Am I inside IR35?

[chead2344]

Hi All,

First post so bare with me.

I was a permanent employee of company X for a year when I decided to accept am offer from company Y for more money. After notifying my boss, he counter offered. However the terms of the new offer where:

• I would be on a PAYE salary matching the offer from company Y
• I would be working for my boss's Limited company as an employee
• He would contract me out to company X to cover my salary and other expenses such as employers NI
• It would be on a 1 year fixed term contract.
• I could be working anywhere that his company saw fit I.e. Not just company X.

After accepting The offer I've now completed a year working for the company X on behalf of my boss's Limited company and all has been fine. I've been paid a regular salary, paid tax and NI and paid my student loan.

I have now, to coincide with the end of the 1 year fixed term found a fully fledged contract position at a different company though my own limited company. My boss has again counter-offered.

The new offer is for me to come back to company X as a proper contractor on X a day, for 3 months. My concern is that by accepting this I may be deemed inside IR35.

Can anybody advice?
Thanks

[Sausage Surprise]

Is there an Agency involved here. If so I've no doubt your "boss" is looking to be another level of bureaucracy and will be taking his usual cut.
I wouldn't be lining his pockets any further unless he's offering you a better rate than the agency.
I may of course be totally confused as to what is going on...
I'd take the new role away from "your boss" for simplicity.

[Louisa@InTouch]

Hi chead2344,

Reading through these circumstances, this may put you at more risk of IR35 questioning from HMRC.

However with IR35, you always need to bear in mind this is based on each contract individually.

On this new assignment through Company X, you will actually need to look at the working conditions between you and the end client, to determine your IR35 position.

I would suggest that before making any decisions, you have an IR35 review done, based on your contract with Company X for this assignment and working conditions with the end client.

[LisaContractorUmbrella]

If you're going back to the company to do the same or similar role then I would say that you are IR35 caught; if it's a completely different role then look at whether you will be under supervision, direction and control; whether there is mutuality of obligation in the control and whether you would have the right to substitute another individual if you couldn't attend the contract for whatever reason

[WordIsBond]

Maybe I don't understand or didn't read carefully enough. But the big question for me is, why would you want to accept 3 months for a contract at serious risk of IR35 when you can take a 12 month contract somewhere else with less risk?

Unless you can do both on a part time basis. It isn't a silver bullet, but if you have two contracts running at once it is a lot harder for HMRC to argue you are a disguised employee. But if you have to choose, choose the longer, cleaner contract, unless the money is so much better that you'll be better off even if you are inside IR35.

[TheFaQQer]

I have now, to coincide with the end of the 1 year fixed term found a fully fledged contract position at a different company though my own limited company. My boss has again counter-offered.

The new offer is for me to come back to company X as a proper contractor on X a day, for 3 months. My concern is that by accepting this I may be deemed inside IR35.

Will you have:

• an unfettered right of substitution; or
• a lack of mutuality of obligation between you and the client; or
• a lack of direction and control exercised by the client

If you have ONE of those three, then you are outside IR35. It may be a much harder fight to prove - and that's where you rely on your IPSE membership (if you aren't a member and want to sign up, use reference code IPSEMGM0005 for a £10 Amazon / iTunes voucher) to fight your defence if you were investigated.

If you would fail on all three, then you are inside IR35.

Personally, I'd take the other offer, get some "real" contracting experience - but that doesn't mean that the new role won't be IR35 caught, though!

Good luck with whatever you decide.

[ASB]

Do you have any shareholding in the "boss's" company ? From your description it appears not.

It appears you are simply an employee paid a salary of "more than you got previously".

If all of your income is through PAYE then IR35 is irrelevant.

It might not be to the boss though.

If this situation is changing in the new offer; i.e. you have some shareholding and receive dividends then IR35 is a risk.

[northernladuk]

Personally, I'd take the other offer, get some "real" contracting experience - but that doesn't mean that the new role won't be IR35 caught, though!

Good luck with whatever you decide.

Totally this. IR35 aside going back to your old employer isn't contracting, it's getting paid differently. If you are gonna jump then do it properly IMO.

[unixman]

I would say he IR35 risk depends entirely on the wording of the contract and your working practices. Check it for the usual things (as above) or have it checked.

Some above say contracting for your former employer is a bit naff. I think it depends. Eg it might be a good geographical location for you.

[tarbera]

So your boss see's his cash cow going and can magically match your new offer

Can I ask

What is your current day rate and what have you been offered?

Please don't sell yourself short