• Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.

Have to make a decision imminently - i.e. PAYE or PSC. Would be grateful for a steer.

Collapse
X
  •  
  • Filter
  • Time
  • Show
Clear All
new posts

    Have to make a decision imminently - i.e. PAYE or PSC. Would be grateful for a steer.

    Evening everyone

    I have to make a decision imminently (really should have been today) and I have been given until Tuesday to give an answer. I am afraid I find the subject rather confusing (despite how many threads/web pages I read) and would be eternally grateful for some help and advice. I will endeavour to be concise and please let me know if you need more information.

    I work for my Ltd company serving an end client via a recruitment agency. I submit a weekly invoice to the recruitment agency.

    The end client has ruled all contractors inside IR35 and has offered two options: (a) remain and continue to be paid by the recruitment agency but PAYE, or (b) join the end client PAYE on the books. Many contractors have left this week seeking work elsewhere. Others are holding out for a change of stance and are questioning the legality of the end client’s blanket decision.

    Fortunately my position is different and I have other options. The end client accepts I am outside IR35 and agrees that my SDS is accurate. The end client is trying to make an exception for me (as they don’t want me to walk) and if successful I would be allowed to continue working as a PSC. However the decision rests with the Commercial Dept, and to honest it could go either way. To assist in their decision, the recruitment agency has provided details of an ‘IR35 Tax Liability Insurance product’ that I could purchase.

    This afternoon the end client proposed another option. While they continue to try and make my PSC arrangement work, would I be interested in going PAYE via the recruitment agency if my day rate was upped by 25%? My current day rate is £700, and therefore it would increase to £875. The recruitment agency has clarified that the £875 figure represents my total cost to the end client, and my actual PAYE day rate would be £676.

    Thank you for reading thus far. To cut a long story short I am trying to compare the take home pay between (a) current PSC arrangement, and (b) PAYE based on the £676/875 figures. I have tried in vain to speak to my Accountant (an online firm) but despite several calls there has been available suitable qualified to take my call. Fair enough I shouldn’t have left it so late. But sadly it’s only the last couple of days that information has been forthcoming from the end client.

    Now for my silly questions (apologies in advance!).

    How do I work out my take home pay based on working 5 days a week, 48 weeks a year (less Bank Hols). I take 10 days holiday in the summer, and 10 days off at Christmas although this includes some Bank Hols. I have experimented with online calculators but the results are always different and I’m not sure whether I am using the correct figures to begin with.

    I am afraid I don’t know what my tax code is, or what it would be for PAYE. My tax affairs are basic to say the least. As basic as they can be. I have one contract, no staff, no investments etc. Not sure if this is relevant but I am aged 45 and married with 2 children. My husband is out of work thanks to Covid.

    My Ltd company pays me £732.33 gross a month in accordance with advice from my online Accountant. The rest I take as dividends. Every month I withdraw the maximum dividend amount allowed by the Accounting Software and I use it to pay off debts. Don’t ask, it’s a tragic story!

    The online Accountant has sensibly closed for the weekend so I thought I might try this forum so I am prepared for Tuesday.

    Thanks for any kind soul able to help me, Amanda x.


    #2
    I think there is a lot of things wrong here and you end up missing the biggest point but lets try break it down.

    Originally posted by amandakclose View Post

    I have to make a decision imminently (really should have been today) and I have been given until Tuesday to give an answer. I am afraid I find the subject rather confusing (despite how many threads/web pages I read) and would be eternally grateful for some help and advice. I will endeavour to be concise and please let me know if you need more information.
    How have you let it come to this point? Surely it's too late?. The legislation hits on Tuesday and there is no more working time before then. Why have you not dealt with this sooner? There is very little you can do now. Any real options you had have gone unless everyone works bank holiday there. You can't do any work for the client on Tuesday as you don't have a determination or a contract. As soon as they say inside then you decline and you are done.
    I work for my Ltd company serving an end client via a recruitment agency. I submit a weekly invoice to the recruitment agency.
    So what is your exact situation now? I would expect that you currently have no contract as you should have a new one ready for the 6th when the new world of IR35 hits? You should have an SDS and a new contract reflecting that. I bet you have neither. You cannot go in to work on Tuesday without one as should be normal for contractors. If you do you'll be accepting a contract you haven't made a decision on yet. Is it the old terms or are you working to terms you've not yet signed? What a horrible horrible mess.

