Another One of 'Em Urgent Questions

[floatsy]

Good morning folks,

Another one of 'em urgent questions But seriously, I need to get back to an employer today so genuinely so!

I have a 5-6 month contract which may go to a permie role, but the basic point is that if I can negotiate it to sit outside IR35, then it makes a lot more sense for me to form a ltd company.

That said, I have read in all the guidelines that if one is not doing long term contracting, just go umbrella.

So my question is - I assume this is because of the cost/paperwork...BUT if the financial incentive outweights this, I should still go for a company oui?

Thanks for any advices.

You guys are great by the way, I love forums like this. Go comaradie !

float

[Newby]

IMHO, its not worth it if you want a perm job in 5-6 months.

[Cowboy Bob]

I'd have thought it would be difficult to prove that a contract to perm role is outside IR35. After all, it's effectively just the trial period for real employment as you are already aware that a permanent contract is at the end of it. You might be able to get away with it if you can somehow fake it to demonstrate that you didn't know a permanent contract would come of it.

[floatsy]

Thanks cowboy Bob - If the arrangement is entered on the basis that I will operate as someone selling specialist skills/services, and I don't get bonus/holiday pay etc, and I work in terms of the 'how' to do the job - I genuinely would have thought this constituted IR35....

But willing to take your advice.

In any case, the contract and nature of engagement (if it is the above) - would determine status? Or have I got this wrong?

Thanks.

[floatsy]

IMHO, its not worth it if you want a perm job in 5-6 months.

Is this based on cost? I spoke to an accountant this morning who said that it's worth it because the tax benefits outweigh the setup costs (say 1000 pounds for the full year including all accountancy services).

[malvolio]

It would and you could probably defend your contract against accusations of disguised employement with a bit of care, but for a few months? Go umbrella and forget about IR35 implications. The cost is around 10% of your gross by paying full PAYE/NIC plus the umbrella fees, set against complete peace of mind.

Your call, but personally I wouldn't bother with a Limited in your position.

[rootsnall]

When I was living overseas but came home for the summer I worked out it was worthwhile setting up a Ltd even for a couple of months work. It's also a very slim risk IR35 wise if you are only doing 6 months work, if they make you pay up the NI contributions down the track then so be it.

[floatsy]

It would and you could probably defend your contract against accusations of disguised employement with a bit of care, but for a few months? Go umbrella and forget about IR35 implications. The cost is around 10% of your gross by paying full PAYE/NIC plus the umbrella fees, set against complete peace of mind.

Your call, but personally I wouldn't bother with a Limited in your position.

Thanks, malvolio - have read a few of your posts !

I used these calculators on that SJD website and it just looked like I would get so much more for a ltd company - so given that the nature of the work is above, I thought it would be worth it but I must be missing something (ie.....it wasn't just 10%)..

OK Onto the next silly question which has been asked a thousand times - any good umbrellas

[floatsy]

When I was living overseas but came home for the summer I worked out it was worthwhile setting up a Ltd even for a couple of months work. It's also a very slim risk IR35 wise if you are only doing 6 months work, if they make you pay up the NI contributions down the track then so be it.

Is that the only consequence usually?

Anyway thanks roots, I spoke to 2 accountants this morning, they gave conflicting advice of course

[floatsy]

OK To make it clearer, here's my thought process:

1. I am genuinely operating on the terms of specialist skills, can define how to approach my work, won't be getting holiday/bonus pay etc

2. The diff in net pay is about ... 15-22% per month which I found quite substantial (again I'm going by these SJD calculators - which gave me a diff figure to listentotaxman.com but that's another story)

ie. between just going umbrella or forming my own limited

3. I asked some of these big accountant firms what the cost I could expect to pay IF I went Ltd. and they basically said:

a) Accountancy fees - say 800 per year
b) Company form/close - say 200 per year

Total 1000 and that would settle the whole matter.
ie. These accountants would pretty much do everything for me anyway

Therefore cost/benefit...I was leaning towards the company.

Is this clearer, or I have missed the x factor in my equation?

Thanks again,
float