Forming a company in the UK

[bluphoto]

I work in the offshore oil & gas industry but am a keen photographic enthusiast, and have been asked my my

employer, with whom I am currently staff, to form my own "one-man-limited-company" and then they will contract me

instead of employing me directly.

 

So I'm playing with the idea of including commercial photography as part of my business model, and as such should

be able to make a lot of my photographic purchases of equipment and consumables tax-deductable. I would invoice

the sole client every month and there would be no indication of what sort of services I was charging for (oil & gas

consultancy or commercial photography) - even the name of the company is specific to neither O&G or Photography,

although gives connotations to both. This would also allow me to take on other private photographic assignments as

well and put them through the books in the same way.

 

Someone has told me that instead of going limited, that I should incorporate in an offshore location (specifically the

isle of man) for tax purposes. Does anyone know if this would be beneficial, or perhaps know where I can get more

information on the benefits and disadvantages of going down this road?

 

many thanks

Guy Carnegie

[xsswgd_dfgdf]

Company formation in UK is now easy because of Govt policies.

<br>

<a href="http://www.drugtreatments.com/alaska" REL="dofollow">Alaska Drug Treatment</a>

[bluphoto]

Was that some attempt to get me to go to a particular website that has nothing to do with forming a business (or nothing to do with the UK for that matter)?

 

Apologies if it IS relevant, I can't quite see the connection.

 

Perhaps, xsswgd, (how do you pronounce that?), you might explain exactly how it's "easy".

[steve_dawson1]

If you are working in the UK you will be subject to tax in the UK. Subcontracting whereby the contractor operates as the sole employee of their own limited company and has a single customer is very popular. In this model the employer transfers the administrative costs of employment and some of the statutory obligations of employment to the employee in return for a somewhat higher rate of pay. Doing this gets you some tax advantages because of things that can be offset against tax. There is a limit to the purchases of photographic equipment you can offset in this way if they are really to support your hobby. As a limited company you are required to keep accounts - your auditors will ask questions and they need to be friends with the revenue people more than they need you. And what you really don't want is for HM Revenue and Customs to come poking through all those vague invoices and purchases.

 

And sadly you can't dump the tax liability by establishing an offshore company. It may nominally be based in the Isle of Man or wherever, but the test as far as tax is concerned is where the company ACTUALLY operates. If you are clearly operating in the UK you're stuck with a tax bill here. All you can do is keep it to a minimum.

[bob_sunley]

That reply is spam, ignore it.

 

Sound like your employer is trying to cut overhead and make it easier to let you go in the future. You realize of course that as a contracted service provider you lose all the benefits you currently have as an employee, like pension, vacation pay, etc.

 

Most companies only recommend this to their employees as it is the company that benefits, not the employee.

[bluphoto]

So I got offered redundancy last year (Nov 2007) along with 50 other guys at my work. I accpeted, but then the

company decided they wanted to keep me and two other guys around for another year to help wind things up. Fair

enough espeically as we got 25% bonus for that (this) year as a retainer.

 

So the redundancy is still on for Nov 2008 and I'm damned if I'm going to give up that fat cheque. Another branch of

my company wants to take me on for an unrelated job, but a simple transfer would mean no redundancy cheque. So

they offer me this contract thing, which apparently gets around me losing out on my redundancy payment.

 

The contract is for a minimum of two years with the option to return to "staff" at any point after 6 months.

 

They have added the monetary value of all my benefits to my invoice, with the value of my annual performance bonus

being considered as 100% met.

 

Hard to see where I can go wrong!

 

I know the company I work for at the moment already buys computers and marketing supplies such as software,

cameras, lenses, memory cards etc so surely it doesn't need to be a "photographic" company to purchase

photographic items. They have even had call to hire promotional and photographic models for exhibitions and

advertising. I think all I'd be doing is the same thing.

 

I've heard of companies before where one profitable department of the company supports the less profitable (or loss

making) departments - I think that's the nature of a company structure. ie personnel departments don't make money,

but they pay wages, so they make a loss. Sales departments make lots of money but have few outlays, so they

subsidise the other departments, like Marketing etc.

 

If I can offer photographic services - even if it's only a couple of shoots per year - then so much the better - assuming

I am or get good enough.

 

I was asking because a friend of mine at the camera club said that he did the Isle of Man thing instead of the Limited

Company thing, and he is netting around 81%. Obviously going limited would net less, but maybe not so bad that it

wold make it worth the overseas setup hassle.

 

Thanks for the pointers... and the Alaskan Alcoholics site!

[bob_sunley]

Well that additional info makes the scenario very different than what can be read out of your first post.

 

I'd talk to a solicitor and an accountant where you live, as the free advise you receive on an internet forum may not be worth the price you pay for it. :)

 

I live in Canada, and the rules here are very different from the USA or the various parts of the UK.

[steve_dawson1]

So far this thread does not contain any advice, just general comments. Of course you should obtain professional advice first. One piece of free advice is: employers are not stupid - the reason they are making this offer is more to do with controlling their costs than making you rich.

 

But that does not mean it's a bad offer.