    It could be the usual thing where I've got something wrong by not reading and understanding something but new legistaltion starts on the 6th so by law you need and SDS and a new contract to back that up.
    The end client has ruled all contractors inside IR35 and has offered two options: (a) remain and continue to be paid by the recruitment agency but PAYE, or (b) join the end client PAYE on the books. Many contractors have left this week seeking work elsewhere. Others are holding out for a change of stance and are questioning the legality of the end client’s blanket decision.
    The ones that walked are the smart ones. They've done what they need to in good time. Plenty of gigs out there so if they are any cop they'll be back in contract within a week. The others are not smart. It hits on Tuesday to it's too late to be holding out for any change or legal challenge. It won't happen. They are outside to inside and at high risk of investigation as the client has just told HMRC they have been inside all along. My bet is that although it sounds big that they are challenging it, they are the bunch that didn't really have a clue what is going on and have just stuck their heads in the sands and carried on.

    All looks pretty straight forward so far. Client says blanket inside yet you are still going to go in on Tuesday. You are inside. Hope you have a big appetite for risk cause you are top of list for HMRC.
    Fortunately my position is different and I have other options. The end client accepts I am outside IR35 and agrees that my SDS is accurate.
    What? So they didn't blanket? You just said they blanketed?
    The end client is trying to make an exception for me (as they don’t want me to walk) and if successful I would be allowed to continue working as a PSC.
    You can continue to work as a PSC. Just inside. Sorted no? As soon as you start talking exceptions to keep you I smell a fudge. The role you do is inside or outside. Not much of it has to do with you. It's how the client wants the role run. When you start changing it to try keep one body the determination is unsafe. This doensn't sound clever.
    However the decision rests with the Commercial Dept, and to honest it could go either way. To assist in their decision, the recruitment agency has provided details of an ‘IR35 Tax Liability Insurance product’ that I could purchase.
    I doubt that will sway them. The insurance product means nothing if they come to claim it and the insurance people say no. Too much risk just to keep one contractor IMO. We are all replaceable.
    This afternoon the end client proposed another option. While they continue to try and make my PSC arrangement work, would I be interested in going PAYE via the recruitment agency if my day rate was upped by 25%? My current day rate is £700, and therefore it would increase to £875. The recruitment agency has clarified that the £875 figure represents my total cost to the end client, and my actual PAYE day rate would be £676.
    So this is common. Uplift the rate to go inside. Pretty standard and many people working in Public Sector roles have been doing this for a few years. THat said I think you are forgetting the situation you are in here. Your problem isn't about the money. It's about your IR35 status and risks that come with an inside determination. The next day you go in now you will need to have a determination. Are they attempting to put you PAYE to avoid making a determination on the role? That's not going to work is it? And if that determination is inside, as it sounds like it should be. They you are caught and your entire history at that client is at risk of an investigation. I can't see how you going PAYE in the interim helps anything.
    You know until this is sorted you can't do any work for them on Tuesday until it's all signed don't you?

    Thank you for reading thus far. To cut a long story short I am trying to compare the take home pay between (a) current PSC arrangement, and (b) PAYE based on the £676/875 figures. I have tried in vain to speak to my Accountant (an online firm) but despite several calls there has been available suitable qualified to take my call. Fair enough I shouldn’t have left it so late. But sadly it’s only the last couple of days that information has been forthcoming from the end client.
    And you've completely missed the risk here. You are trying to find out what to do about inside outside gigs. Everything you've typed up to now is utterly pointless if the only question you have is comparing rate. That is very very simple. To be on an equivalent you need about a 30 to 35% uplift to be in a similar position. That was nice and easy.. but that's not your real problem. It's the horrible mess you are in.

    Now for my silly questions (apologies in advance!).

