Advice Needed

[dippyeggs]

Hi guys, I was wondering if anyone could give me some advice on something.

I recently secured a remote working job with an international company. I initially thought the role was full time permanent but when receiving the contract I noticed it was for an independent contractor.

I have been doing a lot of reading up on IR35 and from the details of the contract it looks like I will be inside as some clauses as to disguised employee would apply.

The payment structure of the new role is also different from a normal contract role as they are offering a yearly wage and request monthly invoicing, thus making a monthly payment which needs to be invoiced by the contractor. The monthly payment would not change depending on hours worked so it's hard to calculate a daily or hourly rate.

For example purposes lets say the contract pay per year was 60k and weekends were not worked. The invoice should show 60 / 12 per month.

No other contracts I have found or read about only follow the same rules.

I am unsure how to calculate the take home pay after joining an umbrella or starting a limited company.

Can anyone give me advice on who to speak to about it or can anyone here give me any simple advice?

Feel free to ask some questions.

Thanks.

[NotAllThere]

If you're on a daily rate, you can't calculate your hourly rate either. So a monthly rate, per se, isn't an issue. (I've had a contract like that - but usually only did a few days per month).

If you go through an umbrella company, then you don't need to worry about IR35. Any brolly should be able to tell you your take home. Be careful who you go with - some so-called umbrella companies are operating tax avoidance schemes.

If you are planning to have more than one contract in future, then go ltd... but get your contract reviewed by one of the specialist companies -> search the forum for recommendations. The difference between an IR35 caught contract through a ltd and going through a brolly is the difference between accountancy cost + other company admin fees, and the brolly's fee for processing your income.

[taxevo]

Get the contract reviewed to check the IR35 status but worth remembering that IR35 is not only about the contract but also the working practices.

An accountant will be able to provide you with a take home pay calculation, both for Limited outside and inside IR35 along with umbrella.

[Alchemy Accountancy]

IR35

I have been doing a lot of reading up on IR35 and from the details of the contract it looks like I will be inside as some clauses as to disguised employee would apply.

IR35 applies if, in the absence of the intermediary (limited company), you would be an employee rather than self-employed. In determining this we use a case law precedent (Ready Mixed Concrete 1968) which states that an irreducible minimum of control; personal service; and mutuality of obligation must be present in the contract (and working practices – which should align to the contract) for it to be deemed employment (in this case, caught by IR35). The presence of some IR35 clauses would not necessarily put you inside – for you to be inside IR35, all three of these must be present.

The best advice (as other have said) is to get the contract reviewed by an IR35 specialist as they will know exactly what to look for in the contract.

[WordIsBond]

Does the international company have a UK presence? Any branches in the UK?

It could make a difference. Employees of foreign companies still have to pay income tax and employee NI, but employer NI doesn't have to be paid.

If the company has no UK presence then ideally you should find a structure that takes advantage of that.

[Platypus]

Hi guys, I was wondering if anyone could give me some advice on something.

I recently secured a remote working job with an international company. I initially thought the role was full time permanent but when receiving the contract I noticed it was for an independent contractor.

I have been doing a lot of reading up on IR35 and from the details of the contract it looks like I will be inside as some clauses as to disguised employee would apply.

The payment structure of the new role is also different from a normal contract role as they are offering a yearly wage and request monthly invoicing, thus making a monthly payment which needs to be invoiced by the contractor. The monthly payment would not change depending on hours worked so it's hard to calculate a daily or hourly rate.

For example purposes lets say the contract pay per year was 60k and weekends were not worked. The invoice should show 60 / 12 per month.

No other contracts I have found or read about only follow the same rules.

I am unsure how to calculate the take home pay after joining an umbrella or starting a limited company.

Can anyone give me advice on who to speak to about it or can anyone here give me any simple advice?

Feel free to ask some questions.

Thanks.

This is not unlike my contract. But ... are you contracted to a foreign entity (e.g. a US company) or to the UK branch/office/subsidiary?

If you were working fully remotely for say a US company, I think that would have a bearing. I would advise to get your contract reviewed by an IR35 specialist, being sure you describe the setup.

I think the above will steer you towards a brolly or your own Ltd.

[dippyeggs]

Bump - Advice needed

The company operates in the British Virgin Islands and is requesting monthly invoice for USD.

I will live and work remotely from the United Kingdom.

I had the contract reviewed and it would fall under IR35 here in the UK.

This is my one and only client I will be working for full time. Is a sole trader a better option as to avoid IR35 complications, umbrella and Ltd seem to have similar calculations if IR35 was the case. I read that IR35 doesnt apply to sole traders.

Thanks for all your replies.

[northernladuk]

The company operates in the British Virgin Islands and is requesting monthly invoice for USD.

I will live and work remotely from the United Kingdom.

I had the contract reviewed and it would fall under IR35 here in the UK.

This is my one and only client I will be working for full time. Is a sole trader a better option as to avoid IR35 complications, umbrella and Ltd seem to have similar calculations if IR35 was the case. I read that IR35 doesnt apply to sole traders.

Thanks for all your replies.

It doesn't but are you sure they will engage you as a sole trader? Not many companies will. Are you comfortable running your own affairs, doing your own self assessment and the like? If not you may be better swallowing the cost of an umbrella to do it for you.

I'd check your options first in case you put time in to it and then they turn round and say no.

[WordIsBond]

It doesn't but are you sure they will engage you as a sole trader? Not many companies will.

UK companies don't want to because they don't want to deal with someone coming back and claiming they were employees, in an employment tribunal. There's no reason a BVI company should object.

OP, I'd go sole trader, personally. No employer NI, no need to file company accounts, no IR35. I'd still definitely get an accountant.

The only exception would be if you can live on much less than the total income, and your pension is weak. In that case it might make sense to go ahead and form a limited company, operate inside IR35, and shovel huge amounts from your company into your pension (since those contributions are exempt from the deemed payment calculation, while as a sole trader you still have to pay NI on money put into a pension).

I would not go umbrella, unless you want to pay a lot of money for the privilege. If you go umbrella your income is not only subject to income tax, but also employee and employer NI. So you are paying both the umbrella fees and another 15%+ in NI. That's a lot. This is only an option if you are going to be making whacking pension contributions, then I guess it could make sense under that scenario. But it certainly isn't tax efficient to use a structure that makes your income subject to employer NI.

[WordIsBond]

One more thing, the pound is at somewhat historic lows vs the dollar. You should be prepared for the likelihood that sanity will eventually prevail and there will be, by the middle of the contract and probably sooner, some kind of fairly reasonable deal with the EU, and the pound will then surge. If you are invoicing in USD, that means your income in GBP will drop. Budget accordingly.