Contractor Tax Mistakes
Gerry McLaughlin wrote “Killer Contractor Tax Mistakes that are the Downfall of UK Contractors”.
An IT accountant tells us the worst financial contractor tax mistakes that UK contractors regularly make. Heed this, so you don’t not make any of these.
1) Spending VAT or tax money
- easily overcome by putting away a set amount or percentage each month.
2) Not contacting an accountant at the outset
- can leave a UK contractor in all sorts of problems and is often related to item 1 above.
3) Not having their contracts read over
- IR35 is still around, this is a must.
4) Paying too much for accountancy services
- there are still UK contractors that are paying over £1,000 per year for the same service as a contractor specialist who would charge about £60 per month.
5) Completing tax returns (personal, company) themselves
- this should be included in your accountancy fees.
6) Weighing up
which is best their own circumstances between ltd co, brolly or other routes – each contract/individual is different. So, seek advice and make up your own mind.
7) Banking facilities
- each company is different and as such the requirements for banking are different. For example, if maintaining a balance in excess of £5k, there are those offering accounts with no charges and a higher rate of interest.
8) Paying minimum salaries
- although can be on bad advice, is not the way to go and will, therefore, attract the attention of the authorities.
9) Not sending through accounts/tax info in time
- in order to prepare figures, the information needs to be sent through in a timely manner.
Bearing in mind, therefore, that many accountants have in excess of 500 clients, it’s very difficult to chase all outstanding books.
10) Not seeking advice
- there’s nothing wrong with asking an accountant/adviser for advice and sorting out any niggles before they become problems. Many accountants will provide free advice in the hope
that you’ll become a client of their’s so abuse the hospitality.
So, those are the 10 Killer Contractor tax Mistakes that they make. If you don’t want to make those killer mistakes too, follow the advice above.
If you want to cut your Accountancy costs, and are not afraid of using technology (apps), have a look at Aardvark Accounting.