    How do I work out my take home pay based on working 5 days a week, 48 weeks a year (less Bank Hols). I take 10 days holiday in the summer, and 10 days off at Christmas although this includes some Bank Hols. I have experimented with online calculators but the results are always different and I’m not sure whether I am using the correct figures to begin with.
    30-35% uplift in rate to come somewhere close. That's as much as a comparison as you'll get. It's impossible to do a like for like comparison as they are two completely different things. People have tried creating a calculation to do this since IR35 hit and no one has done it yet.

    Either way. Why are you doing this? You don't have a choice. Take it or walk seems to be your only options now. Depending on how long you have at the client you only real option is to walk i.e. not turn in on Tuesday and that's that.

    I am afraid I don’t know what my tax code is, or what it would be for PAYE. My tax affairs are basic to say the least. As basic as they can be. I have one contract, no staff, no investments etc. Not sure if this is relevant but I am aged 45 and married with 2 children. My husband is out of work thanks to Covid.
    Why do you care about this? To try work out the comparison? Can't do it. 30-35% uplift.

    My Ltd company pays me £732.33 gross a month in accordance with advice from my online Accountant. The rest I take as dividends. Every month I withdraw the maximum dividend amount allowed by the Accounting Software and I use it to pay off debts. Don’t ask, it’s a tragic story!
    Irrelevant

    The online Accountant has sensibly closed for the weekend so I thought I might try this forum so I am prepared for Tuesday.
    Sensibly closed? What does that mean?

    So what do you think is going to happen on Tuesday? You rock up to work not knowing if you are inside or outside with no agreement to get paid? Absolutely awful position and really poor it's got to this. I assume you've got no contract and no SDS at this point so you simply cannot go back in to work until it's sorted. The fact you think you can do that just smacks of part and parcel and other inside pointers. If you are truely outside you do not go in to a clients without a contract.

    You start down the right path talking about IR35 but then just completely forget all about it. What you are doing is accepting you are inside by going PAYE. So what about the retro risk. What about the fact your client is telling HMRC your were inside all along? Why aren't you walking like the sensible lot and instead are staying like the less sensible ones?

    Was this entire, very long thread, just about comparing the two incomes? It could have been a two line question if that was the case. I thought you were going to come ask about what your situation is IR35 wise and the massive risk of retro taxation which would include re-accounting your entire time at your client as inside and paying the extra tax, plus potential penalties, plus interest back?

    The fact it's got to this when the next working day is the 6th of April appears to be a bit of a screw up.

    Do no more work for the client until you are issued with a determination, as they are required to do by law, and a new contract. If it's outside then happy days, if it's inside then you walk. If it's outside because they don't want to leave you and they've pressurised they internal people to an outside decision just to keep you then you walk because it's unsafe.

    I hope someone else can come help you instead of my one dimensional diatribe which is often wrong on many points but that's my thoughts.
    Last edited by northernladuk; 3 April 2021, 01:17.
    'CUK forum personality of 2011 - Winner - Yes really!!!!

    Comment


      #3
      Originally posted by amandakclose View Post
      Evening everyone

      I have to make a decision imminently (really should have been today) and I have been given until Tuesday to give an answer. I am afraid I find the subject rather confusing (despite how many threads/web pages I read) and would be eternally grateful for some help and advice. I will endeavour to be concise and please let me know if you need more information.

      I work for my Ltd company serving an end client via a recruitment agency. I submit a weekly invoice to the recruitment agency.

      The end client has ruled all contractors inside IR35 and has offered two options: (a) remain and continue to be paid by the recruitment agency but PAYE, or (b) join the end client PAYE on the books. Many contractors have left this week seeking work elsewhere. Others are holding out for a change of stance and are questioning the legality of the end client’s blanket decision.

      Fortunately my position is different and I have other options. The end client accepts I am outside IR35 and agrees that my SDS is accurate. The end client is trying to make an exception for me (as they don’t want me to walk) and if successful I would be allowed to continue working as a PSC. However the decision rests with the Commercial Dept, and to honest it could go either way. To assist in their decision, the recruitment agency has provided details of an ‘IR35 Tax Liability Insurance product’ that I could purchase.

