Dear ^firstname ^lastname

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1 Dear ^firstname ^lastname I have been asked by Lavoro to write to you with regards to the way you are currently paid. Lavoro has teamed up with Add2Pay to enable you to earn more money for completing the same amount of work. You will now be working through a payment vehicle that will enable you to claim back the expenses that you incur on a day to day basis and reduce the amount of National Insurance you are currently paying. Please find attached a help sheet explaining how the process works and how much you will be earning each week. Each week you will be ed with a breakdown of what you will be receiving. Yours sincerely, Add2Pay WHAT IS ADD 2 PAY? Add 2 Pay is a project management company that facilitates the completion of projects for the agency and their end client. Add 2 Pay is not a recruitment company. Add 2 Pay is therefore able to utilise you, the subcontractors. You are not one of our staff members but are contracted on an as and when basis. CAN I WORK DIRECTLY FOR AN AGENCY AS A SUB CONTRACTOR? No. Recruitment agencies are not allowed by law to pay people directly as sub-contractors. As a registered sole trader, if you find work through a recruitment agency, under section 134 of the Income & Corporation Taxes Act 1988, they won t be able to deal with you in your capacity as a self-employed person. SO WHY CAN I WORK AS A CONTRACTOR THROUGH ADD 2 PAY? The answer is very simple. We are bought in on a project basis to complete tasks. We are not a company that provides labour to a client. IS BEING A SUB-CONTRACTOR BENEFICIAL? 1 / 11

2 Yes. There is a massive tax saving to working as a sub contractor. You are able to claim back expenses you have incurred which have enabled you to do your job, such as training costs, travel and professional fees. HOW DOES IT WORK AND WHAT DOES IT COST ME? Sign our contract to join our bank of sub-contractors. Submit your time sheet to us and the agency or end client you have worked for. We will raise a self-billing invoice for you. PLEASE NOTE: The invoice will be for 95% of the amount on the time sheet as 5% is kept by Add2Pay as a processing and management fee. As part of the conditons of using our services you accept that a level of tax savings are withheld for in trust to make sure you have enough money to pay your tax bill this amount can be assessed by phoning the office. HOW DO I PAY MY NATIONAL INSURANCE (NI) AND INCOME TAX (IT)? Working as a sub-contractor you are responsible for paying your own National Insurance and Income Tax. The tax year runs from 6th April each year and you must submit your tax return to the HMRC no later than the 31st January of the following year. Add 2 Pay is associated with Liberty Williams Limited, a chartered certified firm of accountants, who will, if requested, produce your tax return for you. With your permission, Add 2 Pay will supply your invoices to the accountants along with any expenses that you to them on a regular basis. Each year you will receive a personal allowance from the government for National Insurance and Income Tax. You will pay a set percentage of your profits after these personal allowances for both NI and IT. To find out what these rates and allowances are please check the HMRC website. Why deduct 10%? This money is held to make sure you have sufficient savings in place when the time comes to pay your tax bill. The government is entitled to charge you interest and penalties if your tax is not paid on time. 10% is the effective rate of tax which most people will pay when they are self-employed which includes both the NI & IT. 10% is an estimated figure. If you put through relevant expenses which are wholly and exclusively for the use of your work you will normally find that the saving of 10% is in excess of your bill. When would I need to pay tax twice a year? If your tax bill is more than 1000 per year you will be asked by the HMRC to pay twice a year. The idea is that you then pay your tax in advance and any overpayments are then refunded back to you by the HMRC. Here is 2 / 11

