I have been approached by a potential client, a long distance lorry driver who trades under a Ltd Company. The PC works for one haulage firm.
The present accountant charges a weekly fee and offsets the flat rate VAT element against future accountancy fees. The weekly fee consists of managing all invoicing and administration duties of the Ltd Company. As far as I am aware the Ltd company is not presently treated as a PSC.
I strongly suspect this is going to come under IR35 so am I right in thinking that the Ltd Company would invoice the "employer" but that the invoice amount would be treated as paye for tax purposes, subject to 5% plus any normal deductions that would be allowed if they were an employee?
If I was to take on this client, I would do the invoicing, bookkeeping aspects and other necessary admin duties, and then let an accountant do the end of year accounts. Would the bookkeeping and accountancy fees be tax deductible? I suspect not (I think that's what the 5% is for.
Regarding the VAT, would the VAT "rebate" also need to be taxed as if it was PAYE income, or would this be other income and be subject to Corporation Tax?
__________________
John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
