Do you have a direct line to your contractor accountant?

Imagine going to your doctor’s surgery, only to speak to an unqualified person who can’t help and can only pass your questions onto a doctor as and when they’re free. Now imagine paying for that service and constantly having to wait for an answer.


Frustrating? Absolutely! But sadly some contractor accountants offer this exact level of service, whereby your questions and queries are directed through a call centre or unskilled account manager. And at the end of the day, you’re left no closer to having your questions answered…


Account manager and call centre vs Personal Accountant – so what’s the difference?

When hunting for a new contractor accountant, it’s important to ensure you understand how you will be supported during your time as a client. Along with understanding what service you can expect, always ask the question, ‘will I speak to a call centre, account manager, or have a direct line to my Personal Accountant?’


Account managers are just that, they manage correspondence between you and an accountant. When it comes to offering support this is usually on a simplistic level, so for the most part you’ll find yourself waiting for an answer, regardless of how basic your question may be.


Whilst for some this level of service may be satisfactory, for the majority who want detailed and accurate responses right away, this is less than ideal.


Call centres are there to answer the phone and ensure you’re passed onto the correct person. In most cases, this will be an account manager, who will only be able to assist you as far as we’ve outlined above.


Again you’re left in limbo without the answer you need, wondering when an accountant will pass your answer down the chain of contacts – and who will eventually get it to you.


Personal Accountants are exactly what their title implies – you get a qualified expert accountant who is allocated to you from the get go. They’ll familiarise themselves with your accounts, listen to what you want to achieve financially from your contractor pay, and be able to offer advice and guidance based on your goals.


You should be able to speak directly to them whenever you wish, meaning you can always expect an accurate and expert answer straight away, allowing you to get on with what you do best whilst they take care of your accounting. After all, that is their profession!


The Intouch Promise: No call centres or unskilled account managers – just a direct line to your Personal Accountant

Here at Intouch you’ll only ever deal directly with one of our expert Personal Accountants. From the moment you become an Intouch client your accountant’s first job is to get to know you on a personal and professional level. We specialise in contractor accounting and take the time to understand what you want to achieve, explaining how we’re going to help you get there. That’s part of the Intouch Promise.


If you’re ready to speak to our team of expert advisers, give them a call directly on 01202 901 385, or email / live chat us. We look forward to getting you started on your Intouch Accounting journey!


This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

Taylor Review could mean more rights for gig-economy workers

The Taylor Review, a major report on the UK’s working practices, has been published.


Produced by a panel led by Matthew Taylor, a former adviser to Tony Blair, the 115 page document recommends how employment practices need to change in order to keep pace with modern business models.


The report covers all types of work in the UK but could have the most significant impact on the predominantly technology-based businesses such as Deliveroo and Uber, that enable people to work on a per-job basis – known as the gig economy.


The main thrust of the proposed changes is the suggestion that people working for gig economy firms should be treated as ‘Dependant Contractors’ rather than as self-employed, and receive more employment rights as a result.


A ‘Dependant Contractor’ would be someone who “is not an employee, but neither are they genuinely self-employed”. “Ultimately, if it looks and feels like employment, it should have the status and protection of employment,” the report explains.


In reality, if the changes were followed by the Government, it would mean those working for Uber, Deliveroo, TaskRabbit and other similar platforms  should be entitled to sick pay and holiday leave.


Paul Gough, MD of Intouch Accounting shares his thoughts on the Taylor Review:


“Intouch are supportive of the key findings of the Taylor report and consider the provision of employment rights to vulnerable workers a good thing. In the same vein it’s clear that some of the state benefits enjoyed by the self employed are not supported by their National Insurance contributions and an equalisation is equitable.” Intouch’s clients  are predominantly “Knowledge workers” and most unlikely to be under the “Control” of the engager. We also expect that they will fall outside the definition of “Dependent Contractor” which we also think is the right answer. Well done Mr Taylor.”


This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

Accounting software – Great up to a point, but then let people take over

For many years some specialist contractor accountants have developed their own technology solutions to help clients provide data in a format that would enable those providers to deliver great service at a reasonable price. Some use spreadsheets whereas others created their own cloud based systems. The common objective has been to reduce the time spent on obtaining and processing data and to improve the accuracy of input. For the more serious providers this meant more time for personal service (advice and guidance based on personal circumstances). Over time it expanded to meet the ever increasing need for vigilance in an environment where HMRC are increasingly challenging the data.


