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Can I Be Self Employed?

Is there anything I am missing about being self employed as well as in full time employment?

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Hi Everyone, 

I started doing a couple of friends tax returns last year. I realised that there will be a market of self employed people who don't know about HMRC regulations regarding self employment which I could help. So over the last year I have built up a small client list of people who I do the accountancy side of their business for. I'm really enjoying it and want to expand it a bit further as the small amount of extra income I am receiving helps keep me and my family in the green. My wife went on maternity leave in 2019 and did not return to work. 

As much as I am sure what I am doing is 100% legal, there is a little voice in the back of my mind telling me there is a rule I dont know about. So I just wanted to put it out there to you all and see if there is anything I am doing wrong or any boundries I cannot cross yet. 

A little bit of background on me; I was a Purchase Ledger/Sales Ledger Clerk for 3 years, I have been an Assistant Accountant for just short of 3 years, I have the CIMA Cert in Business Accounting (which is equivilant to AAT), I am registered as self employed with HMRC as well as being a full time employee. 

Any advice anyone has regarding things I may have missed or may not be aware of would be great and I am thankful in advance.

Replies (24)

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By the_drookit_dug
06th Jan 2021 21:18

You've not mentioned AML supervision - are you registered with HMRC for this? If not, do so straight away.

Also, as you're handling personal data, you should register with the ICO - again, do so immediately if you haven't already.

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Replying to the_drookit_dug:
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By Anonymous
07th Jan 2021 08:48

No to both of those. I will get that sorted ASAP.

Thanks for your reply!

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Stepurhan
By stepurhan
06th Jan 2021 21:19

Assistant Accountant in a practice? Most firms would have a clause in your employment contract preventing you working in competition.

Not sure if CIMA requires a practicing certificate. ACA and ACCA do not allow members to do client work without one.

Obvious concern is that if you cannot answer this question for yourself, what else do you not know that will trip you up in client work.

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Replying to stepurhan:
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By Anonymous
07th Jan 2021 00:22

Thanks for your reply.

No I work in the accounting department for an agriculture company and they are aware and have approved my side business.

CIMA members seem to, however If you are only part qualified it doesn't seem to be a requirement, hence why I wanted to make sure everything was above board, as this seems like a bit of an odd rule.

Very good point, however I feel I am more than capable of doing taxes, book keeping and admin for self employed people, and will not be accepting work from larger organisations which follow more rules until I have more qualifications under my belt and decide to take it full time or not. It is the legal side of things to cover my back which I wanted to be made aware of.

Thanks again for your reply, it's appreciated

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By paulhammett
07th Jan 2021 08:01

Have you actually checked with CIMA?

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Replying to paulhammett:
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By Anonymous
07th Jan 2021 09:11

Their website only mentions members and not students. Hence one of the reasons I posted on here to see if anyone knew for certain before having to call them up.

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By bernard michael
07th Jan 2021 09:00

Quote:

Thanks for your reply.

No I work in the accounting department for an agriculture company and they are aware and have approved my side business.

CIMA members seem to, however If you are only part qualified it doesn't seem to be a requirement, hence why I wanted to make sure everything was above board, as this seems like a bit of an odd rule.

Very good point, however I feel I am more than capable of doing taxes, book keeping and admin for self employed people, and will not be accepting work from larger organisations which follow more rules until I have more qualifications under my belt and decide to take it full time or not. It is the legal side of things to cover my back which I wanted to be made aware of.

Thanks again for your reply, it's appreciated

Are you aware the new MTD is looming ??

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Stepurhan
By stepurhan
07th Jan 2021 15:00

Quote:

Thanks again for your reply, it's appreciated

It is appreciated having replies appreciated.

Too many querists fly off the handle if they don't get the response that they wanted. You appear to be taking the concerns on board in a sensible fashion.

Whilst I would still worry about your potential lack of tax knowledge (as covered in more detail by others) I at least feel you have a chance of realising if you get out of your depth and either passing up work or seeking help. Lost count of the questions on here clearly written by people lacking that essential skill.

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By Matrix
06th Jan 2021 21:26

In addition to the above good points you should also get insurance (PII).

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Replying to Matrix:
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By Anonymous
07th Jan 2021 09:25

Thank you.

Yes I got in touch with Hiscox as soon as I registered with HMRC and made sure I was covered.

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By memyself-eye
07th Jan 2021 08:49

I wonder if he/she realises the cost of AML, PI cover, GDPR, software etc......

Doesn't sound like it!

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Replying to memyself-eye:
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By Anonymous
07th Jan 2021 09:33

Hi,

You're half right, I thought my business would be too small for AML Supervision or having to register with ICO.

However, I do have a software package and I do have insurance and I was very much expecting that all the formal necessities will come at a price.

