Providing consultancy for a local authority many not be as straightforward as you imagine, writes Jono Wilson of Barnett & Turner. If you’re running a limited company and are offered a contract to provide consultancy to a council, the supply of those services is covered by the ‘intermediaries legislation’ – also known as IR35. This means that if it is decided that you are actually an employee, the company’s income could be taxed as employment income and subject to PAYE and national insurance.
How should you approach the issue?
First of all, you should have a contract with the council about your arrangement to provide services, which records the risks and duties of the engagement and the details of control your customer has over how you carry out the work. This contract and the actual arrangement will be considered in determining your employment status, so make sure you talk about it with your adviser beforehand.
What additional requirements are there?
From April 2017, public-sector bodies had to ensure that contractors providing their services through a limited company are operating under the correct employment status. The body – or agency, if applicable – will decide this using a set of tests, the details of which are yet to be announced. If these tests determine that the contractor should be an employee, then the income will be subject to PAYE and National Insurance. Again, talk to your accountant and ensure that you keep up to date with the latest developments.
If you would like to discuss anything related to this article please do not hesitate to call Barnett & Turner on 01623 659659 or email Jonathan at jwilson@barnettandturner.co.uk