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IR35 reforms for contractors coming to the private sector

The IR35 tax reforms that are being introduced by HMRC have moved a step closer to being rolled out to firms in the private sector, following the publishing of a second consultation on this last week.

In this latest consultation (more…)

How to find good accountants in Liverpool

There are many reasons why business owners and the self-employed need the services of an accountant. They can lessen tax liability, help improve cash flow, help write business plans, sort out the new Making Tax Digital requirements and much more. So, how do you find good accountants in Liverpool?

Location

You may prefer to have an accountant based in Liverpool. Although communication between you and your accountant can be done through phone, letters and email, sometimes it is beneficial to meet face to face, which makes finding a local accountant important.

Qualifications

Chartered accountants are highly qualified professionals who have completed a degree level training and are subject to professional standard requirements.

You could save money by using a bookkeeper, but they will not have the breadth of financial knowledge of an accountant. If you want your company to grow, you will need the expert advice of an accountant. You may want detailed business plans with sales forecasts in order to get a loan or investment, or need to purchase new premises and equipment. These are many financial decisions to make when running a successful company. An accountant can help you make informed financial decisions.

Relevant experience

It is useful to use an accountant that has knowledge of your business sector. For example medical companies, doctors and dentists need an accountant who is familiar with NHS pensions and other financial issues in the health sector.

If you own a large company, you need an accountant who has experience with large company finances.

You can ask an account for a list of their clients to confirm that they have experience relevant to your business.

Recommendations

You can talk to business contacts and other business owners about which accountant they use and recommend.

At networking events, ask fellow business owners about the accountants in Liverpool they recommend.

Social

Ask your LinkedIn and Facebook connections about who they use. Many accountants have social media accounts, so check them out to get a sense of what they are like.

Face-to-face

When you have found what appears to be a good accountant, arrange a meeting to talk to them in person. Your relationship with your accountant can be a long one, so it helps to hire one that you get along with. At a face-to-face meeting you can establish if the accountant understands your business and its financial structure.

Fees

All accountants in Liverpool charge fees, some more than others, so don’t necessarily go for the cheapest accountant you can find. It is worth paying extra for a better accountant, especially if they can save you tax payments, and improve the financial stability of your business. The extra money you pay a top accountant can be recouped in the money they can save and the extra profits they can help you generate.

The are many accountants in Liverpool, and that’s not surprising when as a metropolitan area, it has a population in excess of two million. It is important to choose the best one for you and your business.

Four tax issues for contractors to be aware of

Liverpool is enjoying a surge of new SMEs and startups, but all contractors need to be aware of tax issues that may affect them. Contractor accountants in Liverpool will be able to deal with all these issues for them, but it helps to know what they are.

1. Section 660

Section 660 deals with situations where income given to one person is passed on to another. This is often referred to as a “settlement”.

An example where contractors have used this principle is when they set up two companies with their partners and transferred some of their income to the other company via dividends to non-working individuals.

HMRC believes that this arrangement is designed to evade tax, and can look at the accounts for the past six years and send a large tax bill to people who are swerving tax in this way.

If you are a contractor that has been paying money as dividends to a lower rate paying partner when they are a higher rate taxpayer, then it is important to get advice from an accountant who will help you deal with HMRC

2. IR35

IR35 is legislation that is designed to stop tax avoidance by workers who supply services to companies via an intermediary company, but who would be classed as an employee if they did not use the company. HMRC regards these as ‘disguised employees’. Changing the status to an employee can result in paying higher tax.

Genuine contractors, freelancers and consultants who have a legitimate business should not be affected by IR35. However, to make sure, consult a contractor accountant,

3. Childcare

Many contractors know most of the items and expenses that they can claim against their tax liability, but not everyone knows that childcare costs can be claimed for.

Tax rule changes in 2005 made childcare vouchers non-taxable. According to accountant Claire Jolly:

“Both contractors employed by their own limited company and umbrella company contractors can qualify for childcare vouchers. Yet many contractors with families don’t take advantage of this valuable tax break because the scheme isn’t widely publicised.”

Vouchers up to the value of £55 per week are tax free. To qualify, the child or stepchild must be maintained in full or part by the contractor or employee, and be resident with them.

4. Avoidance and evasion

Tax avoidance is the term for legal strategies for reducing tax. These can range from pension investing to offshore tax avoidance schemes. Some of them are controversial, but your contractor accountants can advise on the safe and worthwhile tax avoidance schemes.

Tax evasion, on the other hand, is illegal and no reputable accountant will advise you to do this.

Sometimes, tax avoidance schemes are declared invalid by HMRC and are shut down. The HMRC may claim back tax for the tax avoided.

Contractors need to be aware of any risks before using tax avoidance schemes. An accountant will be able to advise on this.

Tax is complicated,which is why it helps to use a contractor accountant in Liverpool and focus on earning a living, rather than tax issues.

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