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

[allatsea84]

umbrella, agency working and ir35

Hi - having read the crucial post (thanks) at the start of this thread and various posts I'm after some thoughts and advice.

I'm currently contracting at one of the big financial institutions via an agency via my PSC. My contract and working practices are solidly outside of IR35 (reviewed and re-reviewed). Like many, end of Feb... no more PSCs, go the Umbrella/PAYE route. FYI - I've been at the end-client for approx 18 months, albeit on 3 different projects.

My initial plan was to leave, take a formal break, so no clear contract between us and then return at the start of the new FY under a new SoW and role, clearly showing no mutuality of obligation. I have however been informed that if I take a break, the agency will be asked to find a replacement, but if in 3-4 weeks time they don't, I could (likely to) be asked back albeit it would be on the same SoW between the agency and the end-client. The agreement between the agency and end-client covers several resources, none of us are named on the contract, its very generic and deliverable-based.

My own contract/agreement with the agency will be brand new, new role and deliverables and I will be recorded as a "Temp Agency Worker".
In truth, I don't wish to leave (yet), as its a good client and team and some of the work I am participating in is challenging and interesting. However, with my business hat on, I do not want to put myself at real risk of retrospective investigation.

My questions are as I think there is a lot of grey on this:
- By going umbrella/paye as the end-client will no longer accept PSCs, is this effectively accepting the role is now inside IR35, or is it just a new engagement model where you end up paying more personal tax/NI and you no longer engage via your PSC. Both mentioned contracts are worded as though they are purely a delivery-based arrangement.
- Assuming that going Umbrella and that the contract is entirely deliverable based, does that in any way put the previous 18-months worth of engagement at risk?

[Guest]

Hi - having read the crucial post (thanks) at the start of this thread and various posts I'm after some thoughts and advice.

I'm currently contracting at one of the big financial institutions via an agency via my PSC. My contract and working practices are solidly outside of IR35 (reviewed and re-reviewed). Like many, end of Feb... no more PSCs, go the Umbrella/PAYE route. FYI - I've been at the end-client for approx 18 months, albeit on 3 different projects.

My initial plan was to leave, take a formal break, so no clear contract between us and then return at the start of the new FY under a new SoW and role, clearly showing no mutuality of obligation. I have however been informed that if I take a break, the agency will be asked to find a replacement, but if in 3-4 weeks time they don't, I could (likely to) be asked back albeit it would be on the same SoW between the agency and the end-client. The agreement between the agency and end-client covers several resources, none of us are named on the contract, its very generic and deliverable-based.

My own contract/agreement with the agency will be brand new, new role and deliverables and I will be recorded as a "Temp Agency Worker".
In truth, I don't wish to leave (yet), as its a good client and team and some of the work I am participating in is challenging and interesting. However, with my business hat on, I do not want to put myself at real risk of retrospective investigation.

My questions are as I think there is a lot of grey on this:
- By going umbrella/paye as the end-client will no longer accept PSCs, is this effectively accepting the role is now inside IR35, or is it just a new engagement model where you end up paying more personal tax/NI and you no longer engage via your PSC. Both mentioned contracts are worded as though they are purely a delivery-based arrangement.
- Assuming that going Umbrella and that the contract is entirely deliverable based, does that in any way put the previous 18-months worth of engagement at risk?

I am in exactly the same position but I have been with the client for 8 months with 2 different teams and projects. Current contract ends on 28th February.


I am going to be taking a short break (2 weeks approx) and am planning to close my company (divorce). I applied for a few roles with other clients and got no response.

ATM I have no option but to go PAYE (short term) or risk being jobless with no savings. The new "contract" starts mid-March.

[drob1984]

I am in exactly the same position but I have been with the client for 8 months with 2 different teams and projects. Current contract ends on 28th February.


I am going to be taking a short break (2 weeks approx) and am planning to close my company (divorce). I applied for a few roles with other clients and got no response.

ATM I have no option but to go PAYE (short term) or risk being jobless with no savings. The new "contract" starts mid-March.

Frustrating isn't it - also in a similar situ. I am in a position where I do have savings/warchest, but I am loathed to eat into them when I believe I am skilled enough to be in "work". Are you concerned about the risk described in the previous post?

I do think where companies are just changing the engagement model (i.e. no PSCs and PAYE/Umbrella only), it isn't clear enough as to whether you have effectively gone "inside" and are at risk. To me its as if the roles have been not formally declared if you like, but its the unknown and uncertainty that is killing me.

(note: 84 was a good year!)

[Guest]

Are you concerned about the risk described in the previous post?

Yes I am.

[Paralytic]

I do think where companies are just changing the engagement model (i.e. no PSCs and PAYE/Umbrella only), it isn't clear enough as to whether you have effectively gone "inside" and are at risk.

It really is quite clear. If your client has gone with no PSCs and no determinations, you are not inside. Period, as our North American friends like to say.

You're most certainly more at risk than if you leave the client completely, but the level of that risk is something only HMRC could tell you. They've said (written) publicly that there is no risk (unless fraud is at play). Many don't believe them.

[eek]

It really is quite clear. If your client has gone with no PSCs and no determinations, you are not inside. Period, as our North American friends like to say.

You're most certainly more at risk than if you leave the client completely, but the level of that risk is something only HMRC could tell you. They've said (written) publicly that there is no risk (unless fraud is at play). Many don't believe them.

1) While you may not be inside the end client and agency will treat you as inside as anything else opens up risk for them.

2) regarding HMRC seeking back taxes the concern is usually related to the Agency report which would show:-

March - your NI number, your PSC, little NI collected
April - your NI number, a different (umbrella) company. a lot of NI collected

So whether you move inside IR35 or the client has a blanket ban to HMRC it will look the same.

[jamesbrown]

1) While you may not be inside the end client and agency will treat you as inside as anything else opens up risk for them.

2) regarding HMRC seeking back taxes the concern is usually related to the Agency report which would show:-

March - your NI number, your PSC, little NI collected
April - your NI number, a different (umbrella) company. a lot of NI collected

So whether you move inside IR35 or the client has a blanket ban to HMRC it will look the same.

Amendments to the PAYE legislation will facilitate a specific flag for a deemed payment in RTI.

[cojak]

For the avoidance of doubt, this means that although you have not been been deemed as inside, you will be taxed as if you are. The agencies will insist that you go PAYE or use an umbrella to ensure that full taxes are paid because they won’t trust you to pay those taxes via your Ltd.

[eek]

Amendments to the PAYE legislation will facilitate a specific flag for a deemed payment in RTI.

That's different though - it's for a very different system to the Agency reports.

That flag kicks off a separate set of routines within the PAYE consolidation reports i.e. look on that table rather than the usual one (I know too many people at HMRC)..

[Paralytic]

1) While you may not be inside the end client and agency will treat you as inside as anything else opens up risk for them.

2) regarding HMRC seeking back taxes the concern is usually related to the Agency report which would show:-

March - your NI number, your PSC, little NI collected
April - your NI number, a different (umbrella) company. a lot of NI collected

So whether you move inside IR35 or the client has a blanket ban to HMRC it will look the same.

2) Pay significant portion of brolly income into pre-existing pension, little NI collected.

But when it comes down to it, it really is up to the individual: appetite to risk and trust in HMRC.