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Sam, Accountant
Category: Tax
Satisfied Customers: 14199
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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I was hoping to find a tax accountant who could tell me

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I was hoping to find a tax accountant who could tell me whether I should setup a limited company, partnership or work as a sole trader based on my personal circumstances
Assistant: Thank you. Can you provide any more details to help us find you the right Expert?
Customer: Ok, I currently work part time for an employer earing £20kpa; I have two properties from which I earn rental income from which is £2200 gross per month (these are mortgaged properties). I am looking at working as an agent for a estate agent company but the way the business model is designed means I have to invoice clients and pay commissions to head office. I was hoping to find out what would be the most tax efficient way to work as an estate agent? through sole trader, ltd or limited liability?


Thanks for your question - I am Sam and I am one of the UK tax experts here on Just Answer.

I am afraid being self employed or employed is not a matter of choice but a matter of law, and under the employment status legislation - I cannot possible see how this could be self employment (which it would have to be for you to either be a sole trader or limited company becase if you would be an employee were ir not for the li8mited company then this breaches IR35 legislation also )

Your employment is just that - subject to tax and National Insurance under PAYE

Your rental income is just that - subject to Schedule A taxation (so tax and no National Insurance)

This new venture is one of employee unless you set up on your own sourcing clients through advertising, have your own business premises, admin costs and overheads and charge your clients a fee directly.

It sounds like this business is operating out of the scope of tax law, which will affect your rights and tax position, see link here re employment status

and read through each of the tabs. Then complete the Q & A tool - employment status indicator for a formal view from HMRC

There might be scope if you work from home, use your own business equipment and charge for the hours worked, and will provide these services to many estate agents - but not if its just a one on one situation.

Have a read through the legislation and try out the tool - if you have any follow up questions, then please do ask.

Customer: replied 1 year ago.
The estate agency is run as a business. I meet with the clients, invoice them when properties are sold or let and do marketing that is specific to my area.Head office provides training, support, branding materials (which I have to pay for) the setup volume discounts with the likes of right move etc and provides the property management.The agreement between myself and 'the company' of which I am representing is setup as a licensing agreement so there is no employment law related to this particular setup.Everything has been checked and above board, I am just looking for guidance on what would be the most take efficient way of running the business based on my personal circumstances. Thanks


Thanks for your response

Then you are (based on what you advise so far ) an employee - and can only proceed in this manner you says its all been checked and is above board - have you endorsement from HMRC you can proceed in this manner?

As this is not a franchise nor a business run by yourself you are working for a branded company on their behalf being provided training by them and materials and whilst you may have to pay for them - this does appear to be just a smoke screen to the actual facts - that you are working for just one company and on their behalf -

You do however advsie that you invoice the customers when a sale takes place - so they pay you rather than the company ? Do you then pass a % onto the company - will you work from home - use your own vehicle and be the only point of contact with the customers ? tel me a little more - as I am sure you can appreciate - I would not be doing my job properly if I didn't ensure you are not being misled in this venture.

As this has serious tax consequences if this is got wrong - along with tax penalties and interest charges - so I can either be sure you get this right and advsie how to take matters forward based on following the law correctly - or bow out as I will not give inaccurate advsie which then risks being tax evasion.




Customer: replied 1 year ago.
HiThanks for your response.I haven't obtained endorsement from HMRV as yet as I am waiting for feedback on the licensing agreement from the solicitors.Whilst operating under a licence agreement of the agency I have To invoice the customer, I use my own car, work from home, use my own PC, camera etcOnce my invoice has been paid a portion of the my invoice is paid to head office to as commission for sales and same for letting a (if they are managed on a monthly basis).I will be the only point of contact to the vendor if their property is within my postcode allocation.
For buyers or people looking to let I will be their contact if they view properties and buy/let within my allocated area.
A buyer/renter may decide to look at other postal code areas outside my allocation at which point they will speak with a different agent.I hope I've answers your queries, please let me know if I have missed anything. Thanks


Until you have agreement from HMRC then you have to assume you will be an employee and ensure you are engaged and paid under the PAYE system as they are the only ones who can sanction this and as they take a long time to reply - you cannot proceed until you have their agreement and you cannot be a limited company (as you will then pay Corporation tax and Employees Tax and National Insurance (as you are then director/employee of your own company) and as you will work for just one client this will be in breach of IR35 legislation,

Write to HMRC now laying out all that you have advised me as to how you will operate and ask them to agree self employment can be applied

You will write to Employment Status Inspector contact details in this link

But if HMRC agree you can be self employed then start up as sole trader, it will be simpler and more importantly more cost effective in tax and National Insurance deductions and tax mitigation.

You cannot be a limited liability as there has to be partners which you do not have so you are left with just sole tradership



Customer: replied 1 year ago.
Ok thanks for your help, it is greatly appreciated


You are very welcome - let me know if I can assist further, but if you have all that you need, then it would be greatly appreciated if you could rate me for the level of service I have provided (or click accept)

Thanks and have a great weekend


Sam and 2 other Tax Specialists are ready to help you