Protect your Interests

Introduction

There are many advantages of becoming an “independent” (see Benefits of Being an Interim Manager). However, the way you set yourself up and maintain awareness of legal and tax issues are vitally important.

The following series of information is designed to guide you through essential areas. There are no “minefields” but the plethora of legal and taxation requirements that you have to understand and abide by need to be dealt with before you send out your first invoice.

You are strongly advised to seek professional advice in all the areas that we cover below.

You will note that there are links to organisations that offer a variety of services but clearly there are others and you need to ensure that you spend time in finding advisors who are the right fit for you.

The Key Areas:

Limited Company
The preference of all providers of Interim Managers is that the Interim Managers work through their own limited company.

The necessity for this may not be clear but the main reasons are –

It is seen by providers that you have made a conscious decision to be an “independent”. This means that your priority is not seeking a permanent role.
To the provider it will demonstrate the necessary independent and objective thinking needed to take on and complete an Interim Management assignment.
It will demonstrate to the client that you are taking your own responsibility (through your limited company) for all liabilities that an employer would have to pay on your behalf such as PAYE and NI.

It will demonstrate to providers and clients alike that your focus on managing the assignment will be objective and unaffected by client company politics or history.

Setting up a limited company
This is a very simple and inexpensive exercise which can be done via the internet or through a specialist advisor.

You could even search the company name you would like to use on the Companies House website.

Company structure
Working through a limited company is straightforward, although you must be aware of the roles that you will undertake – even if it is just you.

You will be a shareholder and a director of the business but when working on assignment, you will also be an employee of your limited company.

Unless you are totally sure of what these roles entail, you should take advice.

It will be necessary to have a Company Secretary and you may want to think about your accountant or advisor carrying out this role.

Annual Returns
You will be required to file annual accounts to Companies House and unless you are fully conversant with this, your accountant or advisor should manage this for you.

Taxation
Apart from NI and PAYE payments that need to be made to the Inland Revenue, there are other taxation issues that you will have to deal with such as VAT. Your company will need to register for this and pay it dependent on the VAT element of your invoicing.

The rates you need to pay and how to accrue the necessary funds are areas that your accountant or advisor would cover as a natural part of their service.

The full range of issues that your accountant or advisor can carry out for you should cover some, if not all, of the following issues – which failure to comply with, could result in financial penalty –

Accounting advice
Acting as a Company Secretary
Company accounts production and filing
Companies House registration
Corporation Tax registration
IR35 advice
Limited company setting up
P60, P35 and P11D documentation
PAYE registration
Salary payment and the payment of personal tax and NI
Using an “Umbrella” company to manage your accounts (see below)
VAT registration and calculation

Help and Support
The following organisations offer a variety of help in setting up and support on an ongoing basis.

Professional Contractors Group (PCG)

Operating at the heart of the freelance/interim community, PCG gives voice and provides expert advice, guides on taxation, tax investigation insurance, draft contracts and a wide range of benefits to the freelance worker.

JSA Group

For 20 years, JSA have been looking after the needs of independent freelancers and the recruitment industry. So, whether you’re a first time freelancer, or if you’ve done it all before, JSA have solutions that are designed to meet your needs.
More

Parasol

Umbrella companies, such as Parasol, allow contractors to benefit from being legally tax-efficient, without having to worry about the IR35 contractors’ tax (your status is “employed” so IR35 cannot apply).
More about Umbrella Companies

The Interim Management Association

This is a new innovative development from the IMA providing existing Interim Managers with the opportunity to become individual members of the IMA.

The IMA Institute

This organisation provides valuable information through an Induction Workshop for potential Interim Managers. Working in partnership with leading organisations such as The Open University, Saville Consulting and Competex, the IMA-Institute is dedicated to raising the awareness of interim management as a profession, promoting the highest professional standards and providing members with a range of quality benefits.