umbrella or Ltd??

[clwd]

My spouse was made redundant by her employer but will return as a contractor for six months (rolling) for the employers parent company a few weeks from his termination. Everything else aside would this make her inside IR35, even though there are a few weeks before starting the contract?

If she is definitely inside IR35, is it better for her to set up a ltd company or join an umbrella for only a six month contract? Any comments?

However, I don't think it is good idea to let her join my Ltd because of S660 issue.

[SueEllen]

My spouse was made redundant by her employer but will return as a contractor for six months (rolling) for the employers parent company a few weeks from his termination. Everything else aside would this make her inside IR35, even though there are a few weeks before starting the contract?

From an employment law point of view that sounds a bit dodgy i.e not a real redundancy situation.

If she is definitely inside IR35, is it better for her to set up a ltd company or join an umbrella for only a six month contract? Any comments?

Is she is going to remain contracting whether she is inside or outside IR35 then she may as well set up her own limited now. If she is going to go and find a permanent job after 4 months then she may as well use an umbrella.

However, I don't think it is good idea to let her join my Ltd because of S660 issue.

Have a read of the income shifting legislation that is due to come in this April covering this tax year. http://www.hm-treasury.gov.uk/media/...e_shifting.pdf

[tim123]

My spouse was made redundant by her employer but will return as a contractor for six months (rolling) for the employers parent company a few weeks from his termination. Everything else aside would this make her inside IR35, even though there are a few weeks before starting the contract?

If she is definitely inside IR35, is it better for her to set up a ltd company or join an umbrella for only a six month contract? Any comments?

However, I don't think it is good idea to let her join my Ltd because of S660 issue.

There won't be any S660 (replacement) issues if she's contributing substantial 'actual' income to the company. It's the people who pretend that answering the phone to pimps and writing out the invoices generates a commercial benefit that it's aimed at.

tim

[r0bly0ns]

From an employment law point of view that sounds a bit dodgy i.e not a real redundancy situation.

I would agree, if she has been made redundant, then brought back in to do the same job as a contractor, the job wasn't redundant so they have no grounds for making her redundant.

If that is the case, she may have some legal comeback. It may be worth speaking to the Citizens Advice Bureau

[Ardesco]

There won't be any S660 (replacement) issues if she's contributing substantial 'actual' income to the company. It's the people who pretend that answering the phone to pimps and writing out the invoices generates a commercial benefit that it's aimed at.

tim

But what happens if she takes a couple of months off, or becomes pregnant? In this scenario she will no longer be contributing and equal level into the company and HMRC could bring income shifting legislation into play.

We won't know how badly it is going to affect us until it comes into play. I would still reccomend you have a separate LTD Co each.

[FiveTimes]

I would agree, if she has been made redundant, then brought back in to do the same job as a contractor, the job wasn't redundant so they have no grounds for making her redundant.

If that is the case, she may have some legal comeback. It may be worth speaking to the Citizens Advice Bureau

However if she objects, she might lose a redundancy payment plus the contract.

It sounds like a win/win situation in terms of cash, although it does sound a bit dodgey

[LA1]

In answer to your original question, if she is returning to do the same or a similar role then the short gap makes no differnce she will fall inside IR35. If the role is substantially different then if the contract and her working practice are both strong then she could fall outside IR35.

She needs to be very careful as it is exactly these types of contractor that are targeted by HMRC. Many people think that they can 'go contract' with the same employer and instantly reap the rewards of being in business on their own account. Unfortunately this is complete rubbish. I know of 2 contractors who were fined £10,000 and £12,000 respectively for doing just that.

[clwd]

1. Is it true that her contract will become inside IR35 if she accepts a contract role from her ex-employer after being making redundancy?
ie. There is a Ir35 rule that you can't work as a contractor in the same company after you left the company for certain amount of months or years? If you do so, your contract will be automatically in inside IR35.

2. If I decide to take her as an employee in my ltd, is it worth keeping my ltd for her contract as I am going for permanent role and planning to close my company? By then, she can save money to set up a new ltd and I pay her salary in PAYE.
But my concern is that she is the fee earner as an employee in my Ltd but not me as a Director becuase I am having a permanent job in another company. Will I get any attentions from HMRC?

[malvolio]

...It's the people who pretend that answering the phone to pimps and writing out the invoices generates a commercial benefit that it's aimed at.

tim

Balls. That's not what the debate is about (unless you are a secret NL stooge or blind). You can't separate "family interest" and business relationships between a married couple. Every other part of a marriage/civil partnership is shared equally so why not the tax burden?

[Ardesco]

They should really be encouraging married couples to utilise thier shared tax allowance. May even encourage people to get married nowdays instead of encouraging then to go out and get pregnant by somebody who doesn't give a tulip because you can get more on the benefit.