3 another advantage of Add 2 Pay holding the 10%; when this money is requested it can then be transferred directly to the revenue making sure you do not have to find any additional income. What happens if the 10% isn t enough? The likelihood is that if the 10% is not enough to cover your tax liability you should not be working as a subcontractor but may possibly need to consider operating through your own limited company. If you would like further information please do not hesitate to get in contact with us as we can recommend a specialist accountancy firm. What can I claim back on my tax return? Unlike umbrella companies you will not need to submit receipts to us as you are not an employee, but rather a sub-contractor. As a self-employed contractor it is your responsibility to keep hold of you receipts and keep a proper record. Below is a guide about what you can claim as a legitimate business expense. When considering what you can and cannot claim just remember this simple rule: The expenses have to be wholly and exclusively for the use of the business. Please try and pay for all business expenses using the company credit or debit card. RATES OF REIMBURSEMENT Travel Motor mileage rate the first 10,000 45p, the 25p. Motor cycle 24p per mile Pedal cycle 20p per mile Bus, train, taxi fares will be reimbursed on the basis of actual amounts paid. HMRC expect documentary evidence to be retained, but normally take a pragmatic view if some evidence is missing and it is clear that the journey was made. Sustenance We eat in order to live, not in order to work; but where the duties of the employment dictate that more is spent on food than would otherwise be the case, then the extra amount is allowable. That is, when an individual is unable to take food to work for an extended period, for example if they are working at a day centre and not allowed to use the fridge, they are allowed to claim for the food they have to go out to buy. 3 / 11

4 Overnight sustenance If the duties of the employment dictate that you are away overnight, then you can claim the actual amount of the expenditure. This will include hotel accommodation plus associated meals, provided that the costs incurred are reasonable. HMRC will not sanction excessive alcoholic consumption and the claim must normally be restricted to you. Staying with friends/family HMRC will grant an allowance for the actual cost incurred so a claim is relevant only where a financial contribution has been made. It follows, therefore, that it is unlikely that there will be a receipt. Where it is difficult to obtain a receipt HMRC expect that a record of the expense is made at the time. We suggest that you make a diary note in order to back up the claim. Personal Incidental Expenditure When staying away from home there are often minor items of incidental expenditure that are not strictly allowable for tax purposes. However, when staying in the United Kingdom, HMRC will not seek to tax an allowance of 5 pounds ( 10 if abroad) per night on average. Rented accommodation Generally speaking, HMRC do not object to rented accommodation where it is an alternative to hotel accommodation. Clothing Claims under this heading are likely to be limited to protective clothing such as boots, helmets, goggles, overalls, protective gloves etc. If you are working outside and need warm/waterproof clothing it is not an expense incurred in the performance of the duties warm/waterproof clothing is required by all of us if we venture out on a cold wet day. It is important when claiming for clothing that the description on the claim form is accurate, and that it is backed up by documentary evidence. Postage, stationery and couriers receipts to Add 2 Pay for all of the above that relate to your business. Tools Tools and equipment acquired and used in performing the duties of the employment are allowable for tax purposes. There is a difference between large items of expenditure which could be considered to be capital in nature ie anything that can help generate future profit, and small items which could be considered as consumables. This would need to be looked at on an individual basis. Training courses and Professional Membership If you are required to attend a CPD or CPE course, you can claim them as business expenses. Membership to professional bodies that relate to the trade of the company i.e. GMB, ACCA can also be claimed. 4 / 11

5 Insurance All businesses should have the minimum of Employer Liability insurance. If you work in a professional field, you should have Professional Indemnity insurance. Both of these insurances are wholly and exclusively for the use of the business. IT Hardware and Software IT hardware and software that is necessary for you to complete your work can be purchased by the company. These items should be purchased using the company bank account. This hardware and software must be wholly and exclusively for business use. Telephone including Internet and Mobiles Only business calls are allowable. Private calls are not allowable. We strongly recommend that you get a separate phone for business use to avoid any issues that may arise when trying to differentiate between business and personal calls on the bills. Reimbursement to use a phone at home is restricted to the cost of business calls only and to this end it is advisable to set up a business line at home from which you can also have a business broadband connection, which is then an allowable expense. See below. Extract from the HMRC manual: No deduction should be permitted for Broadband Internet access where the employee is able to use the Internet for non-business purposes. Tracking your expenses: Add 2 Pay makes this very simple Input your expenses on the website and we will keep the records for you. 5 / 11

