We have just taken on a client from a “Specialist” Accountant for Contractors which inspired me to write this blog.
What exactly is a specialist accountant in contracting? In my world, I would expect a specialist to be able to offer these services
- Monthly Bookkeeping using a modern system like Xero or QuickBooks with client access to records inc Vat returns.
- Payroll Services
- Year-end accounts compliance
- Tax advice on Expenses especially travel
- Tax advice on company’s/cars/van motorbike Vs Mileage Method
- Profit Extraction Tax planning/Pension Planning
- IR35 planning and reporting
All of these services bar one are what I consider routine and very easy for a modern accountant to deliver.
The real value to a contractor from an accountant is the ability to deliver advice on each new contract and analyse the risk of an existing contact under IR35. If you are not getting this advice, then you are not using what I deem to be a “specialist”.
IR35 is horribly written and grey legislation that defines are you an employee or are you actually a business. The effect of being an employee is you will incur national insurance, you might not also be able to use profit-sharing tax planning by paying your spouse a share of dividends. To cut a long story short get it wrong and you could face a bill in the tens of thousands or even millions if you are a BBC presenter who has recently been caught by this legislation.
In short, there are three main areas that your contract should deal with:
- Mutual obligation
However, it is not enough to just have these areas dealt with in the contract the reality should follow the contract. If your contract states, you supply your own equipment for goodness sake don’t use the contracting companies laptops/Phones/Vans. If the contract states you are free to carry out the contract as you see fit, don’t send e-mails asking for time off to the area manager. These are simple things but with IR35 the details matter.
My advice to all those contractors who use nationwide “specialist” Accountants would be to find a local firm that has the tax expertise to deal with IR35 as well as all the other standard areas to your accounts. Where you can find a company that will include all aspects of your accountancy in a fixed fee so you know what you are paying.
If you are interested in anything in this article or something concerns, you then please contract Chippendale and Clark and our accountants and tax consultant will be happy to help you through the grey mist which is contracting.
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