Made redundant, offered contract work at same company

[deadlake]

All,

I'm sure this has been asked many times before, but here are my circumstances:

1) I was made redundant last week as my ex-company of 3 years had run out of cash, 20% headcount reduction.
2) I've been offered a redundancy package and accepted it, this will be paid on the 14 Nov.
3) For an increase in the redundancy payment I agreed to finish various pieces of work with my ex boss, these will be completed tomorrow.
4) Since then (they did not consult my boss) they have found they need me to carry on due to my specialist knowledge.

I've seen on other threads that if I do temp contract work for them I will be inside IR35, as at the same company for more then 2 years, etc, etc.

1) If I take contracting work with my ex-company will this make my redundancy payment liable for tax?
2) If the redundancy payment is liable, who pays the tax bill, *me or my ex-employer*. Since I'm PAYE then its my ex employer who will get stung, or not? This is the question I've not seen answered.

I know this all sounds like wrongful dismissal, however I'd rather get as much out of them before they run out of cash.

And yes, time to move on and find new employment.

Thanks in advance for your advice.

[badger7579]

I have seen quite a few people in the past being made redundant and then turning up next Monday as a contractor but I have no idea how it would effect your redundancy payout.

I'd suggest you talk to an accountant.

[TheFaQQer]

If they keep running out of cash, then I'd be wary about going back there, myself!

Is there a better market for your specialist knowledge that you might be able to sell to someone with money?

Just trying to forestall the post in a couple of months "Inside IR35, gone direct, but no money paid yet "

[deadlake]

I take your point, but I see the type of contracting as short term until I find another company.

I just want to cover all the bases before I go into it.

[pmeswani]

All,

I know this all sounds like wrongful dismissal, however I'd rather get as much out of them before they run out of cash.

Their argument could be.... "Lets get as much work out of this guy for free."

May not necessarily be the case, but be warely of that possibility.

[Crossroads]

You will not necessarily be IR35 caught, but you will need to be doubly careful to avoid the usual "permanent Friday, contractor Monday" scenario.

A business like approach will avoid this. They are a client and you are a supplier. Get your working practices, contract and approach right and you'll be OK.

I would suggest you insist on payment in advance given their recent financial history!

[Crossroads]

1) If I take contracting work with my ex-company will this make my redundancy payment liable for tax?
2) If the redundancy payment is liable, who pays the tax bill, *me or my ex-employer*. Since I'm PAYE then its my ex employer who will get stung, or not? This is the question I've not seen answered.

I know this all sounds like wrongful dismissal, however I'd rather get as much out of them before they run out of cash.

1. No. This would only apply if you took new employment with them.

Doesn't sound like wrongful dismissal at all.

[BrilloPad]

I am sure the original budget speech on IR35 (1997?) only talked about "people who are permanent on a FRiday then contract on a Monday". Or is my memory playing up?

I would want very very strict payment terms with a client like that - invoice weekly - pay within a week of invoice.

[TheFaQQer]

You will not necessarily be IR35 caught, but you will need to be doubly careful to avoid the usual "permanent Friday, contractor Monday" scenario.

A business like approach will avoid this. They are a client and you are a supplier. Get your working practices, contract and approach right and you'll be OK.

I'd be interested to know how to avoid IR35 in this situation, since the OP seems to be going back to the same client to do the same job as they did as a permie.

I am sure the original budget speech on IR35 (1997?) only talked about "people who are permanent on a FRiday then contract on a Monday". Or is my memory playing up?

Don't think so - ISTR the same kind of rhetoric myself.

Where's Mal when we need him?!?!?

[Crossroads]

I'd be interested to know how to avoid IR35 in this situation, since the OP seems to be going back to the same client to do the same job as they did as a permie.



Don't think so - ISTR the same kind of rhetoric myself.

Where's Mal when we need him?!?!?

He doesn't say he is going to do the same job - if he goes back to do the same job in the same way then he will caught.

If he is going back to provide SPECIALIST KNOWLEDGE (as stated) and delivers this in a different way, then it won't necessarily be the same job. If he works in a manner that another consultant from an external company would, then he should be fine. He should change the working practices and delivery methods to make it very obvious he is no longer an employee.