      This afternoon the end client proposed another option. While they continue to try and make my PSC arrangement work, would I be interested in going PAYE via the recruitment agency if my day rate was upped by 25%? My current day rate is £700, and therefore it would increase to £875. The recruitment agency has clarified that the £875 figure represents my total cost to the end client, and my actual PAYE day rate would be £676.

      Thank you for reading thus far. To cut a long story short I am trying to compare the take home pay between (a) current PSC arrangement, and (b) PAYE based on the £676/875 figures. I have tried in vain to speak to my Accountant (an online firm) but despite several calls there has been available suitable qualified to take my call. Fair enough I shouldn’t have left it so late. But sadly it’s only the last couple of days that information has been forthcoming from the end client.

      Now for my silly questions (apologies in advance!).

      How do I work out my take home pay based on working 5 days a week, 48 weeks a year (less Bank Hols). I take 10 days holiday in the summer, and 10 days off at Christmas although this includes some Bank Hols. I have experimented with online calculators but the results are always different and I’m not sure whether I am using the correct figures to begin with.

      I am afraid I don’t know what my tax code is, or what it would be for PAYE. My tax affairs are basic to say the least. As basic as they can be. I have one contract, no staff, no investments etc. Not sure if this is relevant but I am aged 45 and married with 2 children. My husband is out of work thanks to Covid.

      My Ltd company pays me £732.33 gross a month in accordance with advice from my online Accountant. The rest I take as dividends. Every month I withdraw the maximum dividend amount allowed by the Accounting Software and I use it to pay off debts. Don’t ask, it’s a tragic story!

      The online Accountant has sensibly closed for the weekend so I thought I might try this forum so I am prepared for Tuesday.

      Thanks for any kind soul able to help me, Amanda x.
      As you are too late either walk away or do a contract directly with the end client PAYE. You just have to accept the hit on the income you take home and you as everyone else will be paying more tax going forward.

      Comment


        #4
        Originally posted by Pmidas View Post

        As you are too late either walk away or do a contract directly with the end client PAYE. You just have to accept the hit on the income you take home and you as everyone else will be paying more tax going forward.
        And risk of retrospective action
        'CUK forum personality of 2011 - Winner - Yes really!!!!

        Comment


          #5
          Originally posted by northernladuk View Post
          Sensibly closed? What does that mean?
          I think she means "the accountant has made the sensible decision to close for the weekend".

          Comment


            #6
            How long have you worked at that client for?
            Also, what proof do you have that your contract, which you declared to be outside IR35, was actually outside IR35.
            The greatest trick the devil ever pulled was convincing the world that he didn't exist

            Comment


              #7
              Originally posted by LondonManc View Post
              How long have you worked at that client for?
              Also, what proof do you have that your contract, which you declared to be outside IR35, was actually outside IR35.
              I've a feeling we won't be hearing from the OP again unfortuantely
              'CUK forum personality of 2011 - Winner - Yes really!!!!

              Comment


                #8
                Originally posted by northernladuk View Post

                I've a feeling we won't be hearing from the OP again unfortuantely
                You've scared them off again?
                The greatest trick the devil ever pulled was convincing the world that he didn't exist

                Comment


                  #9
                  Originally posted by LondonManc View Post

                  You've scared them off again?
                  Generally a pretty safe bet but I'm thinking this one is more the case of the OP realising what a mess they are in and not wanting to elaborate further.
                  'CUK forum personality of 2011 - Winner - Yes really!!!!

                  Comment


                    #10
                    Originally posted by amandakclose View Post
                    I am afraid I don’t know what my tax code is, or what it would be for PAYE. My tax affairs are basic to say the least. As basic as they can be. [..] My Ltd company pays me £732.33 gross a month in accordance with advice from my online Accountant. The rest I take as dividends.
                    Picking up on this point, I assume that you get payslips from your limited company? (You can probably download these from your online accountant.) Each payslip should include your tax code. You should also have received a letter from HMRC each year, informing you of your new tax code.

                    Comment

                    Working...
                    X