The Money Mustache Community

Around the World => UK Discussion => Topic started by: brokenarrows on March 04, 2021, 04:41:48 AM

Title: Subcontracting a software developer as a sole trader
Post by: brokenarrows on March 04, 2021, 04:41:48 AM

I am operating as a sole trader at the moment in the UK while in between jobs. I am a software engineer.
I have received a contract to create some software for a client. A small part of the project is highly specialised and I want to subcontract that part of the work out.
I know someone based in Germany who can do the work.

If I subcontract the work out for £1k to my friend in Europe. He wants to be paid via Paypal.
I then invoice my client £5k for the whole project.

Do I simply report £1k as an expense when reporting my income to HMRC?

 

Title: Re: Subcontracting a software developer as a sole trader
Post by: ExitViaTheCashRamp on March 06, 2021, 04:52:46 PM

Yes I believe so.

 You need to retain evidence of the payment and why it was made (i.e. a contract) for a really long time - 8 years I think ? If HMRC decide to investigate you - they can demand paperwork for that payment for that without it you can be taken to court for it.