Technology was simply deemed to be one of the tools of the trade, with some providers having sharper tools than others. As a contractor accountant, and with more than  18 years’ experience I have always believed that if we can harness  the means to deliver compliance work efficiently, by this I mean the outputs that every adviser delivers such as accounts and tax returns, then the door is wide open to broaden personal service to provide value added  advice and guidance. I’ve previously used the explanation of 80% personal service supported by 20% technology many times, to explain what I and we at Intouch consider to be the best “balance” for contractors.


With the growth in online accounting services such as FreeAgent and Xero or the plethora of new entrants such as Pandle coming to market, there is an undeniable change occurring to how clients and accountants rely and depend upon technology to capture and then process data. This will continue to evolve as Making Tax Digital becomes a reality and by 2020 I would expect all small companies to be fully within the embrace of MTD. It’s exciting times, as well as challenging.


The critical question is: “Will technology alone ever to be enough to protect and advise the needs of contractors using personal service companies?” Respected online providers such as FreeAgent have a great product, but alone all it can only ever function as a data collection tool with various levels of integration between the business and personal requirements to file returns online. Without appearing to criticise these providers, the problem I see with current technology is the lack of validation which leaves people with a false sense of security and the risk of filing inaccurate information. This is especially true for new entrants to the sector as experienced contractors are historically more savvy- but even then they must work hard to remain up to date in an ever changing landscape.


Allow me to explain with a very simple example using FreeAgent (whom Intouch respect hugely), you can declare a dividend in FreeAgent and create the necessary documentation. Great news! It even flows through to your tax return data. However, the dividend is not validated against shareholdings and so any amount can be paid and declared as a dividend. If you have more than one shareholder and only one payment it’s very easy to fail to record the dividend correctly. In this example technology can fail unless the user has adequate understanding of the wider ramifications of what they are doing and intervene manually to correct the error.


In my example, a lack of validation allows the data to be recorded incorrectly albeit totally innocently and whilst it is recorded very effectively, it’s still incorrectly reported. It’s the danger with all technology, and often described as “rubbish in rubbish out”. (No offence intended).


So, whilst technology does not fully address the issues of validation and verification at the point of entry we are left with accountants that check the data, wasting expensive resources or poor service providers, simply accepting any data warts and all.


Allow me to cite another common problem. Adding an expense into an accounting system is easy, as is allocating it to one of the nominal expense categories provided. But when are any of the questions asked?


1. Is the expense allowable as a tax deduction?

2. Does the expense include any personal element?

3. Does it count as Relevant Goods for Limited Cost Trader issues?


There are providers in the market that won’t bother asking, they will assume the original answer is correct (even if it looks dubious) and automate the result. This places the entire burden for accuracy, and risk of challenge by HMRC, firmly with the contractor. There are other providers in the supply chain who ask the questions at the end of the year when they do accounts, or when returns are prepared. (Far too late in the day to advise on what amounts are available to draw out safely) there are a few of us who  firmly believe the best time to ask and check for error is when the data is input in the first place.


We therefore resurrect the debate over who is responsible for the validation of data, the client or the accountant or nobody? Is it better to ignore validation altogether, leave it to the last minute, hope for the best, or get it right first time?


I vote for get it right first time.

As pure accounting technology solutions proliferate, and I see the value in this, accountancy providers are likely to fall somewhere between the carers and the care not’s. The caring variety will continue to try to get the right answer, even if it takes more effort, or requires more complex technology, whilst the others can offer a cheaper service and a ‘who cares?’ approach.


You will find increasingly that HMRC care!

I find that when you ask a client “do you want the right answer, or the easy answer?” the answer is “the right answer”; and if clients want the right answer then someone must take the extra steps necessary to understand all of the specific circumstances. This solution is not always delivered by technology, though in time I hope it will be. What it does mean for all of us is that if you (the client) want the right answer, and HMRC expect the right answer, you need to be prepared to provide the right information and have it validated by both the software used for data capture and more importantly by the accountant being paid to protect you. I believe technology should make things easy, but not at the expense of the right answer.


So I conclude that if you require quality answers, alongside planning and guidance, you need personal service in addition to, and supported by technology. If you are experienced and have the time to “self-diagnose”, or worst case the right answers are not important to you, or value of service is measured only in terms of price, then go with a technology only solution. Forget about needing the input of a professional accountant, but you need to recognise that you won’t always get the best result, and may attract unwanted attention from the taxman if he notices.


