Want to move from umbrella to limited - I would need help

[Testor VTS]

Hello Everyone,

First of all thanks for this great forum I already found a lot of useful information here!

On the 2nd March I became a contractor but as I had to move for my new job I just wanted to make things easy and I went with an umbrella company. Basically, I work for a company through an agency and that company supplies us for an OEM. (so it's like me - agency - company - OEM).
Now I would like to look into moving to my own limited company, but first I would like to know whether I would fall inside or outside of IR35.

My umbrella company suggested a specialist company for this, but I would be glad if you could give me other alternatives to look at.

The actual issue I am facing at the moment is that I am currently with an umbrella company, so really there is nothing to be reviewed as I only have an assignment schedule between myself and the agency, and a contract for the umbrella company. If I want to have my situation reviewed for IR35 I am sure the specialist company would need an actual contract plus some additional information, the contract between myself and the umbrella is not relevant.

The problem I have is the agency does not want to produce any contract upfront (not even a contract proposal).

They said I should have my current situation reviewed for IR35, and if it turns out I am outside they would issue me a contract...

But surely in that case the review would no longer be valid as the company doing the IR35 check has not actually seen that contract!?

An other interesting thing is that when I initially contacted my agency they said all of their contracts are inside IR35, and after a few conversations they said they can produce a contract which would possibly fall outside of IR35...

I believe the next step would be to get a proposed contract from agency, get the review done, and once the IR35 situation is clear then sign the contract.

The only reason why it's not the other way round (so sign contract, get it reviewed) is because the agency would issue different contracts based on whether I am inside or outside IR35

I am confused at the moment, and I don't really know what to do and how should I move on, so this is why I would need your help.

Thanks,

Tibi

[Alan @ BroomeAffinity]

More important than any contract is the actual working practices. Assuming the assignment is the same whether brolly or limited, then it should be fairly easy to assess inside or outside.

[mudskipper]

Also worth pointing out that if you have had only one assignment through the brolly, it may invalidate expenses as it may not be considered a temporary workplace - worth checking with them.

[LisaContractorUmbrella]

As Alan says if HMRC come calling they will be far more interested in what you actually do than what's written on a piece of paper - they got wise to contracts being written to be outside IR35 years ago. Have a read here IR35 Legislation - Advice, Help and Information for UK Contractors so you have a good understanding of the legislation and then have a look at the work that you're doing - if you think you'll be outside IR35 after that then get your contract looked at by a specialist

[Testor VTS]

Thanks for the replies, now it's more clear.

As I mentioned above the umbrella company suggested an IR35 specialist company who could do the review for me. They would charge £155 plus VAT for this. Does this sound reasonable? If yes I just go ahead and have my situation reviewed.


I read a few pages on this site and it looks like I will go ahead with the limited company regardless I am inside or outside as it looks like even if I am inside the take home amount would be a little bit more than going through an umbrella.

[Kenny@MyAccountantFriend]

IR35 Review

A lot of the contractor specialist accountants (ourselves included) would include an initial review for free if you sign up with them, so you could save your money if you have decided you are going to go with a Ltd company either way.

Most of the accountants would also be IR35 specialst as well having undertaken the IPSE (formally PCG) courses and training.

[northernladuk]

Thanks for the replies, now it's more clear.

As I mentioned above the umbrella company suggested an IR35 specialist company who could do the review for me. They would charge £155 plus VAT for this. Does this sound reasonable? If yes I just go ahead and have my situation reviewed.


I read a few pages on this site and it looks like I will go ahead with the limited company regardless I am inside or outside as it looks like even if I am inside the take home amount would be a little bit more than going through an umbrella.

Sounds too expensive to me. QDOS do it for £90 but if you buy PI/PL through them (which you should) you get three free a year. They aren't as indepth as the £90 one but should suffice if you have a decent understanding of IR35.

[Dan@OrangeGenie]

We work closely with all our Umbrella employees. If running a Limited company is something they could benefit from then we educate them. If they are compliant then we handle the migration across.

It really helps cement the relationship and understand the goals and aspirations when tax planning.

Happy to help if needed...

[Kate Cottrell]

Thanks for the replies, now it's more clear.

As I mentioned above the umbrella company suggested an IR35 specialist company who could do the review for me. They would charge £155 plus VAT for this. Does this sound reasonable? If yes I just go ahead and have my situation reviewed.


I read a few pages on this site and it looks like I will go ahead with the limited company regardless I am inside or outside as it looks like even if I am inside the take home amount would be a little bit more than going through an umbrella.

Judging by the prices you are quoting I think the specialist referred to is us - Bauer & Cottrell. As Alan says it is the working practices that are key to all of this. We do a service called Contractor Switch designed for your situation and this costs £50 plus VAT. We do ask for the proposed limited company contract if you can get it. If we are of the opinion that you can work outside IR35 on this engagement and the contract needs work we will reduce our normal review fee of £155 plus VAT by the £50 plus VAT, so essentially those outside IR35 will only pay the normal review fee but those inside IR35 will be £50 worse off but at least they will have an independent opinion when making such important decisions of this sort.

Kate Cottrell

[PinnacleChris]

Considerations for you and your agency.

Hi Tibi,


Echoing the other replies on this thread, understanding where you would sit should HMRC look at your situation is one of the most important considerations when considering the limited company option.

Also you may want to speak to your agency as, under legislation, if your situation has the presence of Supervision, Direction and Control and you do choose to contract through a PSC (Personal Services Company) your agency can still be liable for any PAYE that hasn't been deducted correctly.

Chris.