Like many sole practitioners, I started out as a wage slave and only became self-employed about midway through my career. It was something of a happy accident really. It certainly wasn't planned that way!
I spent most of my early career in financial services and worked for various banks, finance houses and insurance companies throughout the 80s and 90s, studying part-time for the ACCA exams and finally qualifying in 1988. I had a CV as long as your arm, but all that background actually did me a lot of good, as it gave me a breadth of experience few people in the industry had.
It didn't teach me very much about being an accountant though, not a real one anyway. That only really happened when I started contracting in the late 90s and running my own company. Maybe it was the buzz of being (more or less) my own boss or maybe it was just the tax savings, but I never wanted a "permanent" job after that. In just a couple of years, I learnt more about tax returns, and more importantly tax planning, than in the whole of my career up to that point. In fact, the other contractors started asking me to do their accounts too, so I got my practising certificate in 2000 and re-branded the business as Acumen Accounting.
Back then it was just a spare time practice, as I had a full-time job running the finance function for a group of captive insurance companies. This came in handy when IR35 first reared its ugly head in 2000, as I had a separate contract with each company and, crucially, was able to draft the basic terms and conditions. This kept me on the right side of the taxman, but IR35 also encouraged me to take on more private clients and market my burgeoning practice as a real business, mainly through the website. This worked quite well, as few accountants had their own website in those early internet days, and I was able to steal a march, so much so that when I came to a cross-roads in my career a couple of years later, the way forward was obvious.
The group had decided to outsource their insurance operations, and only a small team of us remained to manage the handover. I had a choice between finding a new position or staying on 2 days a week for a while and using that interim period to dip my toe in the water and see if I wanted to go into public practice full-time. It was a no-brainer. I went for it, and I've never regretted it for a single moment ever since.
For one thing, I actually feel as though I'm doing something useful these days. My clients are really appreciative of the work I do for them and rely on my advice. So different from the old days, when I felt more like a cog in a machine, and I certainly never really felt appreciated. Back then, I seemed to spend more time sorting out staff issues or sitting in weekly meetings than doing any useful work, and I was getting bored with the repetitive cycle of head office reporting and regulatory returns.
I came to another career cross-roads in 2008 when the "old job" finally came to an end and simultaneously my largest client created his own accounts department, precipitating a big drop in turnover. I decided to focus more on the tax side of things, so set up a new brand called Acumen Tax Solutions and marketed it with a series of fact sheets, which ranked highly on the internet and drove business towards the main website.
I've always enjoyed tax more than accounts and by that time I'd added considerably to my knowledge and experience. Anyway, there's not much money in number-crunching any more. Those days are over. You have to be more of an all-rounder now and advise on all sorts of things, from IT to HR to tax, and I find the tax work a lot more fulfilling. I've even found the time to write a couple of Tax Cafe books which have helped to put me "on the map" so to speak.
It was also around that time I started posting on Accountingweb. I've always found this site to be both a brilliant resource and a great way of communicating with fellow professionals. I also get a lot of satisfaction from helping others, which is one of the things that makes me stay in public practice. It's been a lot of fun too, even when I'm crossing swords with some of the more contrary posters (of whom I am undoubtedly one). Accountingweb certainly boasts more than its fair share of us. Well, that's my story, for anyone who's interested. It would be fascinating to read other members life stories and see where they come from.
No one's even mentioned IR35 yet. Have you considered that?
What exactly does this other person on your payroll do?
HMRC do have the power to restore companies struck off under Spongebob and apply for a winding-up order. The Official Receiver will then chase the director for the money he owes the company. They have up to 20 years to do this I believe.
HMRC could alternatively treat the cash taken out of the company as undeclared remuneration in the absence of any proof of loan/dividends. They then have the power under Regulation 72 of ITEPA 2003 Condition B to transfer the debt to the director, which will apply if he knew that salary was being paid without any PAYE deductions.
Not quite the easy option that people think it is.
I don't think we can justify it just because other landlords are not paying tax when they should. Why should people who comply have to subsidise the tax bills of those who don't?
As for spending money here, why should that come into it? Should you only get a tax rebate if you promise to put it back into the UK economy? It's not a cash hand-out from the public purse with strings attached. It's his own money!
