There is an alternative

Since the tax legislation was first announced, IR35 has forced many independent contractors with personal services companies to...

Since the tax legislation was first announced, IR35 has forced many independent contractors with personal services companies to investigate alternative modes of operating.

With this in mind, a web-based company called Prosperity4 launched itself last month, claiming to provide contractors with "the most tax efficient and time saving" method of working, post IR35.

Founded by an ex-contractor and two former IT recruiters, Prosperity4 operates as an on-line based or virtual employer, hiring contractors as PAYE employees and administering their business affairs (including invoicing, and tax and National Insurance payments) for a fee.

In return, the company claims to offer contractors flexibility, freelance rates, benefits such as holiday pay, sick pay and insurance, less the "inconvenience, risk and cost" involved in running a limited company.

However, the service is not to be confused with an umbrella company, nor does it sanction tax avoidance, stresses Prosperity4 sales and marketing director, Alan Corcoran.

"IR35 has happened and we believe it's time to move forward," he says. "Our focus is on building an on-line community for IT contractors that provides them with an effective alternative to the limited company structure. By offering a range of benefits and services, we are more than just a payment service."

According to Corcoran, the company charges contractors three per cent of their gross income - capped at £3,000 - for its services.

Contractors wishing to compare their potential incomes from this and other methods of working are encouraged to use the company's on-line calculator which Corcoran says has been evaluated and approved by accountancy firm, Pricewaterhouse Coopers.

This was first published in July 2000



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