Interim Management

The advantages of working as an interim:

• The opportunity to use your core skills to deliver real results to a range of organisations
• Using your skills in a variety of environments will provide a constant challenge and
  will ensure your continuing professional development
• Interims can often avoid the organisational politics but at the same time have
  the opportunity to make a difference
• Working in a variety of roles gives the opportunity to get involved in brand new
  initiatives as well as more established ones
• Working across organisations provides an excellent opportunity to network
  across the health economy
• A good work life balance – a large proportion of contractors work part time and/or with flexible hours giving them the chance to work flexibly around family or other commitments
  
  

Setting Up As An Interim Manager

As a contractor you will need to work through a limited company. It's important you get advice from a professional (typically an accountant) to help you make the decision about how to go about this.

Below is a guide to some of the areas you need to consider when setting up as an Interim Manager. Please note that this guide is not exhaustive and you should do more research using the links provided.

Limited Company
When working through your own Limited Company you are both the owner and employee of the company (you are NOT self employed) and you pay tax and National Insurance under a 'pay as you earn' scheme (PAYE). As you are the employer and the employee, you also pay both employer and employee National Insurance contributions. You are responsible for funding holiday pay, sick pay, pension contributions, medical insurance etc. You are responsible for keeping all your own accounting records and for paying your own tax including Corporation Tax.

Forming the Limited Company
You can buy a new company with your own choice of name or you can buy a ready made company which has been formed but has never traded (off the shelf). Numerous company formation agents will establish your company for you, or if you are using an accountant, s/he will be able to form the company for you. For first time contractors, short term contractors or those that do not want to take on the statutory responsibilities of managing their own company, an umbrella company can be a simple way of quickly setting yourself up to work legally as a contractor. The umbrella company is your employer; you submit your timesheets to them on a monthly basis and they raise an invoice to Blenkin Associates on your behalf.

There are hundreds of umbrella companies vying for your business – we have provided details of three such companies (see right) that our existing contractors use.

Getting paid
In a company you can be paid either as an employee by means of a wage, salary or commission, or as a shareholder by way of a dividend from taxed profits. This is a complex area; establishing the optimum and most tax efficient method of remuneration can have a significant effect on your earnings. Your accountant will advise on the best approach. You must also consider the IR35 regulations which are summarised below.

IR35
IR35 is a set of Inland Revenue rules introduced in April 2000 governing the amount of your company's income which must be paid out as a salary. The rules state that if your income falls under IR35, 95% of all income less allowable expenses has to be paid out as salary to the person who earned it. Whether or not the income you earn as an interim manager falls under IR35 depends on the nature of each assignment. You will need to do further research to understand which type of assignments fall under IR35. The type of contract provided to you by Blenkin Associates will reflect whether the assignment falls within IR35 or not. You can make the decision assignment by assignment so that some earnings are within IR35 and some outside of it in any particular tax year. At the end of the tax year you will have to sign a declaration to say if any of your income has fallen under IR35 it has been treated according to the rules. HMRC can challenge your status for up to seven years, so it is advisable that if you believe your assignment falls outside IR35, that you keep good notes as to why you believed that to be the case. If you need to check your status, you can ask a lawyer specialising in employment law.

Paying VAT
Your company may not be registered for VAT until it has a bank account, and you have started your first assignment. Registration usually takes between ten and twelve weeks. Many interim managers are not obliged to register for VAT but, even if your turnover is not above the registration threshold, you could register on a voluntary basis. As well as the standard VAT scheme, you could also investigate the VAT Flat Rate Scheme (FRS). Your accountant will be able to register your company for VAT and can advise you on which scheme to register with.

Opening a Company bank account
You will need a separate bank account to handle your company transactions. You will usually have to present yourself at a local branch with forms of identity and your company incorporation documents.

Insurances
We recommend that you also have some basic insurance cover as follows: Professional indemnity; typically £250K is sufficient – however if you were to undertake work through the Crown Commercial Services Framework you would need £1m worth of cover
Employers' Liability
Public Liability

You will also want to think about arrangements for your own personal insurances including pension, life assurance, private medical insurance, permanent health insurance, critical illness cover

Important
Blenkin Associates has developed this website content to support you in establishing yourself and working as a successful interim manager. However please be aware that, whilst every effort has been made to ensure that the information in this pack is accurate at the time of publication, we cannot be held liable for any errors, omissions or exceptions. You should check its accuracy before use and, if in any doubt, you should seek professional advice before acting on any of its
recommendations.