The country he is living is a bit self-contained, shall we say, and does not share the same values as us in tax or pretty much anything else, so I doubt very much if the landlord has paid tax there on his UK rent. Surprisingly the UK does have a double tax treaty with this country but it's not directly relevant to this issue.
That's not the point really. HMRC should not be allowed to keep tax that doesn't belong to them and was only paid at their instigation. What the landlord does in his country of residence is between him and the taxmen there.
If HMRC accept that it was a careless error, the penalty can be reduced to zero if they allow 100% for telling, helping and getting copies of all relevant documents. If it was an unprompted disclosure and your client cooperated as much as possible, this should be achievable. Ask the inspector why full marks aren't being given for this and what more your client could have done to get a reduction to nil.
I think he was talking about the support staff rather than their own services.
Unfettered right of substitution is even more elusive than control of the work in most cases.
Still, these are just the silver bullets. You don't need a silver bullet to win an IR35 case. A client is by no means a lost cause just because he's not the Lone Ranger. Many IR35 cases have been won on the balance of the facts.
Control of the work is the biggest factor. How do these guys work? Do they have a "boss" who allocates customers to them and tells them what procedures to follow, is there a manual they have to go by, or is it pretty much up to them how they do the work?
Everyone likes to think they're in control of their work, especially contractors for obvious reasons, but actually it can be quite an elusive thing. It doesn't take an awful lot for the client to be in control.
Their best bet is to get their client on-side as much as possible and try and persuade them to sign a statement of circumstances confirming which aspects of the job are left up to them. Then keep a log of tasks which tend to suggest they are in control of the work.
Best advice of all is to stay under the radar and not give HMRC the slightest excuse to open a compliance review by making sure they meet all their tax deadlines and being squeaky clean with their payroll, dividends and expenses.
One of my clients uses Sage for CIS and they had trouble on the 19th too. By midday on the 2oth they started getting a different error message stating that their user credentials had failed. They still can't submit their CIS return for last month even now.
I've just had en email from their bookkeeper saying that she called the CIS helpline who said it was because they had updated their systems and they must ask Sage for an additional package.
Nice of HMRC to tell them. They hadn't heard anything from Sage either, who could at least have made their error message more intelligible and asked them to phone the helpline. HMRC make it compulsory to file online and then present us with problems like this.
Still, at least we can bill them for time wasted and the extra fees for the need to appeal the inevitable penalty.
If you are charging fixed fees (usually only advisable if you have a good idea how much work there is to do), it can be included in the service package, but always best to have a range of packages (e.g. Gold/Silver/Bronze) and put this sort of stuff in the more expensive ones. People usually go for the higher packages as they can see the benefit.
If there is no package, I charge £50 + VAT for filing the confirmation statement and other Companies House forms. It doesn't matter that it only takes 2 minutes. That's not how you price this sort of work. £50 is my minimum fee for anything.
If you do let them have it as a freebie, then a good idea of Andy's to show a nil charge on the invoice. Same should go for phone/email advice really. That sort of advisory work is a premium service. It should only ever be done for free if you are wooing a new client. Any other time, it should either be in a package or billed as a monthly fee.
Some clients don't like paying monthly fees for a service they might only rarely use, so I do them on a different basis. I go through the emails and grade the queries as simple, regular, complex, etc, then charge an agreed fee for each one based on what band it's in. Anything from £5 to £50 but subject to a £150 minimum fee for the whole year.
Whatever method you use, always make sure the client a) perceives the benefit, and b) knows they are paying for it. People don't really appreciate anything they get for free. After all, if you don't value your time and expertise, why should they?
As you have employees, you need to make sure everyone is aware of the CV scheme and invite them to join if they ever have kids. Put it on the notice board and send an email round so you have evidence of who it went to and when.
As employees might qualify later, it would be best to do it as a salary sacrifice scheme right from the start. You and your wife can pay yourselves what you like so in effect it would still be a perk for you. Maybe up your pay just beforehand so you can show it went down.
With home-made vouchers it is important to get the details right. In particular, always ask the childcare provider for their OFSTED number (or its equivalent) and show it on the vouchers.
Also important to prove it is not just a paper exercise. Always get them to sign/stamp the vouchers (or at least get a letter formally accepting them) and keep track of which ones have been redeemed for the accounts. Each voucher should have its own number.
Lastly, any vouchers not redeemed by the financial year end should be disallowed in the corporation tax comp unless paid within the next 9 months.