Contractor Tax Issues

Contractor Tax Issues It is imprtant to resolve your tax issues when you have them. The best way to dp that is to talk to your Accountant. Many contractors hide away from their Accountant when they have tax problems but this is the very time when you need your Accountant most. Keep in regular touch with him or her. [caption id="attachment_884" align="alignnone" width="275"] Best Accountancy Advice for contractors[/caption] Inside IR35 or Outside IR35 Also, one of the most important success factors for contractors is to determine if you are inside IR35 or outside IR35. It is crucial to get that tax issue right or you could have major problems. If you are caught by IR35 but use a personal service company you could be in terrible trouble with the taxman if you are caught. You could end up with an IR35 investigation lasting several years ending in you having to pay up tens of thousands of pounds in back tax. [caption id="attachment_878" align="alignnone" width="218"] Contractor Umbrella Companies which avoid IR35 tax[/caption] Using an Umbrella Company Unnecessarily. If you are outside of IR35, but operate through an umbrella company, you could be losing a lot of money. Prsonal service company contractors pay an average of £10,000 a year less tax than umbrella company contractors. That will be increased now that umbrella companies cannot offset travel and subsistence against tax for their contractors from April next year. That could make the differential as much as £15,000 a year now. That would mount up over a few years especially if the savings were magnified. So, it is very important from the start to decide what yor IR35 status is and whether you are outside or inside IR35. [caption id="attachment_921" align="alignnone" width="225"] Contractor Tax Issues - Keep in Touch with your Accountant[/caption]