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!
- Is this legal? 558 9
- Scams are not always obvious 584 16
- Market Value/Connected Persons 152 7
- Auto Enrolment, Payroll, Small Client Advice and what to charge? 569 16
- 100% FYA, do I have to cliam all of it in 1 year? 102 3
- Vat query - EU customer requesting invoice without charging vat 225 7
- Saying NO to a time wasters 1,960 23
- Cells from many sheets 104 2
- Taxation of rental income 134 4
- notice of consent by surrendering company group relief 126 6
- VAT on long lease in comercial property thathas opted to Tax 47 1
- Childcare vouchers 59 1
- Directors loan 1,384 9
- Expenses allowable against income from lodger 113 1
- New company formation and equity 154 3
- Previously dormant company now medium sized - does it need an audit? 110 1
- Tax planning, transferring BTL property to company 211 5
- Forming a Holding Company 152 2
- SAGE - Filtering Inactive Suppliers/Customers 98 1
- OMB contractor company making himself redundant 235 3
- New Fangled Penalties 1,038
- Moving away from CCH software 899
- Recruitment agencies 521
- QROP pension input amounts 408
- write off loan or loan to equity swap or both 361
- Deemed Employment Payment 340
- HMRC BENCHMARK EXPENSES 301
- Unused Losses and Post Cessation Receipts 297
- EIS relief on transferring shares to spouse 216
- fraud 199