6 Welcome Letter Dear ^firstname Thank you for signing up with Add2Pay. You need to be aware that as you are acting as a sub-contractor to admin_name you are brought in on an as and when basis, you are responsible for maintaining and submitting your own taxes on a Self-assessment tax return. To register for self-assessment please complete the form on-line at This HMRC Link or by completing the attached form. However Liberty Williams, ( ) who are ACCA accountants will be able to help you complete your return, free of charge as long as your expenses records are kept up to date. Please also be aware a 5% processing project fee will be deducted from the payment which is sent to you each week. We will send you an with a breakdown of what you will be receiving each week. We can withhold 10% of your earnings after our processing fee for tax purposes and we will place it in a client account. We can pay the amount to the HMRC with your written consent. If you have any problems please me or call me on Eric Diamond Customer Services Director Please send back to Add2Pay I Contractor name understand that by signing this statement I agree to the following :- 1. I understand I am a sub-contractor and therefore I am responsible for filing a tax return and declaring my income. 2. I understand that I need to register with HMRC as a sub-contractor. 3. I understand that I need to record my expenses for the completion of my tax return - however I can them in weekly and admin_name will complete my record keeping. 6 / 11

7 4. As a sub-contractor I am not entitled to Holiday pay. Add2Pay will withhold 10% of my weekly/monthly pay in a savings account until such time as I need to pay my tax bill. Yes/ No Name : Signature : Date : PERSONAL DETAILS First Name: Surname Name: Address: NI Number: Date of Birth: Land Line Number: Mobile Number: BANK DETAILS Name on Account: Name of Bank: 7 / 11

8 Sort Code: Account No: CONTRACT FOR SERVICES THIS CONTRACT FOR SERVICES is made on Between: Add2PayLimited Lavoro Care and Name Address ('the Operative') BACKGROUND 1. {The Supplier} is a provider of services to various projects for clients ('Clients'). {The Supplier} is engaged by Clients to provide the services of its employees and subcontractors on various specific and distinct contracts or projects ('Engagements'). 2. The Operative has skills and abilities which may from time to time be available to {The Supplier} ('the Services') to help on dedicated projects. 3. {The Supplier} and the Operative agree that if the Operative offers to make his services available to {The Supplier} and is engaged by {The Supplier}, the terms and conditions in this Contract for Services shall apply. 4. If and when the Operative provides the Services to {The Supplier} on a Engagement, such provision of Services shall constitute a separate and distinctive engagement under this Contract for Services. Unless varied or amended or otherwise agreed between the parties in accordance with clause 25, these terms and conditions shall apply to each engagement. OPERATIVE PROVISIONS 1. {The Supplier} is not obliged to offer work on any Engagement to the Operative, neither is the Operative obliged to accept any work offered. The Operative is not obliged to make his Services available at any time. Specifically both parties agree that they do not intend to create or imply any mutuality of obligations at any time, either during or in between any individual engagement. 2. This contract for services supersedes any other contract for the performance of the Services between the parties or between the Operative and any other party. 8 / 11

