One million people have missed the deadline to complete their self assessment tax return. If you have completed a self assessment in the past, but you no longer have different income streams, you must still compete a return, unless advised differently. Those now late will be charged a £100 late return notice, even if there is no tax to pay. This can only be overturned, if you have a genuine excuse. Don’t leave any later, otherwise that penalty will keep rising!
IR35 was brought into bridge the gap between those self employed and intermediaries who in fact should be employed. So for example two people work for a company, they do the same tasks and job. One is employed and one is a limited company. The person who works under a limited company might fall under PAYE and is not in fact limited.
Introduced in 2000, IR35 was for an individual/contractor to assess their contractual relationship. HMRC would then challenge contractor if they believed they should be employed. The end users would become involved in the relationship set-up.
Two years ago, IR35 was revised for the Public Sector, the end user (Client) now assesses whether a contractor falls under IR35. In April 2020, this will roll out to the Private Sector. HMRC have clarified this will happen, but maybe some minor alterations. Large companies, such as RAC, have requested that the Chancellor either delay or cancel, but to no avail.
Currently, the end user has been more risk averse than expected, and removing many of their contractors and recruiting staff. Many contractors, have found themselves either moving permanently or finding new clients.
Will it affect your business, some simple questions will assist in this decision. If you answer yes, its a stronger case for self employment.
- Do you have multiple Clients? Each assignment would be judged individually
- Any income from non-contractual sources?
- Do you have your own website, company email address, marketing and advertising?
- Do you have your own logo, company stationery, letterheads?
- Do you use your own equipment for contract purposes – laptops, phones, cars, printer etc?
- Are you registered for VAT?
- Do you have business insurances, such as liability, indemnity?
- Do you have a dedicated office space?
- Do you tender for contract work and apply for contract positions?
- Are you registered under the Data Protection Act?
- Do you invest in training, development and other ways to improve the marketing of the company?
- Do you have control and direction of what you can do in your daily work?
- You receive no benefits, such as use of staff facilities, social events, gym membership etc?
- Do you have a substitute if you cannot perform the tasks?
- You are paid by the job/task and not hourly/daily rates
- You are not continuously with the same Client and renewing the contract.
How to prepare?
- read press releases/guidances
- strategies to prepare for outcomes, such as PAYE costs
- check HMRC webpage
- reviewing contracts
- will you need to return to employment
- seek legal advice
Straight from HMRC, helpful advice on who needs to complete a tax return and what expenses you can claim if you are self employed.
As your business grows you may find you no longer have the time to keep your books up to date. The accounting rules and compliance you must follow becomes overbearing. The strict deadlines you must adhere to. Maybe it’s time to either hire or maybe outsource your accountancy work. Please see article below to help you make up your mind. And if you decide to outsource, we can help!
Be aware after 31st January, you will be charged £100 for a late return. After 30 days you will be charged 5% on it. Then a late return of 90 days, will be charged £10 per DAY!