The Tax Man and Me

Static M.e.

Hey all,

Hope this is the right forum, apologies if not.

I work as an IT Contractor for another company, I invoice them and they look after my taxs etc and pay me.

I am looking for some advice or guidance here. Ive been working as a Contractor for a long time (5 years) but Im just after getting screwed again! and its the final straw.

I was owed holidays (9 days) and was expecting a large pay check for Christmas (which I planned for and budgeted for) but then when I reveived my pay pack the Tax man had screwed me for over 2.5 K.. I'm devasted to be honest but Im the only person to blame here for not taking more of an interest and watching exactly what is happening with my pay.

Could someone please tell me, should I have my own company or accountant or both so this kind of crap happen to me again.

Is their like a best practice in these kind of situations?

I really don't have a clue when it comes to tax or tax credits or having/owning a business. The last time I did any sort of Business work was my Business Studies in 3rd class

Could someone even tell me someone I could speak to about this? or what I should/need to do

Any advice at all.
(Sorrry if this seems like it should be under PI or something but Ive no idea who I should be speaking too or what I should be doing. Im lost)

Thanks

kluivert

Static M.e. wrote:

I work as an IT Contractor for another company, I invoice them and they look after my taxs etc and pay me.

Its up to you to look after your own taxes - self assessment system in this country. How do they look after your taxes or what is the agreement there.

Static M.e. wrote:

I was owed holidays (9 days) and was expecting a large pay check for Christmas (which I planned for and budgeted for)

This is conflicting from what you said earlier that you are an IT Contractor.
You are only owed 9 days holidays if you are an employee of the company.

Static M.e. wrote:

I really don't have a clue when it comes to tax or tax credits or having/owning a business. The last time I did any sort of Business work was my Business Studies in 3rd class

It just seems like you need a quick lesson on how this works, thats all.

1. If you are IT Contractor and you raise an Invoice to the company that you are contracting for each month then you are classified as having your own business and are a self employed individual. You must look after your own tax affairs.

2. Self employed indivdiuals must regsiter for tax with their local tax office by filling in a TR1.

This registers you for Income Tax and Paye, Vat and RCT (Last three being optional depending on your circumstances, do you have any employees - no, well then dont register for Paye, do you have any sub contractors working for you, no - well then dont register for RCT, do you meet the Vat thresholds as per the Revenue (2006 - €55,000 in Sales), if so then you must register for Vat and charge Vat on your monthly invoice at 21%.

3. As a self employed individual, you will have to file an Income Tax Return each year on 31st October. You have to pay over any Income Tax owed based on Tax Adjusted Profits from your business. In addition you must also pay preliminary tax on account for the following year, this is based on 100% of the liability you have to pay for this year.

4. How do you arrive at tax adjusted profit figure.

You should have an Income and Expenditure Account done each year which will assist you to determining you Tax Adjusted Profits. Normally people have the 31st December 200X as there year end, in line with the tax year and calendar year.

Income and Expenditure Account for the year end 31st December 200X
Income

Sales

Total Sales

Expenditure

Telephone
Postage
Stationery
Motor Expenses
Insurance
Computer Expenses
(Add as necessary)

Total Expenses

Profit for the year end 31st December 200X

5. This profit figure will be used to determine your tax adjusted profits, together with any other income to determine the total tax due if any.

So in January 2007 I will be preparing peoples Accounts for the year end 31st December 2006, and determining their tax position based on their profits from 2006. Any tax due on this will then be paid on the 31st October 2007.

6. Seriously advise you to meet with an accountant and talk this through and take all your records from the last 4 years (Revenue will only look back four years now). You might be due a refund of tax.

7. If you are self employed you determine your own holidays.

8. You need to give more details about the agreement between yourself and the company you invoice each month.

Static M.e.

Thank you kluivert for such a detailed post.

Ive drop you a PM on one issue.

thebourke

i am an it contractor as well and go through a company that sorts out mt tax etc as well for a commission of 5 percent a month..
is it better to go to an accountant and get set up as a limited company rather then go through another company (what im doing) and let them sort out the tax?