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But won't I be OK if I set up my own limited company or use a Personal Service Company?

The 'taxman' has already though of that. That's why the first thing you must do when starting any new contract or different style of trading (such as a limited company or Personal Service Company), is find out whether or not HMRC will class you as employed or self-employed. You should do this using HMRC's IR56 tool.

Once you have found out whether you are earning your income as an employed or self-employed worker, the options are black and white. The HMRC even changed the entire Construction Industry Scheme (CIS) to be in line with the new regulations, so you are not alone. All contractors and subcontractors are faced with exactly the same issues.

The Chancellor confirmed in the 2007 Budget that Managed Service Companies and Personal Service Companies would come under HMRC's spotlight. As a result, some of the 'biggest' names in the market are falling over themselves to withdraw the products they have been unfairly pushing onto contractors, despite all the warnings over recent years. Sadly, many contractors, agencies and clients are likely to be investigated as a result.

But anyone who has been using Tarpon can rest easy because we have been operating with full HMRC approval. By contracting as a Tarpon member, contractors ensure that they, their clients and agencies will always remain fully compliant.

To speak to one of our tax experts call 0800 434 6402.

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