Tax issues when working as a consultant in the public sector


Many organisations are unwilling to employ specialist and experienced professionals on a permanent basis due to the wage demands of these professionals, but there are times when public sector organisations need the assistance of a highly trained and qualified professional. This is why public bodies employ consultants for set periods of time or on a job-by-job basis. The organisation benefits from the guidance and expertise of a qualified professional, but they only pay for the time and work that they receive.

It may also be that the organisation is doing something new and doesn’t have anyone with the required skills in place, or they need an external professional to cast a fresh eye on their working practices. These are all factors in why public sector bodies employ consultants, and a consultant should offer guidance, advice, working practices and perhaps even leadership to an organisation that needs to improve or change direction.

 Independent consultants need to develop their skills in an industry

Independent consultants need to develop the required skills in the workplace, usually working their way up through organisations, and then showcase their ability to provide guidance to major bodies. From here, many professionals decide that their skillset and reputation allows them to set up as an independent professional. A good consultant will have connections in their industry and will be known for their work, but they will also market themselves to bodies and professionals in the area.

Consultants are responsible for their own tax and NI payments because the public sector body will not withhold anything when paying the consultant. The consultant must be aware of the tax implications of their role and the deadlines for submitting returns and making payments. With many consultants earning good fees for their work, they may be placed into a higher tax bracket, and this can impact on the profit that a consultant earns for their work. Many consultants also find that issuing invoices and then following up for payment is a time-consuming task that can cause them problems.

There are ways that consultants can lessen the impact of these issues, such as hiring a secretary to carry out their paperwork or working with an umbrella company. An umbrella company takes care of the paperwork and tax issues for a consultant, allowing them to focus on their work. With 2017 featuring a further clampdown on what constitutes “self-employment”, many consultants require help with IR35, and this is where working with a reputable umbrella company can make life much easier for a consultant.

While very few people enjoy paying tax, there is an acceptance that tax issues have to be dealt with correctly and as efficiently as possible. Consultants who aren’t skilled or experienced in this area will find that calling on a professional for help allows them to focus on their core skills and key roles, without placing themselves at risk.