Taking a contract inside IR35

[WordIsBond]

Do you have a letter of engagement from your accountant? Does it specify an extra fee for inside IR35 contracts? Does it specify that the engagement only covers outside IR35 contracts?

If that stuff was in your letter of engagement, then obviously they are well within their rights to put up your fees for an IR35 contract. If it isn't in that letter of engagement, then I'd talk to the accountant on the phone (not his assistant) and say that this extra fee wasn't covered in your letter of engagement, that going inside IR35 for a few months is not particularly complicated, and they shouldn't need to be charging an extra fee. If he insists, get another accountant.

Sounds to me like they don't know how to handle an inside contract and want you to pay them to learn. If they are going to insist on that, it probably makes more sense to go to someone who already knows how.

The advice Martin gave you is sound. I still run an inside contract, £2K a month retainer with my former employer. I probably now could go outside with it, with the other contracts I'm running, and no one would ever say anything. But I use it for my salary and pension contributions. I pay no other salary but what comes out of that contract. When my pension maxes out and I can't make the contributions anymore, I'll have to reconsider how I handle this contract. But if you apply your pension contributions and salary for the entire year to a 3 months inside contract, it is not likely to result in a big tax hit.

[ContrataxLtd]

I'm obviously being too much of a purist here, but if the sector was working as it perhaps should, people might be going in and out of inside contracts as a matter of course, so I naively expected the accountants fee to cover both. I did imagine that declaring yourself outside was rare, but not so rare as to be non existent.

As WIB points out, check your engagement letter (if you have one) to see what it covers in terms of inside IR35 contracts. I can't really see why they would charge more to be honest, there is a little bit more work each month calculating what the deemed payment should be but not that much more work. If you are using Freeagent it will calculate this for you also.

They should also really be able to provide you with a few calculations to see how being inside IR35 will affect the tax you pay and the ways to reduce this (pension, changing salary etc.) that have been mentioned previously.

Martin
Contratax Ltd