From the 4th January 2011, the standard rate of VAT will increase from 17.5% to 20%.

The increase will also affect the rate at which those on the Flat Rate Scheme (FRS) pay VAT.

For example, a typical IT contractor’s rate of 13% will be raised to 14.5% -  this will result in many being slightly better off.

For example at present, an invoice of £1000 would be charged to the client at £1175, but the amount paid over to the revenue would be £1175*13%=£152.75 – giving an amount retained of £1022.75.  From 4th Jan 2011, the gross amount charged to the client would be £1200, with the amount due to HMRC being £1200*FRS14.5=£174, leaving a retained amount to the contractor of £1026.

The AccountsNet online system will automatically account for and produce VAT returns based on the amended rate for both FRS and non-FRS clients.

Clients use a 256-bit SSL encrypted system to access and update their account information using a unique username and password. This ensures that the data is not altered and cannot be read by anyone whilst being sent to our servers.

We do not disclose, rent or sell any personal information of any kind, to any third parties, for any purpose whatsoever.

To comply with Money Laundering Regulations 2007, we use an electronic verification system to confirm new clients identity.

AccountsNet Chartered Accountants are registered under the Data Protection Act and any personal information we hold is used solely for the purposes of providing accountancy and taxation services.

We provide detailed advice and support to our clients as well as a fully integrated online accountancy system, within a secured area of the site.

1 Definitions
“we”, “us” and “our” means AccountsNet Chartered Accountants Limited
“client”, “you”, “your”, “your company” and “directors” will be used for the client in all cases throughout.
We reserve the right to alter these terms and conditions at any time giving you 30 days notice.

2 Our Services
2.1 We will undertake all reasonable aspects of your company’s accountancy and taxation requirements. A list of services and our fees are available on the website.
2.2 Any additional services outwith that agreed may incur additional charges which will be confirmed and agreed in writing prior to commencement.
2.3 We do not undertake responsibility for and in respect of any matters arising from services or information provided by any previous suppliers of accountacy services.
2.4 We are not authorised to and do not give investment advice and we shall have no liability whatsoever to you in connection with investment advisory matters.

3 Your obligations
3.1 You are legally responsible for making correct returns, by the due date and for making tax payments on time. If you fail to meet any deadlines you may incur automatic penalties, surcharges and / or interest charges.
To enable us to carry out work on your behalf you agree to:
3.2 Undertake to ensure that you provide full information and documentation and that all such material provides full disclosure of all sources of income, charges, allowances and capital transactions and that the information you provide to us or that is provided to us on your behalf is complete, true and accurate, and relevant to you, your company and/or your respective affairs.
3.3 Ensure that you keep us informed of any change of address, telephone or email.
3.4 Send us all relevant transaction information on a monthly or yearly basis using our secure online facilities.
3.5 Upon receipt, forward all copies of Inland Revenue statements of all correspondence received from HM Customs and Revenue and Companies House to enable us to deal with them as necessary and within the statutory time limits.
3.6 Regularly check for communications from us so that you are fully aware of any changes in the services that are to be implemented.
3.7 Agree to indemnify us in respect of any losses or damages suffered by us as a result of any misrepresentations or any dishonesty and/or fraudulent behavior on your part or that of others providing information to us on your behalf.

4 Fees
4.1 In all cases the agreed fee must be paid monthly or on receipt of invoice.
4.2 For monthly services, the payment method used is Direct Debit.
4.3 You will be given at least 30 days notice of any change taking place to the agreed fee structure.
4.4 Transfer fees are applicable if you wish to transfer to us part way through your business year. The transfer of the first 3 months is free of charge, the remaining months will incurr a fee. Payment will be spread over the remaining months of your business year and our standard payment terms will apply.
4.5 You will be invoiced separately for any additional fees incurred that fall outside your agreed service levels, for example, HM Custom and Revenue enquiries. These fees will be agreed with you in advance and invoices are to be paid within 30 days of the invoice date by cheque, BACs or Direct Debit.
4.6 All fees are fixed and there will be no reductions or refunds for services not utilised.
4.7 In the event you become more than 60 days in arrears, in respect of your fees, we reserve the right to suspend our service to you which includes access to your online account until all outstanding fees are paid.

5 Termination
5.1 Either party can terminate the supply of this service at any time providing written notice is given. The termination becomes effective at the beginning of the next billing cycle following cancellation of your direct debit.
5.2 In the event of termination, no charge will be applied for closing down your business or transferring to another accountant.
5.3 We reserve to right to hold all records and information until full payment of any arrears is made.
5.4 In the event of termination we will undertake subject to the above terms to provide all records (including up to date accounts) up to the specified date of termination. We shall only prepare and provide statutory accounts in respect of a particular financial year if you were a client as at the end of such financial year.

