Does an IR35 contract 'red flag' my company?

[WordIsBond]

However, I've been talking to a few people already contracting and they seem to believe I could be risking automatically 'red flagging' my company in some way to taxman. eg: even if I then move on to perfectly legitimate outside-35 contracts I run the risk of being under more scrutiny because of that first one.

Is this a reasonable bit of advice, or a load of rubbish?

Sounds like a load of rubbish to me.

They are speculating. So let me speculate the other way. If you operate a contract inside IR35, then that shows the tax man that you take IR35 seriously, you understand it and obey the law. Therefore, if you say that your next contract is outside IR35, they are less likely to investigate it and more likely to take your word because you've built up credibility. /speculation

I defy anyone to prove my speculation is worse than the other guys you've been talking to.

Besides, we don't even know what IR35 is going to look like next month. It could all change in the next two days. What we do know is that under the current regime, very few investigations take place, and there are contractors who are still at their former perm employers and have been for a long time and have never been investigated.

I think it is extremely unlikely that they would red flag someone who voluntarily operates IR35 on a contract when they know there are probably thousands taking the mick. I'd say if the contract makes sense with what you want to do with your business, take it.

[VectraMan]

Sounds like a load of rubbish to me.

They are speculating. So let me speculate the other way. If you operate a contract inside IR35, then that shows the tax man that you take IR35 seriously, you understand it and obey the law. Therefore, if you say that your next contract is outside IR35, they are less likely to investigate it and more likely to take your word because you've built up credibility. /speculation

WHS. If anything a company that's only ever paid its one director exactly the right minimum salary and has always paid out nearly all its post-tax profits as dividends is a red flag. In reality nobody is ever likely to look at what your company does closely enough for any of this to be a factor.

It is a fairly simple and safe way to get started and means you'll be properly set up for contract number 2. If there's any truth in agents not seeing you as an experienced contractor then you'll be no worse off than you are now.

But if you're confident you can get something better straight away, then do that.

[NibblyPig]

So leave and get a lot more lucrative one that's outside. That's what someone that is serious would do. Not stay and hang on to mummy's apron tails.


Thats what someone serious would do.. You getting me yet?

That's what someone who is derisive and abrupt to all new contractors would do, like yourself

You always forget that it's not easy to start out and assume everyone knows everything there is to know already.

@Nibblypig I get asked if I have my own limited company and I've been contracting for years.

I also randomly get asked about different insurances, bank account and occasionally, where credit checks are required, about my accountant.

Agents just ask you that so if you are selected you can start asap.

Indeed. If you can't talk confidently about them then your CV might hit the bin if they think you are trying it on. Do you think OP will be able to quickly reply when an agent says 'ok I'll put you forward please send me your VAT certificate, company incorporation certificate, bank acc sort code IBAN and liability insurance they're interviewing later today' or will he be going hold on how do I get my bank details I am just setting my bank up, what's a VAT certificate, did I get that when I signed up etc. etc.

I only found out how to get half of that stuff at the start of my first gig, and I had ages to figure it out because I already had the job

NLUK says you can set all that up in a couple of days, but again he always assumes everyone knows all about contracting and has done it before. It took me 3 weeks to get a business bank account sorted due to some teething problems (was eventually compensated for them), I had to sort out my accountant, purchase required accounting software, discuss how to proceed, research contracting, set up an LTD, research best insurance, buy a car, etc. etc.

Half of it I figured out on-the-job as a contractor for my former employer. I felt ready and confident at the end of it, and landed a gig a week later.

It is in your best interests to do whatever you can to succeed, if you think you go from 0 to fully fledged contractor instantly then you're probably deluding yourself and you're likely going to burn through whatever savings you have figuring it all out. It's no a brainer to take a free transition step that helps you get everything figured out and it will help you with talking to agents.

[northernladuk]

That's what someone who is derisive and abrupt to all new contractors would do, like yourself

What had the way I speak on the forum got to do with the way I run my business and how is advise others?

There is so much that needs correcting in that lot I can't even be bothered to start...

Your opinion is it's good to play contractors at your ex employer. Mine is that it isn't. Let's leave it at that.

