CBSbutler in conjunction with Lawspeed
Why have we chosen Lawspeed?
Lawspeed's FAST service is designed to help freelance contractors from start-up onwards, providing expert and objective advice on what genuinely helps a freelance contractor to operate, including operating outside IR35. It covers guidance on whether to set up your own company or operate through an umbrella, assists in putting together your work description through to full blown IR35 action points (if that is what you want) and gives all the support you need to safely operate as a freelance contractor.
...Because, as legal and commercial specialists, they have ISO-9001 accreditation, the industry expertise and the right attitude we believe each of our freelance contractors deserves. Lawspeed is a preferred supplier to the PCG and has been providing industry-tested and revenue-tested contract advice since 1998.
In our view, the proof of the pudding is in the eating, Lawspeed was responsible for drafting the clauses accepted by a Tax Commissioner in the only successful IR35 case yet (Lime-IT) and has a professional pedigree second to none. Its range of services is not limited purely to IR35, and includes a whole raft of commercial solutions that could benefit you for the whole of your business lifetime.
Over the years that Lawspeed has been helping freelancers, it has researched and developed a number of business contacts. We invite you to take advantage of this support for our mutual benefit for years to come.
Lawspeed's FAST Service gives contractors access to:
Historically, the vast majority of freelancers ran their own limited company, allowing them to draw much of their fees as dividends with significant tax advantages compared to any other method.
- Immediate impartial start-up guidance
- Rapid advice dealing with your queries on our contractual terms FREE OF CHARGE
- Legal and commercial support including company formation, IR35 and recommended services
- Starting up in business - IR35
With the introduction of IR35 in April 2000 these tax advantages may have been removed depending on whether you fall within the scope of the IR35 legislation or not. As a general rule, if your engagement falls outside the scope of IR35 then you will be better off using your own limited company, whereas an umbrella company can be more beneficial if all your engagements fall within the scope of IR35, and there is no scope to restructure. The difference could be as much as 15-20% additional cash in your pocket.
Lawspeed is able to advise on the appropriate method of contracting given your particular circumstances. They will also form a limited company for you very quickly, usually next working day. If you provide some basic figures they will be able to provide an approximate take-home pay comparison between ‘caught' and ‘not caught'.
The "Schedule" part of your contract matters
Our contract template been drafted by specialist contract suppliers and IR35 advisers - Lawspeed. Whilst we understand that the contract terms are not the sole determinant of IR35 status, the template has been prepared to reflect engagements that are operating outside IR35, where appropriate.
This is a cutting-edge contract and has been refined over many years to address typical IR35 and commercial requirements. In the unlikely event that you have any query about the provisions in this contract, the first port of call should be Lawspeed. Through this Contractor Support arrangement, they will deal with most queries free of charge, just call 01273 236236.
The terms and conditions are only one aspect of the contract itself, the specific Schedule wording is a crucial component that is often overlooked. The contract is drafted to reflect the performance of project-based services. From an IR35 perspective, it is therefore important to describe the project as specifically as possible. Drafting the Schedule incorrectly or ambiguously could prove very costly.
What is IR35?
The so called “IR35” legislation is enacted in Schedule 12 Finance Act 2000 and the Social Security Contributions (Intermediaries) Regulations 2000. IR35 is the name of the press release issued by the Inland Revenue announcing the impending legislation in April 1999 and the name has been adopted as a generic name for the legislation ever since. Falling within the IR35 tax rules could reduce your income by around 15-20%, a freelance contractor earning £50 per hour would typically face an additional tax liability of around £12,000.
All the working arrangements are relevant. Of primary importance is the work and nature of the work, and the contracts that the company enters into serve as supporting evidence. If the engagement would have been one of employment if it were not for the existence of the intermediary, the tax is payable by the intermediary.
The test of liability is wholly legal and is a test based upon employment status case law. As such, in order to advise correctly it is essential to have a strong understanding of employment law and the principals involved. Those principles include a good grasp of contract law and the meaning of clauses as well as comprehension of the intention of the parties to the contract. Most accountants would not fall into this category.
We recommend that our freelance contractors seek proper objective advice before:
- Concluding that IR35 applies to their arrangements
- Entering into any dealings with the Inland Revenue on issues relating to IR35