As always there is a compromise. Personal service and technology should work hand in hand. But I believe that the minute you escalate technology to be your deemed adviser directly at the expense of personal service (the human factor), you risk the wrong answer.


At Intouch our strategy has always been one which provides our clients with 80% professional service from our dedicated personal accountants, supported competently with 20% tailored and contractor specific, self-validating technology.


It does mean a little more effort when you enter data, but actually not that much more, for what you lose on entry you save later on. The balance we have created between technology and the provision of personal service is something we are very proud of and hope to continue. We know it works very well for serious, career and financially minded contractors that hope to get the most out of their contracting lives.


To us, technology is a valuable tool that lets us do our real job of protecting and advising. It allows us to deliver the best personal service whilst we continue to strive to make our technology the sharpest tool in the toolchest. If you’d like to find out more about our comprehensive monthly service, get in touch and speak to an expert adviser today.


This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

Your crib, cafe or coworking space – which is the right professional workspace for you?

As a freelancer or contractor you have the freedom to work exactly where you want. Your office is where you lay your laptop, so effectively any destination can be your professional workspace for the day.


But how do you know which location is the right one for you? Sometimes a little trial and error is in order, but in this blog we set out the pros and cons for each option to help you make the right decision the first time.


Your crib

There are so many positives to working from home. From a 30 second commute and unlimited tea and coffee, to having total control over what music you play, what the temperature is and the lighting. You have total control over your home office environment and don’t have to consult with anyone else.


But whilst working from home can allow you to create the perfect working conditions, it does come with its own negatives. As your home is used for things other than just working, these can have a tendency to creep into your working day. If there’s a pile of washing that needs doing, tonight’s dinner to prepare, or even small children to look after, your professional working time can quickly disappear.


It can also be quite a lonely form of working, as other than the occasional email between you and your client you are usually totally alone. Some thrive in this type of environment, but if this isn’t for you then it’s certainly a point to consider. For top tips on how to create the perfect home office, take a look at our blog.


A cafe

Fresh tea, coffee and cake on tap, a spot of people watching and getting out of the house can be the perfect mixture for some. With a dynamic atmosphere that’s constantly changing, remote working from a cafe could provide you with the perfect environment. But before you grab your keys and laptop and head off to your favourite coffee bean, it’s worth remembering there are some negatives.


You have no control over your environment whatsoever! Noisy customers, bad music, dodgy wifi and lack of privacy can eventually get on top of you, unless you find it easy to block these things out. The ever increasing cafe bill can also mean you’re eating into your profit before you’ve even been paid.


If you’re out and about in London and looking for some inspiration, here are the best independent cafes to work from in the city.


A coworking space

If you’re based in a city and have a healthy network of contractor colleagues, you’re bound to have heard about (or already been to) coworking spaces. The greatest advantage of a coworking space is that everyone is there for the same reason, to get their work done. You’re surrounded by a wealth of creative and contemporary professionals, who you can bounce ideas off as and when you need to. The space is also geared up to offer all the wants of a permanent office, but without the staff and politics.


The drawback is they tend to be more on the expensive side, more than what you’d probably spend in a cafe, and certainly more than if you worked from home. Again, it’s all about finding that balance that works for you and which type of environment helps you get your work done.


They also tend to only be found in cities, so if you’re out in the sticks you may struggle to find one. You can find where the closest one to you is here.


Why stick with one when you can have all three!

If you’re just starting out and not sure which environment is best, or maybe you’ve been contracting for a while and want to shake things up, take a week to try each. You may fall in love with one, or find things from each that you can adopt into your chosen environment.


What makes your workspace the ultimate contracting haven? Do you have any nifty tips that help you get your work done, so you’re free to enjoy your spare time? Share them with us! We’d love to hear how you’ve created the perfect contracting environment.


This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

What makes a successful contractor or freelancer?

What makes a successful contractor or freelancer?


If we were able to provide a magic formula that instantly gave you the success you always dreamt of, we’d be very rich! But sadly your success is down to your own hard work, graft, and pure determination (with a little luck thrown in).


So without a fairy godmother on speed dial or magic beans to fall back on, to what do other freelancers and contractors owe their success? In this blog, we share some feedback from successful Intouch clients, on how they got to where they are today.


Be a success from the outset – take the leap into contracting

Leaving the security that permanent employment provides can be daunting, and takes a lot of courage. But becoming your own boss can be extremely rewarding, as you call the shots, decide on your working hours and who you work for.


