I have been approached by a class 2 driver who wanted to operate as a limited company. I thought that only class 1 driver can operate in this way. I then phoned few recruitment agencies and they confirmed that they do take class 2 drivers as limited companies all the time. Can you please advise if this is right? Thank you.
Perhaps for the benefit of the rest of the viewing professionals on here you maybe should explain the difference between class 1 and class 2.
Perhaps it would also be useful to have some additional information to go on.
Recruitment agencies employ stupid people who do not know about tax and the workings of IR35!
I would suggest you rewiew this guys circumstances in line with IR35 guidance or pass this client on to an Accountant who can provide the advice and necessary warnings based on the individual facts of the case, which seem to be hugely lacking here.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I think you need to find out why this guy wants to operate a Ltd Co. As Joanne has said IR35 immediately springs to mind.
The two main advantages of a Contractor operating a Ltd Co, flat rate VAT and legal avoidance of NI contributions, have both been curtailed by the Govt.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
hello, that was just a general question and expected general answer - guidance, pointing into a right direction since every case is different.....
I work on a part time basis for a small company and I do not make decisions regarding accepting potential clients or not, I process information given. I'm still learning and doing AAT course and therefore I wouldn't even dream about giving professional advices, BUT I do like digging subjects by myself for my own curiosity and knowledge building, surfing through internet or asking on a forum like this one. This all is building my knowledge, which one day will become useful. I thought there was no harm in asking and I did not realise that my question may offend someone's professionalism. I don't understand such an angry answer.
I was approached by a friend of a friend on a social grounds and out of curiosity I started to research the subject by myself (including posting a question here).
Generally speaking if there is no haulage (as an asset on balance sheet) they should not be operating as a limited company providing only a service of driving, whether it is class 1 or class2. The main difference between class 1 and class 2 (without going into depths) is the loading I would say, but I may be mistaken here. AGAIN, this is just generally speaking , as every case is different.
This guy was told by recruitment agencies (3 or 4) to start limited company and they would pay him better rates. That is how it all started.
Recruitment consultants are not trained on the IR35 as a part of their job, but they do what they are told. I would not call them stupid for that to be honest, as it should be tackled at the higher level and passed onto the consultants by a manager/director who would be responsible for a training and updates.....
Thank you for your time
hello, that was just a general question and expected general answer - guidance, pointing into a right direction since every case is different.....
Thing is as you know, there are no general answers.
What a lot of people don't realise is that employment/self employment/IR35 is not determined on a person by person case, it is determined on a job by job case. It is perfectly possible for someone to operate as a self employed person/limited company on one job but be classed as an employee on another job.
I work for a building contractor and every week, without fail I get calls from recruitment agencies peddling their services telling me our company can use these so called sub-contractors without being liable to employment rights when I know this is NOT the case due to the nature of the work they would be undertaking.
There is a checklist of questions which covers things like, do they provide their own materials & equipment, do they take financial risk (eg quote for jobs rather than being paid by the hour) can they carry out the tasks in the timescale they choose (within a deadline) and do they have the right to send a different suitable qualified person in their place. Its an area that a lot of accounts people think they know about (and in terms of the tax/financial implications they do) but really its an area that employment law experts should advise on (of which I am not one in a previous role I used to get advice from such a specialist which may be slightly out of date now). The financial penalties for employing such a worker and not paying employers NI, holiday pay and sickness benefits can be severe.
-- Edited by pictures on Friday 10th of November 2017 11:15:04 AM
hello, that was just a general question and expected general answer - guidance, pointing into a right direction since every case is different.....
I work on a part time basis for a small company and I do not make decisions regarding accepting potential clients or not,
I have been approached by a class 2 driver who wanted to operate as a limited company. I thought that only class 1 driver can operate in this way.
That sounds more like a specific question to me, and suggested that you were the decision maker, seeking guidance on a specific situation. A more honest approach to your question would no doubt have resulted in a different response. The response you got from Joanne wasn't rude, but was incredulous at the question being asked, understandably
Anyone can set up a Ltd Co, but in a contractor situation such as this, IR35 has to be considered. Julie has given you a good explanation above.
__________________
John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
I have been approached by a class 2 driver who wanted to operate as a limited company. I thought that only class 1 driver can operate in this way. I then phoned few recruitment agencies and they confirmed that they do take class 2 drivers as limited companies all the time. Can you please advise if this is right? Thank you.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
hello, that was just a general question and expected general answer - guidance, pointing into a right direction since every case is different..... I work on a part time basis for a small company and I do not make decisions regarding accepting potential clients or not, I process information given. I'm still learning and doing AAT course and therefore I wouldn't even dream about giving professional advices, BUT I do like digging subjects by myself for my own curiosity and knowledge building, surfing through internet or asking on a forum like this one. This all is building my knowledge, which one day will become useful. I thought there was no harm in asking and I did not realise that my question may offend someone's professionalism. I don't understand such an angry answer. I was approached by a friend of a friend on a social grounds and out of curiosity I started to research the subject by myself (including posting a question here). Generally speaking if there is no haulage (as an asset on balance sheet) they should not be operating as a limited company providing only a service of driving, whether it is class 1 or class2. The main difference between class 1 and class 2 (without going into depths) is the loading I would say, but I may be mistaken here. AGAIN, this is just generally speaking , as every case is different. This guy was told by recruitment agencies (3 or 4) to start limited company and they would pay him better rates. That is how it all started. Recruitment consultants are not trained on the IR35 as a part of their job, but they do what they are told. I would not call them stupid for that to be honest, as it should be tackled at the higher level and passed onto the consultants by a manager/director who would be responsible for a training and updates..... Thank you for your time
Just to put things straight Ellie, I was in no way annoyed by your question at all, so you did not get an angry response. John has used the totally correct word - incredulity. It was asked as a very specific question, rather than a general question and as Julie rightly points out there are no general answers for such. Plus you will note that I did try to get you to flush out your request, for the benefit of the other professionals on here who might wish to answer, asking you to explain the differences between the classes of drivers, because you have made the assumption (perhaps without realising it) that anyone looking at your question knows the difference between the two.
Now, a great thing wouldve been to have added some of the detail you have now added as above as that would have elicited a completely different response.
That said there are a couple of other things within the above which I must comment on:-
- I did in fact say that recruitment agencies employ stupid people, I did not say because they do not know about IR35 that that in it self makes them stupid. Although I do agree that the powers that be within such organisations should not be allowing such rubbish to be touted by their businesses nor any of their staff. As Julie mentions this is clearly a widespread issue amongst certain sectors of that 'profession'.
- Your word 'expected' as in expected a general answer Im hoping was just a error of judgement in the use of the word, given perhaps you were angered by my response. Given everyone who responds on here (and lets face it there are not that many of us) actually give their time and knowledge completely for free, I would think that expecting an answer is a wee bit unfair.
- Your original question was a closed question looking for a yes or no answer, which as you know can generally speaking not be the case in such questions, so therefore merited a much more in depth comment. Given the subject matter is complex, it seems that whoever would choose to answer is doing a lot of input legwork work based on a two line question, ie not of a lot of output, which as John also says has a different slant to the one you are now suggesting.
Perhaps you can advise what reading you have done so far, then perhaps folk would be happy to post some additional useful reading, in addition to that supplied by Julie already, which will help with your CPD. Saves duplicating effort as we are all busy people.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
