Go freelance to beat the 50 per cent tax rate

Nice to know the BBC presenters are looking to dodge the tax that they should pay.

As a freelancer (self-employed) you have to be able to:

-set the fee you charge
-decide when and where you are working
-correct mistakes at your own expense
-work for more than one client
-hire people to work for you or subcontract the work

If these (and other conditions) are not met then you are not technically self employed and the tax man will catch up with you in the long run, and you tax bill can go back 7 full tax years, plus the year we are in now.

All of which the Telegraph forgot to mention.

possibly, I don't actually know, and right now I can't find out, as my internet connection is being strange.

the other things I should have mentioned, as a freelancer, you have to have your own public liability/employer liability/professional imdenity insurance

and if your turnover (income) is over £60,000 you have to register to charge VAT, although you can claim a lot of VAT back.

Yes, they are some of the IR35 rules, which actually came into force on the 23rd September 2009.

mlewis09 said:

Yes, they are some of the IR35 rules, which actually came into force on the 23rd September 2009.

Click to expand...

IR35 has been around a lot longer than that - since April 2000 to capture IT contractors.

You mention working for more than one client. You'll probably find that a lot of the top earners at the BBC actually do. For example, Chris Moyles presents the Radio 1 breakfast show but was also appearing on Channel 4 a while back.

This, however, is not the be all and end all of proving that you are a bona fide freelancer/contractor and some (especially in occupations such as IT, HR and finance) will work for one client at a time, sometimes for much longer than a year at a time.

Some bedtime reading:

IR35 - what is it?

The problem with IR35 is that the opinion on it will actually differ from one HMRC inspector to another (as told to me by a retired HMRC inspector). Some consipracy theorists will argue that it was intentionally written vaguely to capture many people by fear of getting a huge tax bill. And it looks like they'll be targeting construction workers next....

In terms of tried cases at court, maybe. But that's failing to take into account the millions that contractors are paying through PAYE when using umbrella companies or even through their own limited if they are 'playing it safe' and operating as if they are under IR35, just in case.

Here's some more about exactly that point from another site:

PCG?s revelation of IR35?s £1.5m per year tax take is (sadly) not the full story

The IR35 was introduced in September 1999 not 2009 as I incorrectly mentioned in my previous post - and from April 6th, 2010, a small change to the law in this years budget, means working for one company/client makes you employed not self employed and will result in HMRC cracking down and making sure people (employers and employees) are paying the correct tax and NI.

Don't confuse working with one company at a time on a fixed term contract making you employed....

What they are trying to crack down on is employers making people 'self-employed' when they would normally be an employee, i.e. disguised employment, and therefore avoiding paying NI payments.

Think hairdressers, subbies etc. etc. They are, to all intents and purposes, doing all the roles and duties expected of an employee and are under full control of the employer with regards to working hours and when to take holiday etc. They are the target, not people genuinely doing contract work and control their own output.

I'm a freelancer who has taken legal advice on the issue of being freelance, and working for one company where they virtually dictate what you do is not freelance, never has been and never will be.

I set out some of the IR35 criteria right at the beginning of this thread and that applies, if you control what you do/when you do it/how much you charge, then you are probably freelance, cleary stated on the HMRC website although in different language.

Working for one company on a contract that is not controlled by you is not freelance, and could result in a fine and unpaid ni for the employer and large fines plus unpaid tax/ni for the freelancer/employee.

Best advice is to seek the guidance of an accountant, before going freelance, and continuing to take their counsel.

Well, that's pretty much what I was saying If you're running bona fide business under your own account you shouldn't have an issue. If your 'client' tells you when to turn up, what to do etc. and you're just basically doing the work of a normal employee you could be in trouble (which was why I mentioned hairdressers and the like).

If you want to know a bit more about my background on this Michael, I've worked for an accountancy advising on just this and also have a hand in one of the sites linked above, so I have a working knowledge on this and try not to give out duff advice!

I wouldn't just take advice of an accountant though, it might be worth getting any contract reviewed by the likes of Qdos or Bauer & Cottrell, they will usually bolt on IR35 insurance if they say your contract isn't caught by IR35. That way if HMRC do get funny they pick up the tab.