HSMP -earning by being self employed and also PAYE

[RAJ2007]

If someone earns both by PAYE and being self-employed then what sort of documents he need to show to prove the earnings made by self-employed

Suppose Mr A has plans to apply for HSMP during August 2008. He has got earning of 20k by PAYE. Now he needs to earn another 12k by being self-employed to meet HSMP criteria. Now even if he starts earning by working as self-employed for different accountancy firms he will not be able to produce a TAX return as because TAX OFFICE sends out a tax return form only after completing one full tax year (April-MARCH). In his case, he needs to wait till March 2009 to fill a tax return.

In this scenario, what sort of documents he needs to show to HO if he intends to apply for HSMP next august.

Please advise.

[SYH]

what do you mean by Paye, do you have a limited company?

[RAJ2007]

Thank you your reply.

PAYE means he is employed at a company and get net pay as normal (after tax & NI being deducted).

Please advise what documents he should provide to prove his income by self employed earning.

[SYH]

Thank you your reply.

PAYE means he is employed at a company and get net pay as normal (after tax & NI being deducted).

Please advise what documents he should provide to prove his income by self employed earning.

I know how Paye works but most people don't refer to a company as PAYE and he could be employing himself through a limited company and saying PAYE as a result so to be clear, I think it would be better that the OP answer my question.

[RAJ2007]

Sorry, who is OP?

[dokwal]

get certified your income through an accountant

[RAJ2007]

Thanks for your reply. Is that enough to certify the income by a ACCA (Cetified Chartered Accountant) and provide the bank statement showing the income being deposited into bank.

Please clarify.

[SYH]

Sorry, who is OP?

Are you speaking about yourself or relaying the situation for someone else?

[ashutosh19]

Dear all,
i will be highly greatful if anyone can help me in finding the templet for "contract of employment" which is required for self employed people.
I will be applying for my HSMP shortly and this is the only document i am missing.
Regards
Ashutosh

[John]

i will be highly greatful if anyone can help me in finding the templet for "contract of employment" which is required for self employed people.

You should not be highly grateful! Because a "contract of employment" is for employed persons ... and clearly not for self-employed persons.

Can you go into a little detail about your self-employment? And how is the self-employment related to your employment? Or is it?

[Christophe]

Sorry, who is OP?

OP = Original Poster (i.e. the person who started the thread).

[gordon]

Dear all,
i will be highly greatful if anyone can help me in finding the templet for "contract of employment" which is required for self employed people.
I will be applying for my HSMP shortly and this is the only document i am missing.
Regards
Ashutosh

You don't need a template; after all, you will not be able to generate contracts post hoc ! Instead, you should simply gather all the service contracts you already have (for which you've been paid) for the period for which you are claiming earnings. These will correspond, of course, to the business accounts and invoices (payment advices) maintained over the same period.
AG

[RAJ2007]

I have got another query about HSMP.

I know someone who is self-employed doing accounts job for various firms. He has asked me to do some accounts job for his clients. He will get paid from the client directly and He will then pay me (less his commision) for that job in cheque (like a sub-contract). the job will be for few months. Now, my question is that if a self-employed person pays me (gross) for doing job for him and I want to show that income for HSMP, what sort of documents do I need to collect?

I thought I will keep the records of cheque going into my account and I will give him invoices for the job done. I will also ask a ACCA (certified accountant) to write for me explaining the income earned. Will that be sufficient? Do I need to get any other information form that self-employed person? Do I need to collect any other information from Inland Revenue? Please advice.

[gordon]

The self-employed person sub-contracting to you will need to provide you with contracts and tax returns. In addition, his payments to you should be made by direct deposit.

I have got another query about HSMP.

I know someone who is self-employed doing accounts job for various firms. He has asked me to do some accounts job for his clients. He will get paid from the client directly and He will then pay me (less his commision) for that job in cheque (like a sub-contract). the job will be for few months. Now, my question is that if a self-employed person pays me (gross) for doing job for him and I want to show that income for HSMP, what sort of documents do I need to collect?

I thought I will keep the records of cheque going into my account and I will give him invoices for the job done. I will also ask a ACCA (certified accountant) to write for me explaining the income earned. Will that be sufficient? Do I need to get any other information form that self-employed person? Do I need to collect any other information from Inland Revenue? Please advice.

[RAJ2007]

[quote="gordon"]The self-employed person sub-contracting to you will need to provide you with contracts and tax returns. In addition, his payments to you should be made by direct deposit.

Thank you Gordon.

Do you mean the payment has to be made by standing order? Do I need to provide the recent tax return of that person?
Also, what does the text of the contract should include? Do I need to provide him invoice for the job done and also keep a copy for me?
Also, do I need a ACCA to confirm my income?

Sorry for asking so many questions.
Please advice.

[gordon]

The self-employed person will be paying you, and you will be, effectively, an independent contractor. So when he pays you, the money should be wired in, if possible. I say this only because the HSMP caseworkers look askance at paper cheques being deposited, so direct deposits will be much more straightforward later on.

Re the tax return, the self-employed person who will be sub-contracting to you is the one who should provide you with a tax return, which will indicate what he paid you in the tax year (not his tax return, which will show all of his income, less what he paid you, which will fall under his expenses). He should also provide you with contracts at each phase when you do work for him (per project), indicating what you'll be doing, how much and when you will be paid, etc. A standard contract will usually require you to invoice him, when the work is complete or otherwise as agreed.

If you keep all your other documentation together, you won't need an ACCA to confirm your income.

AG

[John]

Hey wait a minute here. You are preparing accounts for others, and wondering how to keep accounts for yourself?

Be aware that it is a legal requirement to notify HMRC of the existence of your business within three months of the commencement of the business.

[dokwal]

1. Contract from employer for job, nature ,tmeing , hours amount , standard etc,etc
2. your ax returns about payment of NI 2 & 4 , Tax as per on time line
3. confirmation from IR about taxes and NI paid by you
4. Bank statement of money deposted or wired
5. details of total invoiced raised by you in period concerned with bank reco
6. If certified by Accountant , very good

[RAJ2007]

[quote="John"]Hey wait a minute here. You are preparing accounts for others, and wondering how to keep accounts for yourself?

Be aware that it is a legal requirement to notify HMRC of the existence of your business within three months of the commencement of the business.[/quote]

Thanks John for your comments.

I expect to earn about 9k from contract job. The thing is that the job will be for next four/five months. This earning and my other earning from my fulltime job will be sufficient to cover income criteria.
I am aware that I need to inform HMRC about my contract job within three months. My question is that I will not be able to provide a tax return from HMRC. As because even if some one starts working self-employed from now, the tax return will be issued after completing one full tax year (April-March). Therefore the next tax return will in April 2009. Therefore if i decide to apply HSMP during Jan 2008, what other documents I need to submit (you think)?