Contractors who are new to contracting, or employees considering becoming contractors, may find that HMRC’s pre-recorded webinar series provides them with an introduction to the basic requirements of starting and running a contracting business.
Although they provide valuable knowledge and background, particularly about record keeping and director’s responsibilities, in practice most contractors will find that their accountant performs many of the tasks explained in the webinars.
HMRC webinars available
There are approaching 30 webinars currently available and HMRC is adding new content on an ongoing basis. Each webinar is roughly twenty minutes in length and they can be downloaded so contractors can watch the presentation and listen to the commentary at their own pace.
The introductory webinars that contractors may find particularly useful are all accessible via a simple registration process, and include:
These webinars can all be streamed or downloaded to watch later.
‘Self-employment and HMRC – what you need to know’
For budding contractors completely new to the idea of starting and running a business, Self-employment and HMRC – what you need to know is a particularly useful introduction to the types of trading options available
The webinar is heavily sole trader and partnerships focused, which means some of the content will not be relevant to the vast majority of contractors, who typically choose to trade via a limited company.
However, this webinar does provide valuable information about the basics of business profit, registering with HMRC, tax in its various forms, the concept of self-assessment tax returns and filing online and different types of National Insurance Contributions (NICs).
There is also a useful overview of recordkeeping, covering what business records contractors must retain, how to store them, and for how long.
As the vast majority of contractors choosing to run a contracting business via a limited company will be a director of their business, it is essential that they understand the responsibilities that come with the role
The summary of expenses and allowances provides a good overview, but contractors opting to trade via a limited company should ensure they view the webinar about Expenses and benefits for employers. This is because contractors trading via a limited company are employees of their business and are subject to the expenses rules affecting employees.
‘Company Directors – your responsibilities to HMRC’
One of the most useful webinars is about directors’ responsibilities. As the vast majority of contractors choosing to run a contracting business via a limited company will be a director of their business, it is essential that they understand the responsibilities that come with the role.
From the outset, HMRC suggests that company directors might wish to consult an accountant or tax adviser. Contractors are ultimately responsible for ensuring they and their company are compliant and a contractor accountant will play a huge part in making sure this happens.
In addition to highlighting how shares, profits and dividends work, this webinar explains the basics of Pay As You Earn (PAYE) income tax and employee/employer NICs.
Contractors are also told how to calculate when corporation tax should be paid and when the corporation tax return should be submitted. Again, in practice, a contractor accountant would normally manage both corporation and personal self assessment tax returns on behalf of their contractor clients.
Intermediaries and IR35
Intermediaries, service companies and IR35 get a mention, but the HMRC presenter highlights that this is a complex topic and contractors should seek professional advice to determine whether it applies.
Alongside expenses, the tax legislation known as IR35 is probably the most important issue that new contractors must get to grips with as soon as they begin their contracting careers.
The consequences of getting IR35 wrong could be very costly and time consuming, potentially losing contractors up to 25% of their net pay. Contractors can calculate the impact of IR35 on their earnings by using Contractor Calculator’s IR35 Calculator.
Contractors new to IR35 can find a wealth of IR35 resources and guides on this website and can take Contractor Calculator’s Free Online IR35 Status Test for Contractors to determine whether IR35 is likely to affect them.