UK based but working for Aussie company

[Steve2309]

Greetings all

I'm a total noob to all this so please forgive my post if it has been done to death! (I did search 'overseas clients' but it only came up with results re. actually working overseas).

Here's the situation I suddenly find myself in...

Been in regular employment for years but have just been offered a job by an Australian firm. I would be UK based and represent them in Europe. We have agreed an annual salary amount and they will also pay any expenses.

They have asked if I will consider working as a contractor (12 month renewable contract) and I now need to figure out the best way to do this (and fast!).

Has anyone had experience of this kind? Would it be best to go the limited company route? I do already have one in place that I have used for a small part time business venture for the past 12 months (that I was planning to close as it hasn't made much).

With the contracting being just for one firm and for an agreed salary does it actually mean the IR would view me as being employed and therefore coming under IR35?

Help my head is spinning! Really want o work for them but just not sure of the best way to proceed.

All advice gratefully received!

Steve

[slackbloke]

Greetings all

I'm a total noob to all this so please forgive my post if it has been done to death! (I did search 'overseas clients' but it only came up with results re. actually working overseas).

Here's the situation I suddenly find myself in...

Been in regular employment for years but have just been offered a job by an Australian firm. I would be UK based and represent them in Europe. We have agreed an annual salary amount and they will also pay any expenses.

They have asked if I will consider working as a contractor (12 month renewable contract) and I now need to figure out the best way to do this (and fast!).

Has anyone had experience of this kind? Would it be best to go the limited company route? I do already have one in place that I have used for a small part time business venture for the past 12 months (that I was planning to close as it hasn't made much).

With the contracting being just for one firm and for an agreed salary does it actually mean the IR would view me as being employed and therefore coming under IR35?

Help my head is spinning! Really want o work for them but just not sure of the best way to proceed.

All advice gratefully received!

Steve

I don't think that them being an Australian company has any relevance. If you are contracting then you are not getting a salary - your company is getting paid for services. If they are offering the same money then forget it.
I have a friend (it is long story so won't give all details), but he is contracting for an organisation until approvals etc for a permanent position come through.
He is getting a 40% uplift on revenue to contract. That is the minimum I would expect, probably at least 50% cos that is approx the cost to a company for an employee over and above their salary. If they are not offering that then there is no point being a contract IMO.

[Steve2309]

I don't think that them being an Australian company has any relevance. If you are contracting then you are not getting a salary - your company is getting paid for services. If they are offering the same money then forget it.
I have a friend (it is long story so won't give all details), but he is contracting for an organisation until approvals etc for a permanent position come through.
He is getting a 40% uplift on revenue to contract. That is the minimum I would expect, probably at least 50% cos that is approx the cost to a company for an employee over and above their salary. If they are not offering that then there is no point being a contract IMO.

Ah yes I see. Operating a PAYE scheme, paying employers NIC's, administration, paying an accountant etc all eat into company funds. Then there's the time I'd spend personally with the paperwork that goes with running a limited company... I can now see why my potential client/employer will have to up their offer to make this work. Don't think they can afford to so doubt it's a go-er. What a pity. Really want to work for them!
Thanks for your input.

[NotAllThere]

If you'd expect a £50K salary, then as a contractor expect £50/hour £500/day. ( As a rule of thumb ).

And always go ltd. if not permie.

[Steve2309]

If you'd expect a £50K salary, then as a contractor expect £50/hour £500/day. ( As a rule of thumb ).

And always go ltd. if not permie.

Wow! So they'd have to pay me £130K per year so I could have the £50K as salary? They actually want to pay me £30k per year so they'd need to pay my limited company £78K correct? Ouch! This is definitely not going to work.

[slackbloke]

Wow! So they'd have to pay me £130K per year so I could have the £50K as salary? They actually want to pay me £30k per year so they'd need to pay my limited company £78K correct? Ouch! This is definitely not going to work.

