Changing from Inside IR35 to Outside

[Phil the Philospher]

Hi
I am an IT contractor and currently pay tax inside IR35 (aren't I a good boy... or just foolish) through my own limited company. However, I want to change and pay tax outside IR35, but have some worries about the way to go forward with this. If I keep my current limited company and just start paying tax outside IR35 I am concerned that the sudden change in the company's tax situation (after 2 years) will alert the IR to my accounts and I'll end up getting investigated. I guess the obvious solution would be to close my current company and start a new one paying tax outside IR35, but I'm not sure that this is any less likely to alert the IR.

Just to complicate things a little, I have been on a six-month rolling contract with the same company for 2 years and they want to keep me on. This suits me just fine, so whatever I do I will most probably still be under the "same" contract - although I intend to sign an IR35 "compliant" contract with them at the time of the change. Obviously I will also do other necessary things like insurance etc.

Does anyone have any advice in this area? Is the IR more likely to investigate an individual/company that has been paying tax inside IR35 and then changes to outside? Is it foolish to change from inside to outside whilst still under the same contract? Anything I haven't thought of?

[smee.again]

I would say be careful...

[The Lone Gunman]

I would say be careful...

Will you sod off with your inane comments.
These are serious issues boards and we can do without having to trawl through your ridiculous posts.
Go play in General or LR.

[smee.again]

Will you sod off with your inane comments.
These are serious issues boards and we can do without having to trawl through your ridiculous posts.
Go play in General or LR.

I hate typing long replies but my comment was fair. I would say be careful as changes like he suggests can often lead to closer scrutiny and we don't want that.

No need to be so tetchy...

[The Lone Gunman]

Hi
I am an IT contractor and currently pay tax inside IR35 (aren't I a good boy... or just foolish) through my own limited company. However, I want to change and pay tax outside IR35, but have some worries about the way to go forward with this. If I keep my current limited company and just start paying tax outside IR35 I am concerned that the sudden change in the company's tax situation (after 2 years) will alert the IR to my accounts and I'll end up getting investigated. I guess the obvious solution would be to close my current company and start a new one paying tax outside IR35, but I'm not sure that this is any less likely to alert the IR.

Just to complicate things a little, I have been on a six-month rolling contract with the same company for 2 years and they want to keep me on. This suits me just fine, so whatever I do I will most probably still be under the "same" contract - although I intend to sign an IR35 "compliant" contract with them at the time of the change. Obviously I will also do other necessary things like insurance etc.

Does anyone have any advice in this area? Is the IR more likely to investigate an individual/company that has been paying tax inside IR35 and then changes to outside? Is it foolish to change from inside to outside whilst still under the same contract? Anything I haven't thought of?

It should not matter how you do it as long as you are genuinely outside IR35. I know an investigation will be a pain, but if you are outside then your are OK.
A new company would probably be less of a flag, but they could use the change as evidence of knowing you are on dodgy ground.

Wait for one of the legal boys/accountants for advice.

[The Lone Gunman]

I hate typing long replies but my comment was fair. I would say be careful as changes like he suggests can often lead to closer scrutiny and we don't want that.

No need to be so tetchy...

I wouldnt be so tetchy if you weren't trying to be the last poster in thread. You may have had a point but all your other posts show a pattern SP will be banning you again.

[smee.again]

I wouldnt be so tetchy if you weren't trying to be the last poster in thread. You may have had a point but all your other posts show a pattern SP will be banning you again.

I wasn't actually trying on that one...was a quick reply while on phone.

Ban again? Not been banned before....

[Phil the Philospher]

Thanks for your comments guys. I guess the "safest" route is to stay with the same company and ensure my contract is IR35 compliant when I change to outside IR35. I am obviously still on slightly dodgy ground with respect to how long I have been on the contract now, but then I assume that many contractors will be in the same position?

[Gibbon]

Hi
I am an IT contractor and currently pay tax inside IR35 (aren't I a good boy... or just foolish) through my own limited company. However, I want to change and pay tax outside IR35, but have some worries about the way to go forward with this. If I keep my current limited company and just start paying tax outside IR35 I am concerned that the sudden change in the company's tax situation (after 2 years) will alert the IR to my accounts and I'll end up getting investigated. I guess the obvious solution would be to close my current company and start a new one paying tax outside IR35, but I'm not sure that this is any less likely to alert the IR.

Just to complicate things a little, I have been on a six-month rolling contract with the same company for 2 years and they want to keep me on. This suits me just fine, so whatever I do I will most probably still be under the "same" contract - although I intend to sign an IR35 "compliant" contract with them at the time of the change. Obviously I will also do other necessary things like insurance etc.

Does anyone have any advice in this area? Is the IR more likely to investigate an individual/company that has been paying tax inside IR35 and then changes to outside? Is it foolish to change from inside to outside whilst still under the same contract? Anything I haven't thought of?

I did this 3 years ago, still no investigation and as I was paying PAYE only once at the end of the year I re-hashed all my salary into divis for that year . There is no magic flag that says Company X is inside/outside IR35.

If your worried just keep the extra dosh on one side.

I try not to stay at palces more than a year or so and if I do return try to use a different agent so different contract. They may get me on one contract but to contest all of them would bury them in paper work and each contract would be a different court case.

[The Lone Gunman]

Thanks for your comments guys. I guess the "safest" route is to stay with the same company and ensure my contract is IR35 compliant when I change to outside IR35. I am obviously still on slightly dodgy ground with respect to how long I have been on the contract now, but then I assume that many contractors will be in the same position?

Oh yes and:
Join the PCG.
Get your contract checked by a pro.
If possible get a statement of intent from the client stating that the contract terms you have are correct. Though that is often tricky.