6 Security
6.1 It is your responsibility to keep your username and password confidential and not divulge it to any third parties.
6.2 We will not be responsible for any viruses passing through our website or through email although we will use the latest technology to prevent this happening where possible. It is the responsibility of the recipient to carry out a virus check on any attachments received.
6.3 Client data is held on servers located within secure facilities conforming to the highest industry standards for security and authentication.
6.4 We use industry standard 128-bit SSL encryption to ensure that all communications between the client browser and our servers is secure.
6.5 We undertake that your data will be held in confidence and will never be given or sold to any third parties under any circumstances.

Changes to terms of use
AccountsNet Limited reserves the right to make changes to these terms of use at any time, and by visiting our website you agree to the current terms of use.

7 Warranties and Exclusions
7.1 Any advice we give to you is for your sole use and does not constitute advice to any third party with whom you may communicate it to.
7.2 We shall not be liable for any losses, penalties, surcharges, interest or additional tax or loss of use of software or data or for any indirect, consequential or special losses whatsoever and howsoever arising from the services provided by us to you or your inability to use or access the services.
7.3 We are not responsible for any delay or failure in carrying out our services under this agreement for reasons beyond our reasonable control including but not limited to the acts or omissions of a third party, your failure to perform your obligations, including the supply of information, your failure to act on our advice or respond promptly to communications from us or the tax authorities, government action or any other major event.
7.4 Nothing in this agreement shall serve to limit or exclude our liability in respect of fraud or in respect of death or personal injury caused by our negligence.
7.5 The entirety of this clause shall survive the termination of this agreement for whatever reason.

8 Retention of Records
8.1 During the course of our work we will collect information from you and others acting on your behalf and will return any original documents to you following preparation of your accounts and/or returns. You should retain these records for a period of 6 years from the 31 January following the end of the tax year. This period may be extended if there is an enquiry into your tax affairs.
8.2 Certain documents may legally belong to you but we intend to destroy correspondence and other papers we store which are more than 7 years old, unless the documents are deemed by ourselves to be of continuing significance. You must tell us if you require retention of a particular document

AccountsNet attained PCG accreditation in 2005, and since then have advised hundreds of freelancers on contract defences against IR35.

In all cases, our aim is to ensure that you operate in as tax efficient manner as possible through regular reviews and ongoing support. We realise that being able to work effectively with your accountant is of paramount importance to any business, and our focus is always on building strong links with each client we have.

Not All Accountants Are The Same

In choosing an accountant, it makes sense to check that they have the necessary qualifications to do the job. Unfortunately, there is nothing to stop anyone calling themselves an “accountant”, and setting up in business – we’ve had many people over the years coming to us to sort out incorrect advice which has resulted in over or under paid tax. Look for a firm that has “CA” or “ACCA” in its name, otherwise, the professional standard you need cannot be guaranteed.

AccountsNet are the best contractor accountant to offer expert qualified advice.

IT Contractor Accountant

Next on your checklist should be how much experience the firm has in the contracting marketplace. Are they PCG accredited, do they provide comprehensive IR35 contract reviews, do freelancers represent a large proportion of thier current clients numbers. These are all pointers that you are dealing with a knowledgeable firm that can address any issues that may arise during the course of your contracting career.

For experienced contractors, a switch to AccountsNet offers great savings in terms of costs and reduced admin time – our system handles  running employee payroll, creating vat returns, tracking reimbursements, working out correct car mileage expenses etc.

Our Standards of Service

We believe that when clients call, they  should be able to speak with a familiar and qualified member of staff.  We don’t think that’s its acceptable to try and communicate with an ‘account manager’ who screens calls. Equally so, we know from our experience, that clients don’t want to waste  time and money travelling to some city centre office for an appointment. It’s far more productive for everyone to use technology to communicate effectively.

The whole Package

The internet has changed the way that most people work, from banking or booking holidays to shopping. Its fairly strange then, that so many contractors are forced to email  spreadsheets around or have to shell out themselves for third party online software.

Because of our online presence, we have clients using our service throughout the UK, and are listed as contractor accountants London.

AccountsNet have always provided a comprehensive and complimentary purpose build system to our clients, so you know exactly where you stand with things like vat, income tax and company profits.

Get in Touch

If you are first moving into contracting, or are unhappy with your current setup, then don’t hesitate to contact us.