No, it is more like what I said earlier. Presumably if they don't have any employees already in Europe then they would prefer you as a contractor as they don't have cover all your legal entitlements (not just the actual cost, e.g. sick pay, paternity leave, etc) but also having to understand what the local laws are. The cost of these + other benefits (pension, health insurance, training etc) is approx 50% of your salary, e.g. £45,000. So effectively you are getting a £30,000 base salary + benefits and they avoid the overhead of having to understand and comply with local law etc. It is a basic kind of contracting, not the same as someone on £500 a day where they are paying for a skilled individual in a particular sector with the flexibility to terminate at short notice (high risk, high reward).
I would ask for £45K to cover the costs they would otherwise have to pay and you should be good, assuming they can't just chop your 12 month contract in the middle.

[NotAllThere]

Wow! So they'd have to pay me £130K per year so I could have the £50K as salary? They actually want to pay me £30k per year so they'd need to pay my limited company £78K correct? Ouch! This is definitely not going to work.

Not quite. As I said, it's a rule of thumb. A starting point. Now, if you go ltd. as a contractor, you'll want to maximise your income - and that means minimising your Employer NI contributions. And to do that you want an non-IR35 caught contract.

So you should not expect to be paid when on holiday, or sick.

If you say £300 a day, then taking into account 6 weeks of holiday+sick+public holiday, that 48 x 5 x 300 = £72000. But that's based on a professional working day. Maybe you'll only be working a 7.5 hours day. Then you'd look at £30 an hour = £225 a day = £54000 a year.

You may be prepared to take less than this, considering that you've a non-IR35 contract, can offset some expenses, and you're guaranteed work for a year.

You really need to explain to them the costs of employment, then go for a figure where you get more than you'd get as an employee, and they pay less than they'd pay for an employee. To do that you have to quantify the costs of employing you.

You're already saving them ERNIC, administrative costs, and certain legal employment obligations. You'll have no employment rights - and these can be very expensive for a company - so you should seek compensation for that as well.

[Steve2309]

Not quite. As I said, it's a rule of thumb. A starting point. Now, if you go ltd. as a contractor, you'll want to maximise your income - and that means minimising your Employer NI contributions. And to do that you want an non-IR35 caught contract.

So you should not expect to be paid when on holiday, or sick.

If you say £300 a day, then taking into account 6 weeks of holiday+sick+public holiday, that 48 x 5 x 300 = £72000. But that's based on a professional working day. Maybe you'll only be working a 7.5 hours day. Then you'd look at £30 an hour = £225 a day = £54000 a year.

You may be prepared to take less than this, considering that you've a non-IR35 contract, can offset some expenses, and you're guaranteed work for a year.

You really need to explain to them the costs of employment, then go for a figure where you get more than you'd get as an employee, and they pay less than they'd pay for an employee. To do that you have to quantify the costs of employing you.

You're already saving them ERNIC, administrative costs, and certain legal employment obligations. You'll have no employment rights - and these can be very expensive for a company - so you should seek compensation for that as well.

Honestly don't think they can afford it. They wanted to match my current gross salary (£30K) and pay any expenses so I naively thought hey, no problem. I'll still get the same as I'm on in my current employed position after tax with the added benefit of more or less being my own boss. One thing I am confused about is the sickness/holidays thing. Surely if he's saying he'll pay me £30K a year then I'll get that regardless of how many days off I take or hours I work?? Or do I have to legally invoice them in hours/days worked? If I fall under IR35 how much of that £ 30K could I expect to see if that's the maximum they pay me?

They are a genuine company and I know they aren't looking to screw me down. They're just a SME who want to work with me and contracting seemed the easiest route to get it moving quickly. But in a nutshell, they can't afford to pay any more than the amount I mentioned.

Sorry if I'm not quite getting it. I guess I really want somehow to make this work as I hate my current job!!

Really appreciate your help so far. Thank you.