Our first contractor insight comes from Intouch client Alex Patron of Ctrl Cee Limited:


“Contracting is a fantastic way to build up your experience in a shorter space than you would if you stayed in permanent employment. Don’t be afraid of change and embrace the freedom contracting provides.”


Variety is certainly the spice of life for contractors and freelancers, as the industry is ever changing and two contracts are never exactly the same. If you want to gather a large amount of experience in a short space of time, then it’s time to consider a contracting career.


Learning new skills and develop existing ones

Fast-tracking the learning of new skills is a huge benefit of contracting. Many of our clients have found that the independence contracting provides allows the freedom to professionally develop their skills and learn at a greater speed than if they were still in permanent employment.


Our second client insight comes from Paul Davies of Sunny Robot Limited:


I’ve only been contracting for a short time, but the benefits have already changed. I am constantly developing myself as a product, and the new skills I’m developing are my main driving force.


By constantly updating and developing your skills you’ll always be a desirable candidate for future clients. The exposure you’ll get from each and every contract you complete will show you what different industries are like, what they need and how you’re able to give it to them. As a contractor or freelancer you’ll never stop learning, and never work the same day twice!


Having the confidence to step out of your comfort zone

From time to time you’ll come across a contract or client that you might consider ‘out of your league’. But if you always stay within your comfort zone you’ll never develop both your professional skills or confidence, and get to the level (and day rate) you truly deserve.


David Martin of Comprehend Solutions Limited shares his beliefs when it comes to being confident in yourself as a contractor:


My advice if you’re considering a career in contracting is to go for it! Have confidence in your choices; if you were successful in permanent employment and enjoy meeting new people then you’ll succeed as a contractor.


Stop wasting your precious time

As a contractor or freelancer you’ll either be busy working on your latest contract, looking for your next client or enjoying your free time – so why waste any of it trying to make sense of your accounts?


Part of being successful is knowing when to ask for help and outsource tasks that take up your time. Enlist the services of a contractor accountant who’s able to help manage your accounts and keep you updated with changes to legislation. Find out today how we can make your life easier, with our all-inclusive monthly service.
Success is yours if you dare to dream and take the leap. Let Intouch be your guide to contracting or freelancing success.


This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

Why client testimonials and referrals are so great and how to get more

Client testimonials and referrals

We are all consumers, and at some point in our lives we’ve been wowed by super slick websites, seduced by a product’s ability to answer our needs, or simply impressed by the marketing efforts that have gone into promoting something. Yet in today’s marketplace, people still rely heavily on reviews – what people actually think of the product or service, and whether they’d recommend it.


The same can be said for freelancers and contractors. Whilst you’d hope that your experience and skills would be enough, some still need to hear the thoughts of others to be convinced you’re up to the task. So how do you achieve more testimonials and referrals from your clients? In this blog, We explore just that, with some top tips every self-employed person can adopt.


Referrals and trust – one cannot exist without the other

As a testimonial and referral is an insight into someone’s personal thoughts and feelings, a certain level of trust must exist for them to part with such information. After all, you wouldn’t endorse something in your name if you didn’t believe in it.


So how do you get a client to trust you enough to refer you? It’s a tough question to answer as all clients are different, but the easiest way is to ensure you complete your contract on time, on budget and with minimal (if any) hiccups.


Understand how to approach the subject of a testimonial or referral

Before you ask your client if they’d like to provide you with one, remember that you’re not begging for something you don’t deserve. You’ve completed the contract to the requested specification and have proven that you’ve done it well.


It’s important to let the client know what impact testimonials and referrals can have on your professional development and how word-of-mouth promotion is integral to your future success. If they refuse then sadly there’s not much you can do, but by requesting one you’re letting them know of your expectations and why it’s important to you.


Consider them as transactions

This tip may not be everyone’s cup of tea, but if you have a good relationship with your client it’s worth considering offering an incentive for their testimonial or referral. This could be seen by some as a bribe, so use your professional judgement here whether it’s an appropriate step to take.


Your incentive could be something as simple as a referral in return or discount for future work, because if they’re willing to refer you then they will possibly look to hire you for a future contract.


Remember that it’s not all just about you

Your client will know that as a freelancer or contractor you’re part of a bigger network, and that you will have your own opinions of them. So whilst their referral could open more doors for you, your thoughts on them could potentially put other freelancers or contractors off from working with them in the future.