We are accredited, comprehensive and professional UK contractor accountants. It’s simple to move to AccountsNet as we  handle all aspects of the transfer, with no setup or exit fees involved.

To make the transition hassle free, it’s a good idea to use a provider who has experience in in all aspects of the move, that way, you can have peace of mind that decisions you make at an early stage will be the right ones, for example:

• Finding a suitable name for your company
• Checking the agency contract terms and conditions
• Sorting out business insurances
• Getting a company bank account setup

Behind each of the above however, is a level of detail you should be aware of, to ensure that your first venture into business runs smoothly.

Limited Company Set-up

There are many firms who register limited companies, but one of the most important factors is to ensure, from the outset, that the share allocation is structured to minimise your overall tax liability.  AccountsNet will take the time to find out your long term plans for additional directors and employees, and from this we will structure the share allocation accordingly. In addition, your company must be registered for PAYE and, optionally, VAT. Again these are details which we take care of as part of our company start-up fee

Working out your IR35 Status

Your contract must reflect the way in which your relationship with the client will work in practise. However, if there are pertinent clauses omitted by the agency, then you could be leaving yourself open to a challenge from HMRC further down the line. This can be very costly in practise, and we always recommend that we conduct a thorough review of your contract. We will then provide a written report detailing any pointers toward / against deemed employment, and also suggestions of how your contract could be strengthened against IR35.

Business Insurances

Most contracts specify that the supplier (your limited company) will possess professional indemnity as well as public & employers liability insurance. These offer protection for your company and employees and are a pointer that you are legitimately in business in your own right. There are specialist providers which cater for freelancers insurances, and they will provide a fixed quotation based on the levels of cover your contract specifies.

Again, we can explain what each of the insurances cover, and what is likely to be needed in your particular circumstance.

Bank Accounts

In order that the agency / client can pay for your company services, you will be required to setup a business bank account in your companies’ name. We generally recommend you consider bank accounts that have no services charges for life such as Santander, but for expediency, you may wish to also use a bank in which you already have a personal account. In this case, you should be able to negotiate a service charge free period of at least a year. Some intermediaries receive payments for persuading clients to open an account at a ‘private bank’, but bear in mind that these banks have a monthly service change – for the privilege of holding your money.

In summary then, AccountsNet will form your limited company within 4 hours of your instruction, register for PAYE & VAT and setup an online account on our system for £100+vat.

Please feel free to contact us today for an initial discussion of your requirements.

However, unless you are only planning to be contracting for less than a few months, this becomes an expensive alternative.

Special Dispensations

In a nutshell, there aren’t any special arrangements to be made with HMRC. Despite what many umbrella companies claim, nobody has negotiated special deals with the tax man, it just doesn’t happen.

What a dispensation is, is an agreement made by the umbrella company to HMRC, that they will enforce a proper internal vetting procedure to ensure that all expense claims made by the employee contractors are legitimate and receipted. Now that’s an important point, because the responsibility for expense claims made falls to the contractor, not the umbrella company.

Tax Planning

If you work through your own limited company, most likely you will take a modest salary, and top up your income with dividends. Dividends, which are a distribution of the company profits, attract no National Insurance, so this is an effective way of extracting money from the company.

The proportion of dividends you receive is in accordance with the amount of shares you hold in the company. This means that if for example a partner is also a shareholder in the business, then they will receive dividends also.

In addition, as company shareholders, you may leave money within the company from one financial year to the next, free from taxation.

None of the above tax planning measures are open to you as an employee of an umbrella company, and instead, all of your income, less real incurred expenses are subject to PAYE  (as well as employers NI).

Summary

Its easy to setup and run your own limited company, and on a typical contract, you will save many thousands of pounds over the year.

Our online system and clear straightforward advice, will ensure that the admin involved is kept to a minimum leaving you time to enjoy the  financial rewards that contracting offers.

In reality, there isn’t any such thing as a permanent job these days, and many of the perks of being an employee such as final salary pensions, have all but disappeared.

Indeed, with so many firms now seeing contractors as a cost efficient way of maintaining a workforce, its inevitable that the sector will continue to grow.

Financial benefits

Extra money is seen as the most obvious advantage of contracting, and rightly so, as this is the only reason you are working in the first place.

As a contactor you can expect to:

• Earn significantly more than if you were working full time.
• Be tax efficient, working through your own limited company is the best way possible of keeping the biggest slice of your income.
• Get paid for each and every hour you work.
• Offset all business expenses to reduce your tax bill.

Skills development

As a contractor, you will find yourself working with many different types of companies, in different areas of expertise. This will enable you to:

• Get exposed to new processes and ways of working.
• Advance your career without being limited to one employer’s procedures.
• Gain the confidence to undertake new challenges.

