Introduction / sales commission paid 2 years after employment
In 2009 Consultant A, a UK resident and tax payer, working on a freelance basis under an "umbrella company" which paid PAYE out of contract income, signs a contract to introduce Company B to Company C. If the result of said introduction produces any revenue for Company B then Consultant A is paid 2.5% commission from the year 1 revenues arising and 1.25% in year 2. Company B is based in Bulgaria and will pay the commission in Euros (being the currency of contract with Company C).
In 2011 Company C finally enters into a commercial relationship with Company B thus triggering Consultant A's entitlement to payments out of 20,000 Euros per month of revenue. These are to be paid as Company B receives revenue from Company C. Consultant A elects to take this payment quarterly to minimise bank charges on payments on relatively small amounts.
Since 2010 Consultant A resigned their freelancing work under the Umbrella Company and became a full time employee of a different unrelated business. Special terms were negotiated with the new employer to allow continuation of the terms of the contract with Company B - normal employment terms forbid any commercial relationships with other companies. Ex Consultant A is a higher rate tax payer, any additional income is likely to push total taxable earnings above £100,000 per annum.
Ex Consultant A is now ready to receive commission payments and must raise invoices to trigger payments which will be quarterly until end of 2013. The question is how should ex consultant A treat the income for Self Assessment purposes and also for National Insurance?
Given the tax situation it might seem efficient to put the income into a pension policy, however as ex Consultant A has credit card debts of £47,000 their preference is to repay the debts as much as possible.
Many thanks for any advice!
- What taxes must employers pay in Continental Europe? e.g. Germany and France 91 1
- Setting up direct debit on Clients bank accounts to collect monthly payments 327 10
- Travel costs and contractors 264 3
- vat help for catering concession 140 3
- Employee works in UK paid by Denmark and uses company car from another business 41 1
- RTI and Directors' salaries 146 2
- Is there capital gains tax for selling a church? 203 3
- Importers 107 1
- How could I be identified for VAT purposes in UK? 275 4
- Tax free threshold on person receiving gifts 250 4
- dfgd fget 119 1
- More AE! 233 6
- New business - journal entries 610 27
- US Citizen but never resident in US 213 4
- LLP Tax Allocation Prior Year Amendment 68 1
- aia 123 1
- UK company paying dividend to foreign shareholder 446 10
- Capital Allowances and Building Improvements 457 16
- Director Personal Bank Account in company's books 254 5
- Form 17 Joint tenancy v tenants in common 266 7
- Auto enrolment excuses 990
- Feedback on accounts production software for IFRS 744
- Add T&Cs to Sales Order in Sage 431
- Digita Hosted Software 249
- Problems with Sage 50 Payroll v21(2015) pension module 249
- Social investment tax relief 243
- Call Centre Data Costs 229
- Buying goods in US and selling them to company in US 183
- Are any of you agents for doctors? 147
- Petrol station franchise and VAT 137