If you have colleagues who possess skills that the client needs for future projects, let them know. You’ve essentially then shown the client that you care about their organisation and want them to succeed, even without your help. This will leave the client with a positive parting impression.


It’s time to show them off!

Don’t forget that once you’ve earnt those blinding reviews it’s time to show them off. Add them to your LinkedIn profile, professional website, or even material you send out to prospective clients, but just double check your client is happy for their comments to be made public. Always ensure that future clients can see what past clients have to say about your work.

Do you have tips for getting referrals that have worked in the past? Share them with us! We’d love to hear what’s worked for you.


This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

Spring Budget 2017 – what contractors need to know

Following the Chancellor’s first and last Spring Budget on 8 March 2017, many will be thankful that the landscape has not changed more drastically. The Budget primarily confirmed the changes announced in the Autumn Statement, with only a few new measures that will affect Limited Company contractors.


We have today emailed our clients with our full report on the Budget announcements and how they may be affected. Please see below for a summary of the key points and contact us to find out more about becoming an Intouch client and benefiting from our expert advice tailored to your personal circumstances.


Key Spring Budget points for Limited Company contractors:

  • Dividend Allowance: An announcement that didn’t appear in the Autumn Statement – a reduction in the tax-free Dividend Allowance from 6 April 2018. The allowance will reduce from £5,000 to £2,000.
  • ISA savings limit: The Chancellor counter-balanced the Dividend Allowance changes by also announcing that the overall ISA savings limit will jump to £20,000 in 2017/18, from the current limit of £15,240 for 2016/17.
  • Off-payroll working in the public sector (IR35): Whilst some minor changes to the draft legislation have been made, the measures will become effective on 6 April 2017.
  • VAT Flat Rate Scheme (FRS): As announced in the Autumn Statement, changes to the VAT Flat Rate Scheme (FRS) will come into place on 1 April 2017 with the introduction of a new ‘limited cost business’ category.
  • New measures to tackle tax avoidance and evasion: A selection of measures has been announced, with the most notable new measure applying to those that enable tax avoidance schemes. A new Enabler penalty will apply when tax avoidance schemes are found not to work.
  • Corporation Tax: As pre-announced, the main rate of Corporation Tax will be reduced from 20% to 19% for the Financial Year beginning on 1 April 2017.
  • Corporate Gains Tax: The CGT annual exemption will be increased to £11,300 for 2017/18 from £11,100 for 2016/17.
  • Making Tax Digital for Business: Extensive changes to how taxpayers record and report income to HMRC are being introduced under a project entitled Making Tax Digital for Business. The Spring Budget announced a one year deferral from the mandating of MTDfB for unincorporated businesses and unincorporated buy to let landlords with turnovers below the VAT threshold (£83,000).
  • New consultations announced: Those notably likely to affect contractors include consultations on Rent a Room Relief, disguised remuneration (again), employee expenses and Benefits in Kind.


Further information


Still got questions? Our Personal Accountants are available right now to give tailored advice to our clients on how these announcements will affect them. Contact us to find out more about becoming an Intouch client.

VAT Flat Rate Scheme and limited cost traders – what’s new

New draft legislation for FRS: Limited cost traders

Yesterday HMRC released their draft legislation on the proposed changes to the VAT Flat Rate Scheme (FRS), including the addition of a new ‘limited cost trader’ category. These changes are designed to stop abusive use of the scheme and appear very successful in doing so. The draft legislation is now subject to an eight week consultation period and provides us all with a very short window to be heard before the draft becomes final.


In this blog we cover what was included in the draft legislation, how it affects Limited Company contractors, and what’s yet to come.


How things are changing

From 1 April 2017, a new flat rate category will be established, called “limited cost business”.


All businesses registered under FRS must consider whether they fall within the definition of this category and, if so, the percentage to be applied is 16.5%. The test must be repeated for every accounting period and the new category applied where appropriate.


This new rate will remove largely all of the perceived cash advantage arising from the FRS for businesses, with limited costs with the 16.5% producing a benefit likely to be less than claiming the actual VAT input tax on purchases.


What is a ‘limited cost trader’?

One whose VAT inclusive expenditure on goods is either:


  • Less than 2% of their VAT inclusive turnover during the accounting period, or
  • Greater than 2% of their VAT inclusive turnover, but less than £1,000 per annum if the prescribed accounting period is one year, or time apportioned if not.


