Doctor working as a contractor

I've got a new job which means I'm working as a doctor doing consultations for a company. For the first time I'm now a contractor and am paid an hourly rate, whereas previously I was an employee.

I'm trying to find out the best way to navigate this. Should I be operating as a sole trader or as a LTD company? As far as I can see, sole traders are taxed heavily >100k at the marginal rate, whereas LTD companies don't have this problem but do have large reporting burdens etc.

Anyone have any advice?

Some of these previous AAM threads might give some advice.

You need professional advice from an accountant or tax consultant before you commit to this arrangement. Revenue have been extremely aggressive over the past decade or so in their treatment of locums and other medical professionals working as contractors.

settlement said:

As far as I can see, sole traders are taxed heavily >100k at the marginal rate, whereas LTD companies don't have this problem

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The key point to understand is that if you leave profits in the company they are subject to Corporation Tax, but they are still in the company. When you take them out they are, to use your words, taxed heavily.

For a doctor who is unlikely to be selling his business, it is very hard to see any advantages of a limited company, other than the ability to make higher pension contributions.

Brendan

Brendan Burgess said:

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For a doctor who is unlikely to be selling his business, it is very hard to see any advantages of a limited company, other than the ability to make higher pension contributions.

Brendan

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It can be very advantageous Brendan in indemnifying the hiring party from contingent liabilities under employment law as it's not legally possible to be the employer of a limited company.

Hi Tommy

That might well be so. But I think he is asking about the advantages to him, rather than to the "employer".

Brendan

Brendan Burgess said:

Hi Tommy

That might well be so. But I think he is asking about the advantages to him, rather than to the "employer".

Brendan

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Who's going to hire him Brendan if there's obvious inherent risk attaching to engaging him as a sole trader? Notwithstanding my earlier cautionary note, he's far more attractive to any prospective hirer if he has incorporated.

Well he has asked a question about whether he should set up a company or operate as a sole trader.

Many companies pay doctors and other professionals to provide services to them. They don't say what form the service provider should operate under.

@settlement

If you have one client and you provide only them with services and no other clients and you work on their premises during set hours, it is likely that you will be deemed an employee and not self-employed.

However, if you have only one client, it must be a very large company, and they should be familiar with the potential problems for themselves of treating an employee as a contractor.

If you have only one client, there are pros and cons of being an employee or self-employed. In my experience, it is much simpler to be an employee and you have much more rights.

But if you specify the type of arrangement you have, we can give further insight.

Brendan

Brendan Burgess said:

If you have one client and you provide only them with services and no other clients and you work on their premises during set hours, it is likely that you will be deemed an employee and not self-employed.

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Hi Brendan
The Revenue activity in this area throughout the past decade or so has been focused much wider than the very obvious cases of single-client sole traders. For example the locum doctors who previously provided, as self employed agents, holiday and sick leave cover in perhaps a dozen or more practices in the course of a year have pretty much all been forced to operate exclusively as employees with appropriate PAYE/PRSI operation on all their earnings.

T McGibney said:

Hi Brendan
The Revenue activity in this area throughout the past decade or so has been focused much wider than the very obvious cases of single-client sole traders. For example the locum doctors who previously provided, as self employed agents, holiday and sick leave cover in perhaps a dozen or more practices in the course of a year have pretty much all been forced to operate exclusively as employees with appropriate PAYE/PRSI operation on all their earnings.

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Wow. I was not aware of that.

So if I am a locum serving 10 different practices, each of them has to register me as a PAYE employee?

Brendan

Brendan Burgess said:

Wow. I was not aware of that.

So if I am a locum serving 10 different practices, each of them has to register me as a PAYE employee?

Brendan

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Yes Brendan that's it. It can lead to farcical outcomes - the most serious of which is an alarming shortage of GPs across the country as the prospect of limited coverage for holiday and leave time dissuades many older GPs from continuing in business and prospective GPs from going into practice in the first instance.

T McGibney said:

You need professional advice from an accountant or tax consultant before you commit to this arrangement. Revenue have been extremely aggressive over the past decade or so in their treatment of locums and other medical professionals working as contractors.

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I presume what you mean her is what you later said about being forced to operate as PAYE employees? That's interesting because I worked as a locum but basically ended up working for a single clinet (VHI) and then through them I ended up paying PAYE even thought it was casual work. I did not even think about it at the time. Why does revenue want that - I presume it allows them to make stable tax income?

T McGibney said:

Who's going to hire him Brendan if there's obvious inherent risk attaching to engaging him as a sole trader? Notwithstanding my earlier cautionary note, he's far more attractive to any prospective hirer if he has incorporated.

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From the POV of my new job, all I can say is that they arrange my medical indemnity and deduct it from my invoices. So I don't think they care about sole trader or LTD but maybe you mean something else

Brendan Burgess said:

Well he has asked a question about whether he should set up a company or operate as a sole trader.

Many companies pay doctors and other professionals to provide services to them. They don't say what form the service provider should operate under.

@settlement

If you have one client and you provide only them with services and no other clients and you work on their premises during set hours, it is likely that you will be deemed an employee and not self-employed.

However, if you have only one client, it must be a very large company, and they should be familiar with the potential problems for themselves of treating an employee as a contractor.

If you have only one client, there are pros and cons of being an employee or self-employed. In my experience, it is much simpler to be an employee and you have much more rights.

But if you specify the type of arrangement you have, we can give further insight.

Brendan

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I was told by the new client I would be a contractor which I thought was great initially and the flexibility etc is great. But I do note on their website it says that i can be either a contractor or an employee but unsure if that refers to other types of roles. I eas never given an option in any case.
Just to backpedal a bit, yes I only have one client, and took up the 'job' with this client with the sole intent of working for them. but they ask me to issue invoices and it seems from their point of view, whatever revenue thinks, that they are determined i be a contractor. i wonder if there is a benefit to them in that. When i was in australia, I was told that my 'employer' would benefit by me being a contractor, which was better for me too, for tax reasons or some such.
In any case, brendan, i have just the one client.

By the way, off topic, the ability to work as a locum doctor in ireland in general is extremely constrained, not just by revenue but also by medical indemnifiers, by practices themselves etc

settlement said:

By the way, off topic, the ability to work as a locum doctor in ireland in general is extremely constrained, not just by revenue but also by medical indemnifiers, by practices themselves etc

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Yep, that's why they earn so much. My Ex was paying over €3000 a week for Locum holiday cover, more if she went through an agency.
Locum Pharmacists make more.