IR35 implications of my end client (through umbrella) becoming my agency client.

[Ariosa]

Hi all,
Any guidance / advice much appreciated!!

I've been working with a client for a few years now. I was initiall contracting with a digital agency providing services to this end client.
Then I was directly contracting with them for some time through my own limited company. Then, IR35 hit and I've been in several contract renewals with them through an umbrella company (other small contracts with other clients via my own limited company going on at the same time).
I'm now launching my own agency and the plan is to not renew the umbrealla company contract and have them as direct client of my agency instead.

What are the IR35 implications / considerations I should have in mind for this transition?
Thanks!

[malvolio]

Hi all,
Any guidance / advice much appreciated!!

I've been working with a client for a few years now. I was initiall contracting with a digital agency providing services to this end client.
Then I was directly contracting with them for some time through my own limited company. Then, IR35 hit and I've been in several contract renewals with them through an umbrella company (other small contracts with other clients via my own limited company going on at the same time).
I'm now launching my own agency and the plan is to not renew the umbrealla company contract and have them as direct client of my agency instead.

What are the IR35 implications / considerations I should have in mind for this transition?
Thanks!

You will be caught with no defence. Shifting intermediaries makes no difference to the nominal relationship between you and the end client.

That's for this contract of course. Any new ones with different clients and your new agency (whatever form that takes) will be a different matter.

Incidentally, after several years contracting, you really should know that already, especially if you're looking to create a whole new business..

[Fred Bloggs]

You will be caught with no defence. Shifting intermediaries makes no difference to the nominal relationship between you and the end client.

That's for this contract of course. Any new ones with different clients and your new agency (whatever form that takes) will be a different matter.

Incidentally, after several years contracting, you really should know that already, especially if you're looking to create a whole new business..

Indeed. On the face of it IR35 still boils down to the holy trinity of working practices. With an agency under my control, I'd be more worried about developments in the MSC arena given HMRC's recent activities.

[Lance]

If you really are starting an agency then you won’t be working for that client any more. In that regard your worries about ir35 are those of an agency (which I could take a guess at, but suggest you just lie to candidates like an agency would).


but you’re not starting an agency are you? Not really?
this is just a wheeze to avoid tax isn’t it?
if you were starting an agency you wouldn’t be here asking this trivial question.

[northernladuk]

but you’re not starting an agency are you? Not really?
this is just a wheeze to avoid tax isn’t it?
if you were starting an agency you wouldn’t be here asking this trivial question.

This

Incidentally, after several years contracting, you really should know that already, especially if you're looking to create a whole new business..

And This.

Every contractor has thought about this, becoming a proper consultancy or even just supplying the client some bums on seats through their company when a role arises. Never works. In 99.99% the person trying to make this happen really doesn't have a clue what they are doing and this is just another one of them.

You aren't doing it for proper business reasons, you don't understand the model and you certainly don't understand the work involved in doing it properly.

[Ariosa]

I sincerely don't understand why most of you assume things I never stated. The reason for the agency is OTHER clients that I have. I want to be able to support my clients through a managed - service model where other people (contractors to begin with and hopefully employees in the near future) will be working on projects instead of just myself (this is already happening for some of the projects). This client becoming another client of my agency is a symptom of this transition, not the reason for it.

I would truly appreciate constructive comments instead of end-of-the-world scenarios. This is a forum where people (also) help each other I would think?

[Fred Bloggs]

I sincerely don't understand why most of you assume things I never stated. The reason for the agency is OTHER clients that I have. I want to be able to support my clients through a managed - service model where other people (contractors to begin with and hopefully employees in the near future) will be working on projects instead of just myself (this is already happening for some of the projects). This client becoming another client of my agency is a symptom of this transition, not the reason for it.

I would truly appreciate constructive comments instead of end-of-the-world scenarios. This is a forum where people (also) help each other I would think?

Cool rant.

The forum is for one man band contractors, who at best tolerate employment agencies. At worst, they despise their existence.

What exactly do you expect from here?

[hobnob]

I've been working with a client for a few years now. I was initiall contracting with a digital agency providing services to this end client.
Then I was directly contracting with them for some time through my own limited company. Then, IR35 hit and I've been in several contract renewals with them through an umbrella company (other small contracts with other clients via my own limited company going on at the same time).
I'm now launching my own agency and the plan is to not renew the umbrealla company contract and have them as direct client of my agency instead.

What are the IR35 implications / considerations I should have in mind for this transition?

Is this the same client that you mentioned in a previous thread?
Being offered renewal under umbrella, unsure about where to go from here - Contractor UK Bulletin Board
If they gave you an SDS saying that the role was inside IR35, what has changed now? Is the client going to give you a new SDS?

Putting this another way, you previously switched from a limited company that you run to an umbrella. You now want to switch back to a limited company that you run. Whether it's the same limited company (just for you) or a new limited company (agency), I don't think that makes any difference. Bear in mind that lots of contractors work via agencies, but that doesn't change who's responsible for the determination.

[jamesbrown]

It is literally the entire purpose of IR35 to look through all intermediaries and to examine the hypothetical contract between you (a natural person) and the end client and to establish whether it resembles one of employment. So the implications are, as always, to examine that hypothetical contract and to ignore all intermediaries - introducing your own agency makes absolutely no difference, beyond your agency becoming the Chapter 10 Fee Payer and hence liable in the first instance if you get it wrong.

Obviously, you're off to a very bad start indeed if your relationship previously resembled one of employment, according to the end client (e.g., via an SDS) and you're now claiming otherwise, absent a dramatic change in working practices (and that has nothing to do with which or how many intermediaries are interposed).

[Ariosa]

Is this the same client that you mentioned in a previous thread?
Being offered renewal under umbrella, unsure about where to go from here - Contractor UK Bulletin Board
If they gave you an SDS saying that the role was inside IR35, what has changed now? Is the client going to give you a new SDS?

I actually have a confirmation of arrangements from the client that points to outside of IR35 arrangements during the pre-umbrella contract with this client (i.e. when the contract was between my LTD and the client).