What I would say, and not to point out the obvious, but the post was literally asking about these things which I may have missed. So I do feel your comment was more of an unnecessary dig at me rather than constructive feedback, which is what I was requesting in the original post.

If I have read your comment in the wrong context then I apologise.

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By memyself-eye
07th Jan 2021 10:24

just trying to save you from yourself - the days when part time accountants could just send the odd few tax returns are over. Compliance and registration costs grow ever larger year by year and that's before (as others have said) the monster that is MTD for all comes on line.
That is why many (me included) will be packing it in this year.

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Replying to memyself-eye:
Scooby
By gainsborough
07th Jan 2021 15:20

I'm likely to pack it in before 2023 - the combination of rising costs, off-payroll rules killing off some of my client base and the probability of MTD coming in is no longer worth the hassle.

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By Youareatit
07th Jan 2021 10:53

[quote]

Hi,

You're half right, I thought my business would be too small for AML Supervision or having to register with ICO.

<]

This is an issue.
Did you just not want the expense with so few clients? Go on be honest.

You could end up with a big fat fine for non compliance.

I take it you are using clients own GG to submit returns because you havent got the AML, therefore cannot get agent status. Or if you have the latter of old/before HMRC started clamping down, if you dont act fast, you may find all your clients will disappear as HMRC catch up with you.

What is also an issue is that you obviously read the rules but didnt understand that you needed to register. How will that then extend to reading other HMRC blurbs (worse still the legislation) if you can get something so simple, wrong.

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Scooby
By gainsborough
07th Jan 2021 09:17

Memyself=eye is right - these costs really do mount up.

OP, the other thing I would add is to make sure that your tax knowledge is up to date. E.g. if any of your clients own rental residential properties, have you advised them of the new 30-day CGT obligation? There are so many little things that are easy to miss.

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By tom123
07th Jan 2021 09:47

Do not hold yourself out to be anything to do with CIMA until such time as you are qualified. Do not mention studying or anything.

CIMA in effect controls what you do once you are a paid up member.

But, if you fall foul of rules prior to membership you could be barred from entry.

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Replying to tom123:
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By lesley.barnes
07th Jan 2021 10:41

Tom is correct - if you are a student you can undertake work that you are capable of performing. You can't mention Cima and Cima won't supervise you, you have to register with HMRC and be supervised by HMRC for MLR. The moment you qualify with Cima and become a Chartered Management Accountant you can't practice unless you become a Mip and Cima supervise you.

I queried this with Cima some time ago when someone said that they had got round the requirement to become a Mip by completing all their exams but one so they remained as a student, double benefit because the fees for full membership (rather than student membership) and Mip membership are expensive. It is different with other accounting bodies were doing this as a student isn't allowed.

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By zebaa
07th Jan 2021 10:11

The Institute of Certified Bookkeepers run courses in tax. Also their membership fees are worth considering if you decide to run as a business & they do offer good business support. Consider operating as a company instead of sole trader. Often one of the reasons given against operating as a Ltd. is there is no tax benefit. In my opinion this is poor advice, as the gain is in obtaining limited liability if things go wrong. I have seen too many sole traders threatened with financial ruin to suggest otherwise. Also it is good to practice a route you may suggest for others. Lastly, good luck.

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Replying to zebaa:
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By Youareatit
07th Jan 2021 10:55

You cannot get a licence from a lower body with ACCA/ICAEW, but not sure with Cima. Will that work?

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Hallerud at Easter
By DJKL
07th Jan 2021 11:06

Struggling to see any tax experience in your past work experience or qualification, as most mistakes by accountants re tax are acts of omission ,and as one does not know what one does not know, this seems a dangerous pathway to be taking.

I first worked for myself after five years in practice and 4 years in industry and with hindsight it was lucky that I had the support of the previous practice I had been with as my quasi mentors (some of my work was sub contract), I would here be concerned that you likely do not have the depth of experience (amassed by dealing with different clients/issues week in week out) to spot when client issues have strayed into dangerous territory.

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Replying to DJKL:
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By Southwestbeancounter
07th Jan 2021 14:48

Very valid points DJKL.

I worked for a practice for almost 7 years before I was made redundant and started out on my own - that was over 32 years ago - but I worked as a subcontractor for two firms first for a few years whilst building up my own practice and that was a superb 'safety net' as they finalised the accounts from the draft ones I had submitted to them and gave me pointers along the way which was invaluable.

Even with almost 40 years of experience now, it's difficult keeping up with all the regulations that's why AW and accountancy colleagues etc are an invaluable source of information.

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Red Leader
By Red Leader
07th Jan 2021 12:31

What tax knowledge do you have and how have you obtained it?

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By paulhammett
07th Jan 2021 14:43

Simon, don’t take the valuable feedback you have received as criticism. It is constructive and we are only trying to advise you to avoid the mistakes we see only too often. Good luck.

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