Consultancy liability

[Mattt]

I have recently left my job (Friday), however at my leaving party I was asked if I could come back for a few days here and there - I have nothing else lined up so have considered it.

I have a dormant Ltd company that I am (slowly) turning into a Dot.com - so I considered working then invoicing through this company.

I would be working as a Quantity Surveyor, mainly doing admin type stuff (finishing off my old project) with a bit of new bid work.

If I did do this, would I need P.I. cover or anything else? Would I be better off going to an agency and getting them to charge me out and they handle admin/tax etc?

Thanks for any advice you can give.

Matt

[Chrisgr31]

Well the RICS require you to have PI cover when working so unless you wish to be struck off I'd check you are covered!

However if you are going to work as a consultant see if they can cover you on their policy!

[Mattt]

I'm not MRICS, and I doubt I will be doing anything that leaves me in a position that I will be held liable for anything.

At the end of the day, if things do go tits up (worst case planning), the Ltd company should protect me, shouldn't it?

[Eric Mc]

No.

Trading in a negligent manner could result in you losing the normal protection of limited liability.
Trading without adequate (or legally required)professional indemnity insurance could be construed as "negligence".

There are also the tax implications to consider - especially the ramifications of IR35.

[Mattt]

How much would the PI cover cost? I would only be doing maybe 10 days maximum, about £3k max - not a lot!

[Eric Mc]

The liability is based on the costs you might incur if someone sued you - so it would need to cover sums in the tens of thousands at least.

This would apply whether you are trading as a sole trader or through a limited company.

Surely your professional body have regulations covering this area?

[Mattt]

I must admit I havn't looked into it too carefully, my initial thought was to throw it out to the PH crew

I guess I will have to look into this more carefully.

Thanks (again) Eric and Chris.

Matt

[Eric Mc]

Before I went completely self-employed (as an accountant) I had a small number of personal clients. Even though my chief source of income was through my employment, my professional body still insisted that I needed to have adequate Professional Indemnity Insurance to cover the work I undertook in a self-employed capacity.

At that time (just over five years ago) my income from self-employment was ususlly less than £5,000 per annum.

Edited by Eric Mc on Sunday 1st July 23:52

[Chrisgr31]

Eric Mc said:

At that time (just over five years ago) my income from self-employment was ususlly less than £5,000 per annum.

and the PI cover cost? I'll guess £750?

[Mattt]

I suspect the answer to this is 'speak to an Accountant' - but I assume I would become liable under IR35 if I went back to the employer after a couple of weeks working a few days here and there - even if I am actively working on other parts of the business (behind the scenes).

I would be setting up the website (eCommerce site) the rest of the time, and I would only be using the Ltd company to work as a contractor because I have it anyway.

I am not too worried if I do fall under IR35, as my gross as a contractor will be more than double my gross as an employee - i'm not trying to avoid tax, i'm just working out how to arrange the invoicing/work etc.

[Leftie]

Mattt said:

I suspect the answer to this is 'speak to an Accountant' - but I assume I would become liable under IR35 if I went back to the employer after a couple of weeks working a few days here and there - even if I am actively working on other parts of the business (behind the scenes).

I would be setting up the website (eCommerce site) the rest of the time, and I would only be using the Ltd company to work as a contractor because I have it anyway.

I am not too worried if I do fall under IR35, as my gross as a contractor will be more than double my gross as an employee - i'm not trying to avoid tax, i'm just working out how to arrange the invoicing/work etc.

Your old employer might not want IR35?

[Eric Mc]

It shouldn't be an issue for your old employer. The responsibility for accounting for all the tax and Ni arising under IR35 rests squarely on your own limited company.