor in his Budget of 24 March 2010 but is subject to amendment in the Finance Bill.

Further information you may find interesting... ( Members only)