IR35 and Ltd v umbrella

[tonibat]

Apologies if this is going over old ground but I have read many posts on IR35 and LTD v Umbrella but I am not sure if they are relevant!

Consultant A is being paid a retainer (not much) for 80 hours per month by Company B for working at home. A is not allowed to work for anyone else. The contract is for 4 months after which it will be reviewed and may or may not be renewed.

A is based at home and will be paid a daily rate to attend the office and another daily rate to attend customer site as and when asked (although early in the contact I dount this will be often) by Company B.

Does this fall into IR35 as there is only one customer? If it does, because of the restrictions in claiming expenses would a LTD co still be better than Umbrella?

Need to set up the cheapest and most beneficial way in case it does not pan out.

Many thanks to anyone that can help.

[Hex]

Not being able to work for anybody else is bad for IR35. It is a heavy form of control. It's not the only having one client so much as that client is insisting you don't work for anyone else that is the problem.

Limited may still be worth it for the 5% you can take as divis and the fact you keep control over the money. Nixon Williams or similar accountants charge about £70 per month fully inclusive. An umbrella probably wouldn't be much cheaper.

Given some of the accountants like Nixon Williams a call and give them more details of your circumstances and see what they advise.

[tonibat]

thanks

One more question which might seem a bit silly.

But by having to take the whole turnover as salary doesn't a LTD company lose out by having to pay Employers NI on it all as well?

[PhilAtBFCA]

IR35 Ltd V Umbrella

Hi Tonibat,

There is a spreadsheet that enables you to compare net income on Ltd Co Inside IR35 , Outside and Umbrella to download from our website; PM me for details if you wish.

Ltd will always work out higher net income than an Umbrella, it can only be like that as a Limited Co will gain on VAT, interest on bank and the 5% allowance in a deemed payment calculation. Quite often the accountancy fees are less than an umbrella. Remember please that Expense claims legislation is the same between the two entities so no real advantage there.

I would get your contract reviewed by a professional for IR35 advice, the few details you gave is not enough to make an informed decision.

Phil

[tonibat]

spreadsheet please

Phil,

For some reason I don't seem able to pm you. Can I use the email address on your website?

thanks

[poppy01]

One more question which might seem a bit silly.

But by having to take the whole turnover as salary doesn't a LTD company lose out by having to pay Employers NI on it all as well?

that was always the major unfairness with ir35, you were a ltd when it suited hmrc, and you were an employee when it suited hmrc, either way you were shafted, worst of many bad laws nu labour has come up with,

why do you think no-one pays it?
a) its monumentally unfair, drafted out of spite and jealousy and Steven Tims vested interest in Ovum, (who were advantaged by IR35), and
b) they havent the faintest idea how to enforce it, thus there are many insurances available out there to cover you in the unlikely event you are investigated, taken to court, and lose. HMRc has taken over 1600 cases to court, they have won 6.

[PhilAtBFCA]

PM Not Working

Hi Tonibat,
Checked PM settings and they are on, but you can email me on phil dot richards at bfca.eu thanks.

[centurian]

A is not allowed to work for anyone else.

Does this fall into IR35 as there is only one customer?

Only having one customer doesn't automatically fail IR35.

Only being allowed to have one customer is, IMHO, IR35 suicide.


Given that the hours and rate seem fairly low, why is this constraint there? Can't you negotiate it out.

But by having to take the whole turnover as salary doesn't a LTD company lose out by having to pay Employers NI on it all as well?

Oh yes, and that's a whopping 12.8% - and that doesn't have the upper 40K limit either.

It means you are effectively paying 23% NI (on amounts between 5K and 40K).

Wouldn't be so bad if we just had to pay employers NI at 11%, but 23% !!! That's why theres so much of a difference between In and Out of IR35.

[tonibat]

Thanks guys

Thanks to all the replies and thank you Phil but I have managed to do the calculations now.

One two more questions if you would

Has anyone heard of Payscheme Plus?

Is it a Benefit trust as I know we should steer well away from them.

But Payscheme plus are registered in the Uk and say they are IR35 compliant but can give you 80% of your turnover. How is that possible?

Finally if we were to get rid of the retainer but have a guranteed days per month and get one other customer (but that may only be 1 day every couple of months) would that then take me out of IR35?

thanks

[cojak]

I resell books - this gives me multiple customers without impacting my prime contract...

HTH