Inside IR35 and using a limited company

[williamdavis]

I'm due to change contracts soon and by the looks of it, my new contract will be inside IR35.

I've had the pros check it out and they have confirmed in their opinion, it's inside. I'll work on the client to see if I can get the contract changed but I don't hold out much hope.

So, my questions is, does anybody who is inside IR35 work through their own ltd co?

Are you really that much better off than using a brollie?

[malvolio]

Lots.

Yes.

Apart from anything else, you get to pay tax on 95% of your gross, unlilke a brolly where you pay tax on 100%.

Out of interest, what did your experts think you failed on?

[NotAllThere]

Two other reasons:

1. If the client or agency start playing silly beggers wrt to payment, you are in control of the dunning procedures, not some third party whose financial interest is significantly less.

2. Money goes direct from agency/client into yourco bank account. You cut out yet another 3rd party who could go into receivership owing you thousands.

[jigsaw]

I'll work on the client to see if I can get the contract changed but I don't hold out much hope.

There are those who would tell you the contract wording is irrelevant if your actual working practices do not match the words. So maybe it will only be worth getting the contract changed if the client will also agree to the corresponding changes to the way you work.

[williamdavis]

Hmm 5% extra is a little more interesting, especially with everything going up in price (my diesel X5 really doesn't seem like such a smart choice at the moment, £100 fills are now the norm).

Reasons given for being inside were: something about being under the direction and control of the client, no substitution being allowed and a fixed period of termination notice.

Bearing in mind other posts, it seems the chance of an inspection is very low and the terrible win rate of the Revenue does make it tempting but I'd prefer to stay legit.

I'll obviously see if I can get the contract changed, if not, it still looks like ltd might be the way to go.

My guess is working practices always comes second in an audit, surely the first thing the Revenue look at is the contract, just because it’s the easiest thing to do.

[Qdos Contractor]

My guess is working practices always comes second in an audit, surely the first thing the Revenue look at is the contract, just because it’s the easiest thing to do.

Chronologically, yes. In terms of importance, no.

[malvolio]

Reasons given for being inside were: something about being under the direction and control of the client, no substitution being allowed and a fixed period of termination notice.

Given this is losing you around 20% of your gross income, it might be a good idea fully to understand exactly what. RoS can be squared away with a simple contractual change. Notice period is not really indicative either way wrt IR35

4/10 - must try harder

[LisaContractorUmbrella]

[QUOTE=malvolio;608300]Given this is losing you around 20% of your gross income, it might be a good idea fully to understand exactly what. RoS can be squared away with a simple contractual change. Notice period is not really indicative either way wrt IR35

The contract can be changed to say that he can send in a substitute but that's not a lot of use in the event of an investigation if a. the client would not allow it b. the agency would supply the substitute or c. he has no contacts that could serve as a substitute for him

[malvolio]

Well yes, I agree. I was however illustrating the point that the OP appears to be willing to lose a lot of money without actually knowing why. IR35 only continues to work as a tax because most of the people paying it have no understanding of why they needn't be.

As for the detail, you can argue that a) the client only need retain the right of reasonable refusal of an offered sub rather than an outright veto, b) agree but that is down the contractor to resolve (and is again an education issue) and c) you can always find one, most of the time people don't try.

[williamdavis]

OK thanks (and what do you mean 4/10, surely I automatically get 5/10 just for posting and referring to you geniuses).

So...if I can negotiate with the client and get the contract to be reworded, I'll be okay?

However, in the unlikly event of an investigation do the Revenue communicate directly with my client? I guess they must do or how else would they find out what my working practices are? I know for sure the client won't lie to cover my back (stinking clients!).