IR35: Planning for April 2021 – should I stay or should I go?

[ladymuck]

I would stay until Feb as long as the payment period means you are paid before 5 April. No point losing a month's revenue for no good reason.

No real need to keep the Ltd Co for another tax year unless you're hopeful of picking up an outside contract.

[eek]

Hi all, just read through all comments on this topic and found out I am not alone in doubts what decision to take it...stay or go ( by "go" I mean close Limited down).
My situation is very similar to zerosum has as my contract ends on end Feb either and agency had already proposed me to switch to umbrella from March instead with continuity of work for same client ( big bank) . I just regret to not read this thread earlier ( would take a decision to not extend my current contract from November to Feb), but what had happned it happned.

Now I am not sure whether to close Limited down now in January or stay on until end Feb when contract finish, if I will decide to shut down Limited ( still have more then 60k on company's account) can I take ( lets say ) as much dividends as I can first in January and leave the rest for pay taxes 2019/20 then set MVL up, or set MVL first then take as much as I can (after accountant consultation) ? .
Or maybe close it it via strike off instead MVL in January?
Which option is better from the tax to pay view in case when some one has more then 60k on company account ?

How long closure will takes in my case for MVL in comparision to Strike off ? should I start now or is too late and I will finalise it in April

or for instance take another way and stay with Limited for next tax year but leave client in end Feb when contract ends and be without any contract until find entirely new one after April 2020 ?

I will really appreciate for any advice

Let me get this right - you are happy to move from Limited to Umbrella but you don't want to leave the bank you are currently working for and find a contract elsewhere?

[northernladuk]

All the advice about how to shut the company by MVL is already on here.

[suityou01]

Off-payroll review launched - GOV.UK

Financial Secretary to the Treasury Jesse Norman said:

We recognise that concerns have been raised about the forthcoming reforms to the off-payroll working rules.

The purpose of this consultation is to make sure that the implementation of these changes in April is as smooth as possible.

The review, which will conclude by mid-February, will engage with affected individuals and businesses on their experiences of the implementation of these reforms.

A very thorough review

The off-payroll working rules do not affect the self-employed, as only those working like employees are in scope.

Glad they have that bit completely clear now. Only taken 20 years.

Sent from my CLT-L09 using Contractor UK Forum mobile app

[ftccp2020]

So, it’s (nearly!) October 2019 and if you haven’t already, now is the time to start planning for the IR35 changes in April 2020.


Just to be clear – IR35 itself isn’t changing; the change is who decides whether your role is inside or outside of IR35. It is the client who decides that, not you (or your contract reviewer).

First, here are the new rules from the Horse’s Mouth. Read them:
Understanding off-payroll working (IR35) - GOV.UK
April 2020 changes to off-payroll working for clients - GOV.UK


Awareness, not guidance

In this thread I am NOT going to tell you what to do. Your decision comes down to your attitude to risk. If you think it’s unlikely that HMRC are going to start looking closely at your tax position in the future, then you don’t really need to do anything.

But if you feel uneasy about this, maybe it’s time to take stock and decide what you are going to do.


What is the problem?

There is no problem if your outside IR35 contract ends before April 2020. It was reviewed and your working practices show that the outside review was a valid one.


The problem as I see it is if you are currently in an outside IR35 contract but your client decides that your role will be inside IR35 at your next extension or after 6th April 2020. HMRC may look at the months before the switch: “if you are inside IR35 now, you should have been inside IR35 then”.

There is evidence that this happened in the public sector when things changed for them
IR35 inspectors to probe public PSCs retrospectively


What can I do?

Basically, if you think that your client is going to decide that you are inside IR35, you need to consider whether to leave that client:

• BEFORE 31st December 2019 (or you client's assessment date)
• or 24th February 2020 (monthly payment), if your client hasn't said anything to you about assessments
• or 24th March (weekly payment), if your client hasn't said anything to you about assessments
• or not bothering at all and sailing through 6th April 2020.

It’s all about your appetite for risk.


If you do decide to leave, there must be enough time for your last invoice payment date to fall before 6th April 2020.

Because as HMRC says:


(The 'simplified test' defines the size of the companies affected by the changes - annual turnover of more than £10.2 million, see the website for details).


But there’s more to consider…

December 31st comes from some people thinking that you will have been assessed between Jan and March, but my date would have been around the middle/end of Feb (or middle of March if weekly), depending on timesheet submission.