[Fred Bloggs]

I'm in the middle ground on this one. While a BOS/BAU role is offered at a former employer, there can really be little doubt it is IR35 caught and should really be avoided. But in some cases, work at a previous employer can work. When I first left permiedom, my ex employer engaged me for a series of one off days to support one of their systems. The work was carried out against a series of purchase orders on standard commercial terms and conditions. No supervision, direction, control etc involved. It worked for me and it worked for them. I don't believe what I did was in any way IR35 caught. So, I think working at a previous employer can work, but only given certain circumstances.

[TheFaQQer]

However, I've been talking to a few people already contracting and they seem to believe I could be risking automatically 'red flagging' my company in some way to taxman. eg: even if I then move on to perfectly legitimate outside-35 contracts I run the risk of being under more scrutiny because of that first one.

Is this a reasonable bit of advice, or a load of rubbish?

Sounds like rubbish to me - I have a role inside IR35 (thanks to the Alexander review), and a contract outside at the same time. But I doubt that there is anything that red flags the entire company as something to watch.

Where is does make a difference is that HMRC may have a tendency to include your entire revenue (rather than just the IR35-caught revenue) in the figures that they use to calculate how much is being "lost" by people not declaring themselves inside IR35 - a fact that has been pointed out to them in past.

[NibblyPig]

What had the way I speak on the forum got to do with the way I run my business and how is advise others?

When I joined the forum a couple of years prior to successfully starting contracting, I was trying to get advice, and everything I asked and posted you were extremely hostile, which really put me off and made me think I was not remotely ready. As a result of that and my struggling to get going from recruiters hanging up on me etc. I decided to give up and back to perm for a couple of years. After I got the courage to try again it turned out great and wasn't anywhere near as daunting as I was led to believe.

I see people in my position come on here and get blasted and told they have no chance because they don't know every single thing about IR35, and they probably feel the same as I felt, so I do feel somewhat protective of them. And most of what I struggled with was getting the first contract, which was offered free after I left my permie job and incredibly useful to get my foot in the door.

When I tried going straight into contracting the first time it didn't work, and it was only bankrolled by the fact I was being made redundant from a permie job in several months and they agreed to waive my notice period, so I set up an LTD and was ready to go.

So when you post good advice which is a lot of the time I will agree but when you tell people they are idiots and need to learn stuff that most people only learn after months of being exposed to contracting, then I jump in and get defensive

[SueEllen]

Indeed. If you can't talk confidently about them then your CV might hit the bin if they think you are trying it on. Do you think OP will be able to quickly reply when an agent says 'ok I'll put you forward please send me your VAT certificate, company incorporation certificate, bank acc sort code IBAN and liability insurance they're interviewing later today' or will he be going hold on how do I get my bank details I am just setting my bank up, what's a VAT certificate, did I get that when I signed up etc. etc.

This part is complete nonsense.

I get asked verbally do I have all these. Then only once I've secured the contract do they ask me for copies of the paper work.

I only found out how to get half of that stuff at the start of my first gig, and I had ages to figure it out because I already had the job

NLUK says you can set all that up in a couple of days, but again he always assumes everyone knows all about contracting and has done it before. It took me 3 weeks to get a business bank account sorted due to some teething problems (was eventually compensated for them), I had to sort out my accountant, purchase required accounting software, discuss how to proceed, research contracting, set up an LTD, research best insurance, buy a car, etc. etc.

This where the OP is showing you they aren't as ignorant as you in the same situation the fact they are on this forum and doing their research.

[northernladuk]

Again a whole raft of stuff I could correct in there but CBA.

[NibblyPig]

This part is complete nonsense.

I get asked verbally do I have all these. Then only once I've secured the contract do they ask me for copies of the paper work.

Presumably you reply with 'yeah no problem' rather than 'whats a vat certificate let me write all that down I will have to ask my accountant because I don't know'. If you reply with the latter because you're not ready, then your CV is gonna end up in the bin.

This where the OP is showing you they aren't as ignorant as you in the same situation the fact they are on this forum and doing their research.

Yeah, and are being torn to pieces like I was when I first did the same thing! I'm only saying it's a huge help to have a free contracting job than jumping in the deep end with no income or experience because I have been in that situation recently and I know exactly what it is like.

No need to be rude to me calling me ignorant as well as poor newbie contractor. The worst part of my contracting experience was trying to find things out on here while people treat you like tulip.