Best way to set myself up as a "contractor"?

[r.o.s.s.i]

Hi all,

Looking for a little bit of advice for the best way to set myself up for a short stint of self-employed work in the UK.
I am a British citizen but have been working in Australia for the past 4 years for a small company and have recently made the decision to move back to the UK. The company, not wanting to lose me, have made me an offer to basically help establish the business with a UK base - so essentially keep me in the company, go home and start working on growing a UK side.

The only thing they want to do a bit differently as they don't currently have a UK operation/entity set up at all, is to effectively pay me as a contractor in the UK for the first couple months whilst they/me get things set up.

I will still have the same rights as an employee, so will get annual leave, be eligible for sick leave etc but they don't want to set up payroll until we've basically proven the concept and i've got the business operating at a level that we know warrants it - which I totally get.

They have already said they will pay me what the pension contribution would be as extra on top of the salary so I won't be losing out there, but is there anything else i should be aware of? I assume there are going to be tax efficient ways of setting myself up and things which I should be claiming and not claiming etc?

I've read that as they are effectively going to be my single client (i won't be working for anyone else) and I get all the usual employee benefits then I fall inside the IR35. HOWEVER, I have been reading that IR35 doesn't apply if your single client/the business you work for resides outside the UK.

I don't really want to go and set up a Ltd company or anything similar as it feels like a lot of messing about for such a short time (and not mega amounts of money).

Can anyone offer any advice or guidance on how would be best to proceed?

 

[Newchodge]

Find a good accountant and talk to them.

 

[Deleted member 335660]

Hi all,

Looking for a little bit of advice for the best way to set myself up for a short stint of self-employed work in the UK.
I am a British citizen but have been working in Australia for the past 4 years for a small company and have recently made the decision to move back to the UK. The company, not wanting to lose me, have made me an offer to basically help establish the business with a UK base - so essentially keep me in the company, go home and start working on growing a UK side.

The only thing they want to do a bit differently as they don't currently have a UK operation/entity set up at all, is to effectively pay me as a contractor in the UK for the first couple months whilst they/me get things set up.

I will still have the same rights as an employee, so will get annual leave, be eligible for sick leave etc but they don't want to set up payroll until we've basically proven the concept and i've got the business operating at a level that we know warrants it - which I totally get.

They have already said they will pay me what the pension contribution would be as extra on top of the salary so I won't be losing out there, but is there anything else i should be aware of? I assume there are going to be tax efficient ways of setting myself up and things which I should be claiming and not claiming etc?

I've read that as they are effectively going to be my single client (i won't be working for anyone else) and I get all the usual employee benefits then I fall inside the IR35. HOWEVER, I have been reading that IR35 doesn't apply if your single client/the business you work for resides outside the UK.

I don't really want to go and set up a Ltd company or anything similar as it feels like a lot of messing about for such a short time (and not mega amounts of money).

Can anyone offer any advice or guidance on how would be best to proceed?

I am assuming that you have an Australian bank account and pension so they will just continue to pay you as though you were in Australia.

You also say it’s just a couple of months so I would be inclined to get a business card printed and go out there and see what business you can do. If it works out then set up something official. If it doesn’t then start looking for another job.

You don’t say what sort of business it is but I don’t think you would have much trouble testing the market.

 

[r.o.s.s.i]

I am assuming that you have an Australian bank account and pension so they will just continue to pay you as though you were in Australia.

You also say it’s just a couple of months so I would be inclined to get a business card printed and go out there and see what business you can do. If it works out then set up something official. If it doesn’t then start looking for another job.

You don’t say what sort of business it is but I don’t think you would have much trouble testing the market.

I have an AU bank account at the moment, but I am moving home permanently so not sure I want to be paid into an AU bank account as i'll have to deal with exchange rate fluctuations, international transaction fees and things like that.

The aim is for me to do this full-time permanently, they say they just want to pay me as a contractor whilst they get the UK business entity, PAYE, payroll side of things sorted and I think they would rather pay me in GBP into a UK bank account.

It's a digital marketing agency, so no need to "get out there" as such and I agree, it should be quite easy to test the market.

 

[Deleted member 335660]

I have an AU bank account at the moment, but I am moving home permanently so not sure I want to be paid into an AU bank account as i'll have to deal with exchange rate fluctuations, international transaction fees and things like that.

The aim is for me to do this full-time permanently, they say they just want to pay me as a contractor whilst they get the UK business entity, PAYE, payroll side of things sorted and I think they would rather pay me in GBP into a UK bank account.

It's a digital marketing agency, so no need to "get out there" as such and I agree, it should be quite easy to test the market.

Well if they are paying you into a UK bank account that is good. I would just get on with it and then sort it out later.

If they set up a company in few months time and officially employ you then you could just claim this as extra income on your annual tax return.

 

[Financial-Modeller]

Given the circumstances, the obvious thing to do is engage a recruitment consultant / agency to act as an intermediary, and to appoint you on a temp PAYE contract.