We need to remember that none of this is definite, but I’ve been around long enough to have a fair idea where this is all going, hence this thread.

I don't know that this is actually going to happen, or when it might happen. I make my own determination of the situation based on previous observation of HMRC's ethics, methods and tactics, and the risk that they will be applied in the future with regard to the new world of IR35.

If people ARE in business on their own account, they should be familiar with calculating risk versus reward and determine their own manner of mitigation in light of being informed of the possibilities.

Basically - contractors are big and ugly enough to decide for themselves once they have the information.

It's called making an informed decision.

A few mentioned a similar situation already.

However, if the following scenario develops:

A company does not do any determination at all, they just put all workforce (with the exception of the permanent staff obviously) through the umbrella.

Doesn’t it really takes the risk away for retrospective checks from those who decided to have their next contract extended under umbrella (and they were outside IR35 before on the same project)?

[cojak]

We don’t know.

What do you think? (Your answer is your risk appetite.)

[ftccp2020]

We don’t know.

What do you think? (Your answer is your risk appetite.)

Indeed, nobody knows and we are just all speculating on the painful subject

[rp83]

Totally confused!

Firstly, I am terribly sorry for asking but here's truly hoping someone can shed some light. I have done a lot of reading and more I read, more I am confused

A relatively new contractor providing transformation consultancy. Started my contract last September for 6 months, ends on 16th March, payment terms one week in arrears. The contract is through a recruitment agency, i.e. me > Agency > Business to who I consult for. I invoice the agency (and not the business) and are paid by them. I have been offered an extension of the contract for 3 months, i.e. until end of June 2020. Being risk averse, I had my contract, issued to by the recruitment agency, (with name of the contractor being my company and principal operative of contractor being myself), reviewed by Larsen Howie. Following number of back and forth and amendments to T&Cs issued by agency, I was determined to be Outside of IR35.

Question time -

1. If my contract is extended with no changes to the terms, and as such I remain outside of IR35, should I still consider Umbrella route?
2. In terms of the Client who determines if the role is in or outside of IR35, would it be recruitment agency or the business I consult at?

I have spoken to the accountant who has told me one thing and others have said quite the opposite at work and being a newbie to this, thought I'd ask some pros on here.

Ta!

[malvolio]

Firstly, I am terribly sorry for asking but here's truly hoping someone can shed some light. I have done a lot of reading and more I read, more I am confused

A relatively new contractor providing transformation consultancy. Started my contract last September for 6 months, ends on 16th March, payment terms one week in arrears. The contract is through a recruitment agency, i.e. me > Agency > Business to who I consult for. I invoice the agency (and not the business) and are paid by them. I have been offered an extension of the contract for 3 months, i.e. until end of June 2020. Being risk averse, I had my contract, issued to by the recruitment agency, (with name of the contractor being my company and principal operative of contractor being myself), reviewed by Larsen Howie. Following number of back and forth and amendments to T&Cs issued by agency, I was determined to be Outside of IR35.

Question time -

1. If my contract is extended with no changes to the terms, and as such I remain outside of IR35, should I still consider Umbrella route?
2. In terms of the Client who determines if the role is in or outside of IR35, would it be recruitment agency or the business I consult at?

I have spoken to the accountant who has told me one thing and others have said quite the opposite at work and being a newbie to this, thought I'd ask some pros on here.

Ta!

It's the client who is responsible for the determination, although they may sub that to the agency.

If you are demonstrably outside now, you should ideally be persuading the client to leave well alone so you can both continue the work as normal. If for some reason - usually Human Remains or their outsource supplier or simple fear - the client says you will be treated as inside then (a) leave them to it and find another gig or (b) ask for a minimum 35% rate rise to cover your new overheads or (c) if you are staying then get a whole new contract properly reflecting the changes and detailing your rights wrt holiday pay, sick pay and so on and use an umbrella (preferably a good and honest one like Clarity).

[DKB]

Question time -

1. If my contract is extended with no changes to the terms, and as such I remain outside of IR35, should I still consider Umbrella route?
2. In terms of the Client who determines if the role is in or outside of IR35, would it be recruitment agency or the business I consult at?

I have spoken to the accountant who has told me one thing and others have said quite the opposite at work and being a newbie to this, thought I'd ask some pros on here.

Ta!

1. No. If you're outside of IR35 now and the end client determines post April 2020 that the role is outside, there is no change for you.
2. The end client who you provide services for determine the status.