Umbrella to Ltd, and IR35 Query

[swebb]

Hi,

I've been using an umbrella for two years now but I am seriously considering forming a Ltd company. I've spoke to SDJ just to get a few pointers and it doesn't seem too much hassle to get the ball rolling and not too much paper work. However my main concern has always been the grey area surrounding IR35 and its possible long term impact on me should the IR man come knocking on the door (no house here by the way so he can't take that lol).

Nearly all contractors I know seem to take the view that there are so few contractors who get followed up about IR35 they just ignore it and run their companies as though they are outside IR35. Most tell me that if you are just taking on regular contracts less than a year in timespan then its not an issue. From reading various things on here and the web its still not clear to me if this is really the case. Any opinions ?

My contracts so far have all been 3 months in length initially but usually get extended 3 months at a time and upto a total length at a client of 1yr in total. I work at the clients site mainly due to them not liking their s/w on my kit and also this means I work their hours ! How does the IR view this as the contracts are short in length originally but get extended ? Contracting friends tell me that these contracts fall outside IR35 bit I'm not so sure.

Any comments or opinions would be gratefully received

PS: If I set up a ltd company the 1st contract will be with a client I have been with via the umbrella for some time but they are about to extend for 3 months. Would the IR view this as a 3 month contract or include the previous time with the client as well ?

Steve

[Sockpuppet]

<Hand Holding>
You'll be fine. Start your own Ltd its the only way really.
</Hand Holding>

Well thats what you wanted me to say isnt it. Slightly less confrontational then "search you muppet" isn't it.

[swebb]

Thanks for your most informative reply !

As you will have noted I did say I had looked at various sites including this one and found nothing clear on the facts. Obviously someone with as much godlike knowledge as yourself doesn't need this forum, just a kick up the ass. But to most people a forum is a place to find stuff out by searching as you say or asking questions.

Have a good day.

Steve

[Sockpuppet]

Seriously. I you read the first page of the Accounting forum its the same questions over and over and over and over and you get the idea.

All of your questions have been covered a fair few times and the first 1 or 2 pages would have told you that.

[malvolio]

Thanks for your most informative reply !

As you will have noted I did say I had looked at various sites including this one and found nothing clear on the facts. Obviously someone with as much godlike knowledge as yourself doesn't need this forum, just a kick up the ass. But to most people a forum is a place to find stuff out by searching as you say or asking questions.

Have a good day.

Steve

And then you wonder why we get the hump with newbies.

You want to run a business to gain the tax breaks, first you learn to stand up by yourself. I often disagree with Sockpuppet on things, but he is entirely right on this occasion.

[Vito]

Thanks for your most informative reply !

As you will have noted I did say I had looked at various sites including this one and found nothing clear on the facts. Obviously someone with as much godlike knowledge as yourself doesn't need this forum, just a kick up the ass. But to most people a forum is a place to find stuff out by searching as you say or asking questions.

Have a good day.

Steve

Don't take it personally...think of joining this forum as being like starting at a new school...no matter what you do or say, you are going to get a bit of an initiation from the older boys. Accept it with the good grace that it is intended and you'll be just fine.

Alternatively, think of them as your wives, they will always be supportive and come through for you in the end, they will just want their lb of flesh as payback!

[swebb]

lol fair enough, now I know. Sorry of the comments

I must admit I thought I'd been hit by the typical flaming you get on IT news groups

I've read the thread I was pointed to and to be honest I'm still a bit unclear as there are so many damn different opinions on the subject. However my impression is that if the contract states that the consultancy will provide alternative skilled staff, pay for training of staff, supply own equipment where required ..... then there is a good chance your outside of IR.

On another matter I've been reading about MSC and its effects and how this might impact contractors when using companies such as SDJ. Am I right in thinking that any company like this that is basically an accountancy with a few bells an whistles bolted on to specialize in the management of contractor accounts does not get caught in the MSC legislation ? Again there were different opinions but it strikes me I'd be still running the company and making the decisions and a company like SDJ would just be crunching numbers to keep the tax man happy. I'd be the poor sap making all the real company decisions and taking the risks !

Thanks again

Steve

[malvolio]

Briefly there are three contractual clauses, any one of which a good representative can use to take you out of IR35 if challenged:

Right of Substitution (RoS)
Mutuaility of Obligation (MOO)
Direction and Control (D&C)

Go have a look for those terms on these boards, 'cos I ain't about to write out the descriptions yet again.

Also, they have to bear some relation to reality. If the contract says you can work your own hours but you actually have to be there between 9 and 5 regardless, that's what matters (although even then exceptions can be made , such as support work, where you really have to parallel the rest of the clients site arrangements)

SJD and friends are not, never have been and never will be an MSC. That's just FUD put out by real MSCs who have just lost their business model.

[swebb]

<edit>sorry browser problems</edit>!!!!

[Bluebird]

On another matter I've been reading about MSC and its effects and how this might impact contractors when using companies such as SDJ. Am I right in thinking that any company like this that is basically an accountancy with a few bells an whistles bolted on to specialize in the management of contractor accounts does not get caught in the MSC legislation ? Again there were different opinions but it strikes me I'd be still running the company and making the decisions and a company like SDJ would just be crunching numbers to keep the tax man happy. I'd be the poor sap making all the real company decisions and taking the risks !

Thanks again

Steve

yep think you're right there.