Starting contracting within IR35 - no point in LTD?

[Rody]

Hi all,

I'm planning to start contracting (for the first time) in November, for around 9 months. The contract will definitely fall within IR35 (fixed place of work, reporting to a "line manager", no substitution clause etc).

So on this basis, I assume I might as well go with an umbrella? The only advantage of a LTD company would seem to be the 5% expenses allowance, and I guess maybe the (minimal?) experience gained of company formation and running. Also, I need to get all this sorted asap and since VAT registration seems to take a month or so, I'm not sure a LTD is even feasible in this timeframe.

After 9 months I'd have to dissolve the company, and I assume there would be additional costs involved in doing this too. I don't think I could justify keeping the company going whilst I'm not contracting just on the off chance I might need it.

Any thoughts?

Cheers,
Rody

[malvolio]

Read the sticky thread at the top of this board. Then go set up your own company and save a few grand a year...

But since you obviously don't understand the economics and legalities of your proposed new venture, go read the first time guide on this site and the one at www.pcg.org.uk As you are about to discover, ignorance will cost you a lot of money.

And FWIW, reporting to a line manager, and fixed place of work are irrelevant to IR35 determinations. No sub is not good, but what about MOO and D&C? Either one will take you outside. Get your contract checked professionaly

[Rody]

Pretty certain I'm caught

Hi Malovlio,

I have actually read through the sticky post and had a good search through the past comments :-)

I'm pretty sure I will be caught by IR35 since I'm doing exactly what it was designed to catch - I will be a Fri-Mon worker. I'm going to leave my employer and then come back the next day as a sub-contractor for them, doing exactly the same work as I was doing before.

I'm only doing this for 8 months or so to raise some capital to fund a return to university, hence the certainty that I won't be doing it long term.

Cheers,
Rody

[malvolio]

OK, fair enough. In which case, umbrella it - take a look at Parasol, Contractor Umbrella or the PCG one at the link below

http://www.pcg.org.uk/cms/index.php?...361&Itemid=483

And make sure it is an umbrella, not a composite!

[Mailman]

Create your own company and find an accountant who agrees that you ARE OUTSIDE IR35!

You are only caught by IR35 if Gordo says so...but until that time you are outside IR35.

Dont short sell yourself just yet

Mailman

[malvolio]

Read the thread properly MM. The OP's doing a short haul as a fill-in for less than a year against a likely IR35 fail. The financial difference won't be big enough to warrant setting up a company and all the associated bits and pieces, umbrella is the ideal vehicle.

If however the OP comes back to contracting properly, I'd agree with you all the way - get your own Ltd.