9 3. The Operative warrants that he is competent and medically fit to perform the Services. 4. The Operative warrants that he possesses all necessary qualifications and licenses to perform the Services. 5. The Operative warrants that he will comply with all regulatory requirements in relation to the Services. 6. The Operative is free to provide any services to any other party at the same time as being engaged by {The Supplier} and {The Supplier} acknowledges that it will not have first call on the services of the Operative in priority to any third party. 7. The Operative accepts that he is responsible for the Services, and that he is responsible for covering his own risk with a suitable policy of insurance. Where requested by {The Supplier} or by {the Supplier's} client the Operative will provide evidence of such insurance. FEE FOR THE SERVICES 8. Formal written tenders will not be required. The parties agree that the fee for the Services (which may be agreed as a fixed price, day rate or hourly rate) and the method of payment will be negotiated and agreed between them from time to time and this shall include verbal agreements of the rate of payment for the Services. 9. Unless registered for VAT, the Operative is not obliged to raise an invoice for the Services. {The Supplier} operates a self-billing system and will provide the Operative with a periodic remittance advice, including by electronic means where agreed between the parties. If the Operative is registered for VAT the Operative will raise a VAT invoice to {the Supplier}. 10. Where the Services fall within the scope of the Construction Industry Scheme as from time to time defined by HM Revenue & Customs, the Operative will provide to {the Supplier} at the earliest opportunity sufficient information to enable {the Supplier} to verify the Operative's payment status with HM Revenue & Customs. The responsibility for the accuracy of this information rests with the Operative, and the Operative will not be entitled to receive any payment under this contract until this information has been provided to {the Supplier}. 11. Any defective work {The Supplier} reasonably determines has been caused by the Operative, or by any substitute or hired assistant working for the Operative, will be corrected by the Operative at his own cost or in his own time. 12. The Operative is responsible for all his travelling expenses to and from any location where he has been engaged to provide the Services. 13. The Operative is engaged on an independent self-employed and professional basis and is not entitled to holiday pay, sick pay or any other payment for periods when the Services are not provided to {The Supplier} in any circumstances. 14. The Operative is not entitled to participate in {The Supplier}'s grievance and disciplinary procedure. 15. The Operative will not be entitled to receive payment for Services cancelled by {The Supplier} or by {The Supplier}'s Client for any reason. HEALTH AND SAFETY 16. In the interests of all parties' health and safety obligations, the Operative agrees to observe all reasonable 9 / 11

10 operational rules relating to working hours, site security and safety. 17. The parties acknowledge that it may be necessary for health and safety or security reasons for the Operative to be identifiable whether evidenced by security passes or on parts of clothing. However, the Operative will not represent himself as a servant or employee of {The Supplier} or of {The Supplier}'s Client at any time, but as an independent Operative in business on his own account engaged by {The Supplier} for the specific purpose of providing the Services. PERFORMANCE OF THE SERVICES 18. The Operative will determine the manner in which the Services are performed, and will act in a professional manner at all times while carrying out the Services for {The Supplier}. The Operative is acting in an unsupervised capacity and thus proper performance of the Services is the responsibility of the Operative. 19. Unless specifically agreed in advance, the Operative is responsible for providing any equipment and materials necessary for the proper and safe performance of the Services. 20. This Operative is entitled to use a suitably qualified substitute to perform the Services at the Operative's discretion, if the Operative is unable or unwilling to perform the Services personally. 21. The Operative is entitled to use suitably qualified hired assistance to perform the Services at the Operative's discretion. 22. Where a substitute or hired assistant is used by the Operative there shall be no contractual or financial relationship between {The Supplier} and the substitute or hired assistant. The Operative is solely responsible for arranging payments to the substitute or hired assistant. The Operative warrants that the 18. substitute or hired assistant satisfies the warranties contained in clauses 3, 4 and 5 of this contract for services. TERMINATION OF THIS AGREEMENT 18. This Agreement can be terminated by either party for any reason. No notice is required by either party. MISCELLANEOUS 24. The Operative confirms that he has read and understood the terms and conditions herein and has had the opportunity to discuss this agreement with any person or professional adviser he considers necessary before signing. 25. Both parties agree this is intended to be a legally binding contract governing the nature of the contractual relationship between them. The Operative shall signify his agreement to this contract by signing where indicated below. Where the Operative starts to providing service to {the Supplier} under this agreement this shall be deemed to be acceptance of these terms. 26. Both parties agree that, with the exception of verbal agreements referred to in clause 8, these terms and conditions represent the whole agreement between them. No variations may be made to these terms unless agreed in writing by both parties. 27. Should {The Supplier} fail to enforce or apply any of the rights that it has under this contract for services, it shall 10 / 11

11 Powered by TCPDF ( Add 2 Pay LTD not be construed that {The Supplier} approves or agrees to any breach of contract or that it loses its rights to enforce the terms of this contract for services in full at any time now or in the future. 28. The Headings used in this contract for services are for reference only and are not intended to be interpreted as part of the terms agreed between the parties. References to the masculine include the feminine. 29. This contract is governed by the laws of England and Wales. Signed on behalf of {The Supplier} Sign: Print Name: Date: Position: Sign: Print Name: 11 / 11