This is their core business and whilst they will need a margin, it will take away (current and future) headaches on both sides, and if successful, you'll have a relationship in place if and when you need to make hires in UK as the company becomes established.

 

[WaveJumper]

Do you have a private pension they are paying into or an Australian one

 

[paulears]

I can't quite reconcile being a sole trader and being a sole trader who is the UK arm of an Australian Company? So you'd advertise your services as Fred Smith trading as ROSSI Uk or something?

Setting up as a UK sole trader is quite simple as people have found, with or without VAT registration and you get your UK UTR. As the services or sales would be provided to anyone who wanted them, the fact your supplier is one person would to me, as a non-expert seem quite different from the usual situation where the company use sole traders to get around the tax laws.

So - would you be an independent trader - kind of like having a franchise? Cyndy suggest an accountant conversation. That seems very sensible. If YOU are invoicing the clients, sole trader status could work for you I suspect, but if the customer pays the Australian company, and they supply goods direct, then you would look like an employee - albiet at a distance. Where does risk lay? Angry customer. Your problem or theirs? The pension thing would seem to wreck your status if it's evidenced and has paperwork. If your invoice to them is just a regular bill that they simply pay, and you use some for a pension that says sole trader - but I suspect an accountant would ask far harder questions.

 

[r.o.s.s.i]

I can't quite reconcile being a sole trader and being a sole trader who is the UK arm of an Australian Company? So you'd advertise your services as Fred Smith trading as ROSSI Uk or something?

Setting up as a UK sole trader is quite simple as people have found, with or without VAT registration and you get your UK UTR. As the services or sales would be provided to anyone who wanted them, the fact your supplier is one person would to me, as a non-expert seem quite different from the usual situation where the company use sole traders to get around the tax laws.

So - would you be an independent trader - kind of like having a franchise? Cyndy suggest an accountant conversation. That seems very sensible. If YOU are invoicing the clients, sole trader status could work for you I suspect, but if the customer pays the Australian company, and they supply goods direct, then you would look like an employee - albiet at a distance. Where does risk lay? Angry customer. Your problem or theirs? The pension thing would seem to wreck your status if it's evidenced and has paperwork. If your invoice to them is just a regular bill that they simply pay, and you use some for a pension that says sole trader - but I suspect an accountant would ask far harder questions.

I am currently an employee of the AU business but my understanding is I will essentially leave the AU business when I come back to the UK. Obviously they don't have a UK business entity set up but want to pay me to a UK bank account in GBP, rather than AUD for work I do when I get back so I will be a contractor/sole trader until they have the business setup properly, where then I will be employed directly by the UK business entity and none of this will be an issue as I will be paid through whatever payroll mechanism they sell.

Do you have a private pension they are paying into or an Australian one

They pay into a pension for me in AU. When I am officially employed for them in the UK under their UK business entity they will pay into a UK pension as part of my pay. During the period in between they will pay me what their pension contribution would be, directly to me on top of my salary, for me to put into a private pension.

Given the circumstances, the obvious thing to do is engage a recruitment consultant / agency to act as an intermediary, and to appoint you on a temp PAYE contract.

This is their core business and whilst they will need a margin, it will take away (current and future) headaches on both sides, and if successful, you'll have a relationship in place if and when you need to make hires in UK as the company becomes established.

I will look into this, however not sure if that may be overkill and it is going to be as simple as just setting myself up as sole trader and invoicing them for a couple of months.

Well if they are paying you into a UK bank account that is good. I would just get on with it and then sort it out later.

If they set up a company in few months time and officially employ you then you could just claim this as extra income on your annual tax return.

What would i need to claim as extra income? Would I not just do a tax return to cover whatever I earn outside of the official employment?

 

[paulears]

Why don't they just carry on paying you as an employee, but one working out of their country? If the idea is to go back to them when they set up here, faffing around with a budged interim system seems pointless. People have been successfully working from home for a year or more now and it works so you'd just be doing that?

 

[Newchodge]

Why don't they just carry on paying you as an employee, but one working out of their country? If the idea is to go back to them when they set up here, faffing around with a budged interim system seems pointless. People have been successfully working from home for a year or more now and it works so you'd just be doing that?

There may be issues over double taxation and employment rights.

 

[Frank the Insurance guy]

I am currently an employee of the AU business but my understanding is I will essentially leave the AU business when I come back to the UK. Obviously they don't have a UK business entity set up but want to pay me to a UK bank account in GBP, rather than AUD for work I do when I get back so I will be a contractor/sole trader until they have the business setup properly, where then I will be employed directly by the UK business entity and none of this will be an issue as I will be paid through whatever payroll mechanism they sell.

If this is an interim measure until they set up a UK entity, they will surely be using a UK Accountant to set up their new entity?

If so, surely they can engage the accountant to sort you out with interim advice and any arrangements needed - that way you will both be using the same accountant, who knows what is happening form both sides?

 

[Mark T Jones]

You can hire a mentor for building yourself as a contractor. In AU you can visit Lisnic . I also live in Melbourne in Australia. I got help from lisnic mentor.

If you represent the quality of their marketing, I'd certainly steer well clear!