Claimable goods

The key element to this test is what ‘goods’ means. In VAT terms, purchases are either goods or services. Goods is generally understood to mean tangible items where legal title passes on acquisition. Services are everything else.


The draft legislation refers to relevant goods which are any goods purchased wholly and exclusively for use by the business. This automatically excludes any purchases for goods that have a mixed personal element. In addition, however, the following items are excluded:


  • Capital expenditure (goods such as equipment, computers, mobile phones, office furniture, a tablet or printer). It does not matter if the purchase is not capitalised in your accounts, the question is one of duration of its use.
  • Food or drink purchased for the consumption by the business, or its employees. This would include subsistence whilst travelling.
  • If the business owns a vehicle, all costs relating to that vehicle including parts and fuel.


What about expenditure on services?

Well, these appear to be entirely excluded, therefore you will not be able to include travel costs such as train fares and flights, mileage claims, parking, software, subscriptions, accountancy fees, legal services etc.


Taking the test and the online tool

Registered businesses will need to conduct a test every accounting period. The legislation does not say whether they mean the VAT Return accounting period or the business accounting period. The £1,000 however, is an annual limit and so would need to be apportioned to reflect the period considered. Clarity will come forth in the guidance in due course.


HMRC recognise that it may not be clear to many whether they fall within the new category and intend to release an online tool to help make the right choice. The tool is not yet available so we can’t assess how useful it will be.


For many Limited Company contractors, it will be clear whether the value of their goods is above the threshold. However, some may be close to the threshold and therefore will need to rely on the online test to determine whether they’re above or below.


What’s next?

HMRC have allowed eight weeks for comments on the consultation document. During this time, they claim they will engage with representative bodies, to explore the practical implementation of the test and the online calculator.


Until HMRC’s calculator has been created, we are encouraging Intouch clients to use our Flat Rate Scheme calculator to understand how they could be affected.


What Intouch would like to see

HMRC’s current definition of “goods” is far too ambiguous for Limited Company contractors to understand fully how they are affected. Many service businesses, including contractors using Limited Companies, incur substantial business costs that appear to fall outside the scope of relevant goods. This leads to the unintended consequence whereby legitimate users of FRS will be disadvantaged.


This is wrong and Intouch will be participating in the consultation to draw HMRC’s attention to this outcome whereby legitimate contractors are forced into an inappropriate category that does not adequately reflect their cost structure.


At Intouch we want them to look again at how they define relevant goods and amend the legislation to include services used solely by the business.


This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

The contractors’ warchest – spend or save?

The contractors’ warchest

Most Limited Company contractors or freelancers build up a warchest, to ensure they are covered financially for any breaks in contracting. Having provisions for such an occurrence makes perfect business sense, but what happens when your warchest is a rather substantial size? Should you spend or save?


You’ve just started contracting – what next?

When first starting out in contracting there are lots of new things to get to grips with, most of which your specialist contractor accountant can advise and support you on. But when it comes to building your warchest, this usually happens in your second year. There is no one-size-fits-all answer to this, as everyone’s needs and future plans are different.


So to prepare you in your first year of contracting, we’d advise ensuring there’s enough money in your business bank account/s to pay all liabilities (such as taxes due) plus your personal salary and dividends. Once you’ve established you can do this (with profits left in your company) then it’s time to consider your warchest.


What are the options?

Once you’re in your second year and have reached your ISA allowance of £15,240 it’s time to consider what to do with the profit left in your company.


One option is to leave it be for a rainy day or break in contracting. Whilst this is strongly advisable for all contractors who are planning to remain in contracting for the foreseeable future, it’s not always the right option for everyone, especially if you’re close to retiring or returning to permanent employment for good.


Another option is to take money out of your Limited Company as dividends over the higher rate.


Whilst our team of expert contractor accountants can advise you from an accountancy point of view, once you have made the decision to take money out of your warchest, we strongly advise that you appoint an independent Financial Adviser. Here at Intouch Accounting, we recommend Penny Matters, who can provide you with tailored advice on mortgages, pensions, life cover and much more.


Set a target to work towards

A good starting point with your warchest is to consider a target you’d like to reach, then ensure you get there before deciding what you’re going to do with your funds. It’s very easy to see the amount steadily getting larger and starting to let your mind run wild, but ensure you speak to your contractor accountant about a realistic financial goal and how you can reach it.


Remember! Your financial obligations as a Limited Company contractor must always come first, so ensure your ducks are in a row before deciding on what to spend your profits on.


This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.