If in the near future there is the possibility of setting up as a Freelancer Limited Company, then a set of procedures will be imposed to ensure that no one abuses the system and that everyone can be tracked.
There would be a registrar that freelancers would need to join, and to register the freelancer in question would also need to classify or nominate themselves as the Freelancer Limited Companies sole operator and single shareholder, as no spouses are allowed. There must be proof that a fair split between pay and dividend payments has been implemented and in return, FLC’s could be exempt from many of the nasty bits from the IR35 legislation. Already determined exclusions include the need to supply a substitute and the need to have multiple customers at any time. Further advantages of a Freelancer Limited Company could include limited liability status, abridged accounting and the aspect of registering for benefits if between contracts.
Freelancer Limited Company Benefits
Freelancer Limited Company owners will also be able to gain tax credits for parental leave (maternity, paternity), time off due to sickness or illness and, perhaps, holiday time. Furthermore, other traits from limited companies will be passed across such as the ability to claim a wider array of expenses and even employ fellow staff members.
However, the requirement to prove the contract that the Freelancer Limited Company has undertaken is not an employment contract will still be in place. Many claim that new legislation is not needed; Her Majesties Revenue and Customs merely need to update their rules and regulations accordingly.
There are some complications, such as ensuring that lower-paid freelancers and part-time or vulnerable contractors are not enforced into setting up a Freelancer Limited Company if it is against their financial benefit.
There is firm belief across the board that a Freelancer Limited Company will offer solid certainty for statuses in regards to employment and taxation. This is alongside the current existing tax laws and employment regulations already in place for a standard limited company.
There is also outcry for it to become recognized that persons choose to work freelance or as a contractor not for tax evasion purposes but instead for business and professional reasons. This reform and creation of Freelancer Limited Companies may be the end to the argument that many have been waiting on for an overly long time.
For more information on Contractor Accountants or Limited Company V Umbrella visit the Euro Accountancy & Finance Services website.
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