Client putting me (sole trader) under pressure to go Ltd.

M

Mugato

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2
Hi,
I create medical animations for a number of clients, I am a sole trader since 2010.
I have a number of clients (some repeat, some are one offs) and one in particular is putting pressure on me to go ltd. The reason being I do work for them on a monthly basis and hence I bill them monthly for the past 2 years. They state that revenue could see me as someone who should be an employee - if you only look from my clients perspective i can somewhat understand that. I don't have to bill them monthly, i could do it every 2, 3 or 4 months. They account for approx 25- 30% of my turnover and are making sounds that I have to be ltd. or else they will cease working with me. I can only guess someone new in their accounting dept has pushed this.
I've enjoyed the simplicity of being a soletrader, cheaper and less paperwork, my accounts are returned by a professional accountant.
To most people, I make eye candy, its very interpretative, it is not a tangible product that can cause harm and leave me exposed for damages, but it is v important to my biomed companies and it pays well.

My specialty is my medical knowledge and artistic skills not accountancy/business acumen, so with that in mind can anyone advise me if
A) they have a valid point in pursuing this
B) I like the privacy of self employed, when doing annual returns - is everything (turnover, profit/loss, salaries all there for public access)
C) what are typical accounting costs/yr for essentially a one man show that is service based.

appreciate any info on above
thanks in advance
Adam
 
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A difficult one.

A very careful client could be worried that you would be seen as an employee.

So if they pay you €2,000 a month, Revenue could argue that this was your net pay. That your gross was €4,000 and bill the company accordingly for unpaid PAYE and PRSI.

You could also claim that you were an employee and if they stopped using your services, you could sue for unfair dismissal, holiday pay, etc.

Both scenarios are very unlikely as you only get 25% of your income from them.

It is much more a concern where the client is the only client.

I would think that a letter from your accountant to them setting out your circumstances should give them a lot of comfort.

The following is just the type of thing he should write. I am not an expert and have not read the document I linked to.

Dear multinational

I confirm that Mr Mugato is self-employed. He has many clients of which, you are just one. He gets about 25% of his annual income from your company. I prepare his tax returns and I confirm that they are up to date and all taxes are paid. ( this is none of their business but it gives them security)

He has been operating as self-employed and paying tax under Schedule D for 20 years and Revenue has never questioned it.

I would draw your attention to Revenue's guidance on the issue


It's clear to me that they would never seek to deem him an employee

1767711235595.webp

1) He has a contract for service and not a contract of services
2) He has many clients and not just one client
3) He is not under your direction

Mr Murgato is very happy to provide you with any disclaimer or undertaking which you need to satisfy yourself that no liability will arise for you.

Y.S.
 
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very good, thanks for that, I'll raise these points with them and see how receptive they are to the status quo
very much appreciated.
A
 
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