Flexibility

Leaving permanent employment and going contracting means that you can:

• Work all or part of the year.
• Have several clients for extra job security.
• Agree more favourable working arrangements.

All of this makes you more valuable to potential employers and with every contract completed, your CV will reflect the increased breadth of experience you have gained.

So, what are the downsides of contracting? Well, that depends on how you look at things, for example you won’t have long term colleagues in the same organisation, but instead should build up a network of contracting contacts. You won’t be in line for employee perks but the extra money earned means that you can treat yourself in any case.

If you are thinking of going contracting or already have an accountant but are not getting the service you expect, please get in touch with AccountsNet today.

Please feel free to contact us, if you have anything that is not here or if you wish to discuss things in more detail, then we are happy to do that.

Company start-ups, contract reviews, accounts transfers, tax planning, fully qualified staff, award-winning service.

What will be my take home pay?

Not surprisingly, this is top of the list of questions we receive. As a general rule of thumb based on correct tax planning, you will be able to take home between 75%-80% of your contract rate.

Whats the admin involved in running my own limited company?

Its true that you need to allocate a regular amount of time to admin tasks such as entering your income and expenses into our online system But averaged out, this should amount to less than an hour each month.

Should I use an umbrella company?

It is your choice as to whether you opt to run your own limited company or just use an umbrella. However, the tax advantages of having your own company far outweigh the small amount of extra admin involved.  As a ballpark figure, on a rate of £300 per day, you could be better off by around £1,000 per month by running your own limited company.

In general terms, umbrella companies only really make sense if you plan to contract for a short period of time, so only want to incur charges for the months you work.

What expenses can I claim?

You can claim all expenses that are incurred wholly and exclusively as part of running your business. These include purchase of hardware and software, travel and accommodation, professional fees, office expenses etc. As a new client AccountsNet will provide a detailed list of expenses that you can legitimately claim to offset any tax due.

What is the Flat Rate VAT Scheme?

The FRS was introduced to simplify checking of returns by HMRC. Although It is an optional scheme, we advise most of our clients to join, as it can result in a substantial saving each quarter. However, as always, we look at each individual circumstance to ensure that the timing is correct to move to the scheme.

How do I get paid by my company?

You can take money from the company by claiming expenses, paying a salary and topping up your income with dividends.  On an individual basis, we will advise you on the most tax efficient strategy.

Why should I choose AccountsNet

We offer traditional service levels coupled with new technology. For example, when you call you will always deal with qualified accountants rather than ‘contact managers’. We will always reply to emails the same day. We have over ten years experience working with contractors in all sectors. In addition, we have a fully online system which will hold a permanent record or income, expenses, payroll, reimbursements, vat returns, year end completions and much more.

If you initially pay the expense yourself, for example car parking charges or travel cards, then our online system tracks these, and at the end of each month you can write yourself a cheque for total amount as a reimbursement from your company back to you.

When a client first joins us, we supply a detailed guide to valid claimable expenses, but as a introduction, we set out below some expenses which fall into the category as wholly allowable.

In all cases, it should be stressed that any claim you make should be backed up with valid receipts. We do not need to see these, but should a revenue inspection be called, they will be required.

Start-up costs

These include company start-up fees, travel to interviews and any stationery or postage involved.

Subsistence

You may claim any meal costs incurred whist performing your business. Examples of these are lunch or dinner bills.

Travel Expenses

Firstly, if you use your own car to perform business duties, for instance travelling to/from your place of work, then you may claim 45p per mile for the first 10,000 miles and 25p per mile thereafter.  Motorcycle (24p per mile) and bicycle (20p per mile) can also be claimed.  In addition, all receipted public transport is allowable such as train, taxis and flights.

Accomodation

Hotel costs and B&B expenses are fully deductible, as are associated meals. It should be stressed again that these must be reasonable costs as the single most reason for HMRC investigations are disproportionate bills being put through a company.

Equipment

Costs of equipment such as hardware and software etc, needed to run the business can be reclaimed.

Training

Provided the training you receive is exclusively required for you to perform your duties within the company, then these costs may be claimed.

Pensions

You can put some of your income into a company pension scheme. This is entirely tax deductible, so for a higher rate tax payer investing £100, £40 of it is effectively paid by the tax man. In addition there are reduced rate employers and employees NI rates for those paying into a company pension, thus making it one of the few tax breaks left.

There are also various proportions of household utility bills that can be justified in certain circumstances and as mentioned, these are explained in detail on our client expenses document.