I resigned, but been given an offer (IR35)

[j66]

Hi guys,

Been trawling this forum for many months but now finally have an excuse to post!

So I have decided to convert to contracting and have been planning it for a while. I am all setup!
I recently resigned from my perm position in the hope it would make me more attractive to potential new employers.

However, my current company have offered me a deal to come back as a contractor, on a monthly basis. Likely for only a month or two to finish some projects.
I initially agreed as the rate being offered was more than double my permanent rate, aware of the IR35 implications.

From what I understand its pretty much impossible to avoid IR35 in this situation, as i will be doing the same work I still think it could be worth it for me though, providing it doesn't mess up the rest of my year.

Question is, how does it look to do 2 months inside IR35 and then the rest of the year outside of it? Is this common, to have a mixture throughout the year?
I also understand at the end of my financial year i would have to make a deemed tax payment for any income that was earnt whilst inside IR35. Can someone please explain how to work this out, as potentially the IR35 money is less than my entire 'salary' for the year.

Thanks in advance

[TheFaQQer]

Question is, how does it look to do 2 months inside IR35 and then the rest of the year outside of it? Is this common, to have a mixture throughout the year?
I also understand at the end of my financial year i would have to make a deemed tax payment for any income that was earnt whilst inside IR35. Can someone please explain how to work this out, as potentially the IR35 money is less than my entire 'salary' for the year.

I have no idea whether it's common or not (I suspect that for most posters here it's not common at all) - but for some people we have contracts which mix between inside IR35 and outside.

HMRC have a spreadsheet available for calculating the payment - here. A lot of my IR35 caught income I pay as a mixture of salary and pension contributions which means that at the end of the year there is no deemed payment to be made because those payments exceed the income earned from the contract.

[northernladuk]

You aren't looking for potential employers. You are looking for potential clients. If you want to be outside IR35 a good start is to think like you are outside. Pedantic point but I think it's an important one for newbies.

[Sausage Surprise]

Sounds like the BBC

[j66]

I have no idea whether it's common or not (I suspect that for most posters here it's not common at all) - but for some people we have contracts which mix between inside IR35 and outside.

HMRC have a spreadsheet available for calculating the payment - here. A lot of my IR35 caught income I pay as a mixture of salary and pension contributions which means that at the end of the year there is no deemed payment to be made because those payments exceed the income earned from the contract.

Brilliant I will take a look over the sheet! Hm, ok so if i earn 10k inside IR35 but then more outside of IR35 and pay myself 11k salary, there would be no deemed payment? Or have i misunderstood the principle?

You aren't looking for potential employers. You are looking for potential clients. If you want to be outside IR35 a good start is to think like you are outside. Pedantic point but I think it's an important one for newbies.

Very true! Thanks for the reminder

Sounds like the BBC

BBC? I'm not sure I follow..

[TheFaQQer]

Brilliant I will take a look over the sheet! Hm, ok so if i earn 10k inside IR35 but then more outside of IR35 and pay myself 11k salary, there would be no deemed payment? Or have i misunderstood the principle?

Correct - the entire income from the contract is paid as salary. From an accounting / investigation point of view, it would be cleaner if your salary is paid such that it clearly relates to that contract though.

[Cirrus]

FTFY

its pretty much impossible to get caught by IR35 in this situation,

It's up to you but I would personally deffo steer clear of IR35 issues. People on here will tell you that is in some way dangerous but in truth they don't know from experience. There was a bit of a Fri-to-Mon connotation when IR35 started but essentially the Revenue are after all people who are not paying PAYE and F-T-Ms are a small proportion. If you're only going to be there for a limited period, waving any IR35 flags seems like more risky than turning a blind eye.

[j66]

It's up to you but I would personally deffo steer clear of IR35 issues. People on here will tell you that is in some way dangerous but in truth they don't know from experience. There was a bit of a Fri-to-Mon connotation when IR35 started but essentially the Revenue are after all people who are not paying PAYE and F-T-Ms are a small proportion. If you're only going to be there for a limited period, waving any IR35 flags seems like more risky than turning a blind eye.

Interesting. So you mean to say that raising the IR35 issue myself over 2 months of work will perhaps draw unnecessary attention?
I have every intention of working inside the legislation after this period anyway.

[northernladuk]

Interesting. So you mean to say that raising the IR35 issue myself over 2 months of work will perhaps draw unnecessary attention?
I have every intention of working inside the legislation after this period anyway.

He's talking bollocks. Ignore him.

[BrilloPad]

I was under the impression that IR35 status was determined from contract to contract.