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  1. #1

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    Default Taking redundancy and going back as a contractor

    I know this is a question asked time and again but I think my situation is slightly different to other questions I have seen on this topic.
    I currently work for a large International company as an IT Service Manager based in the UK. Until now there has been 2 roles - Service Manager and Project Manager. Due to cutbacks they have decided to only have one role which will primarily be Project Management with some elements of Service Management. This means the IT Service Manager role is now redundant and I have accepted a redundancy package as a result (my last day of work will be 31st December 2014).
    I have always wanted to move into training and taking redundancy has given me the perfect opportunity to set up my own training company. I was talking to one of our managers in the business in Netherlands and explaining what I would be doing through my new company, they asked if I would be interested in designing the training program for a new system they are implementing. It is a win-win situation, I know the company and have knowledge of the new system (so I can hit the ground running) and it means my business gets a great contract to start out with and I get to practice in a relatively safe environment.
    1) Part of my redundancy will be tax free;
    2) The contract I have been asked to take on is completely different to the role I have been made redundant from;
    3) The new contract is only for 3 months;
    4) To make things easy I will be going through one of their existing vendors, using them as an umbrella company.
    Does anyone know if HMRC are going to have an issue with me taking on this contract and will there be tax implications??

  2. #2

    Double Godlike!

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    Default

    Interesting thought that they consider PM and SM to be parallel roles...

    However, from what you describe, I can't see a problem. Clawback of redundancy can only happen if your original salaried post has not genuinely disappeared which doesn't appear to be the case here.
    Blog? What blog...?

  3. #3

    Umbrella Queen

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    Default

    Quote Originally Posted by Psychocaz View Post
    I know this is a question asked time and again but I think my situation is slightly different to other questions I have seen on this topic.
    I currently work for a large International company as an IT Service Manager based in the UK. Until now there has been 2 roles - Service Manager and Project Manager. Due to cutbacks they have decided to only have one role which will primarily be Project Management with some elements of Service Management. This means the IT Service Manager role is now redundant and I have accepted a redundancy package as a result (my last day of work will be 31st December 2014).
    I have always wanted to move into training and taking redundancy has given me the perfect opportunity to set up my own training company. I was talking to one of our managers in the business in Netherlands and explaining what I would be doing through my new company, they asked if I would be interested in designing the training program for a new system they are implementing. It is a win-win situation, I know the company and have knowledge of the new system (so I can hit the ground running) and it means my business gets a great contract to start out with and I get to practice in a relatively safe environment.
    1) Part of my redundancy will be tax free;
    2) The contract I have been asked to take on is completely different to the role I have been made redundant from;
    3) The new contract is only for 3 months;
    4) To make things easy I will be going through one of their existing vendors, using them as an umbrella company.
    Does anyone know if HMRC are going to have an issue with me taking on this contract and will there be tax implications??
    I can't see any tax issues arising from this but can you confirm whether you will be working through an umbrella company (i.e. one that will employ you under an over-arching contract) or whether you will work with a company that will act as an umbrella company?
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  4. #4

    Should post faster

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    Default New Role

    Quote Originally Posted by Psychocaz View Post
    I know this is a question asked time and again but I think my situation is slightly different to other questions I have seen on this topic.
    I currently work for a large International company as an IT Service Manager based in the UK. Until now there has been 2 roles - Service Manager and Project Manager. Due to cutbacks they have decided to only have one role which will primarily be Project Management with some elements of Service Management. This means the IT Service Manager role is now redundant and I have accepted a redundancy package as a result (my last day of work will be 31st December 2014).
    I have always wanted to move into training and taking redundancy has given me the perfect opportunity to set up my own training company. I was talking to one of our managers in the business in Netherlands and explaining what I would be doing through my new company, they asked if I would be interested in designing the training program for a new system they are implementing. It is a win-win situation, I know the company and have knowledge of the new system (so I can hit the ground running) and it means my business gets a great contract to start out with and I get to practice in a relatively safe environment.
    1) Part of my redundancy will be tax free;
    2) The contract I have been asked to take on is completely different to the role I have been made redundant from;
    3) The new contract is only for 3 months;
    4) To make things easy I will be going through one of their existing vendors, using them as an umbrella company.
    Does anyone know if HMRC are going to have an issue with me taking on this contract and will there be tax implications??
    As you mention that it is a completely different role and therefore distinctive from your previous job, there should be no problem here in you setting up your own company and undertaking this specific short term/ fixed term project. The contract should of course be properly worded.

    I am not so sure that the best decision is to go through an Umbrella solution (especially one provided by them). If your intention is to have this first contract as one of many, it may well be a better option to trade through your own ltd company outside of IR35 and maximise your take home remuneration. Running your own ltd company gives you more flexibility and opportunity to save tax compared to running through an Umbrella.

  5. #5

    Nervous Newbie


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    Default Thanks

    Thanks for the replies. Regarding using another company as an umbrella company, it's only because I may not be able to get my own company accepted as an approved supplier as I will have no trading history.

  6. #6
    sal
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    Quote Originally Posted by Psychocaz View Post
    Thanks for the replies. Regarding using another company as an umbrella company, it's only because I may not be able to get my own company accepted as an approved supplier as I will have no trading history.
    I think your understanding of contracting through Umbrella and ltd are a bit mixed up. You can still go trough another company (preferred supplier) with overarching contract and use your own ltd, not work on their PAYE (using them as Umbrella).

    Client <ContractA> Preferred supplier <ContractB> YourCo - This is not Umbrella

    Client <ContractA> Preferred supplier <Employment contract> You - This is Umbrella

    The difference in take home pay is massive

  7. #7

    Midland White

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    You have mentioned the Netherlands so do your due diligence on operating compliantly if working out there.

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