ir35 jitters

[richard101]

Hi All

Got my first contract starting Monday :-)), and got the IR35 jitters. (btw I've been perm for 10 years and was a contractor for 7 years before that).

Agency says: "btw our Contracts are NOT IR35 friendly - in that our clients being large legal companies wouldn't buy anything 'dodgy' like having a substitute-contractor potentially turn up in your place"

Specialist-accountant says: "well ... your job title 'database administrator' immediately puts you at high-risk for IR35, we recommend our umbrella company".

questions
If I can get the agency to change my job-title to 'Database Consultant' or something, would that be better?
Are the accountants just trying to flog me there umbrella facility do-you-think?
My perm salary was 43k, this 6-month contract pays 315pd, how does that compare?

richard

[Fred Bloggs]

Can't answer the IR35 stuff but I'd say that you nned to look at the various contractor calculators to work out inside and outside IR35 take home. I would say £315 a day and £43k a year are about in the same sort of ball park rate wise.

[malvolio]

Hi All

Got my first contract starting Monday :-)), and got the IR35 jitters. (btw I've been perm for 10 years and was a contractor for 7 years before that).

Agency says: "btw our Contracts are NOT IR35 friendly - in that our clients being large legal companies wouldn't buy anything 'dodgy' like having a substitute-contractor potentially turn up in your place"

Specialist-accountant says: "well ... your job title 'database administrator' immediately puts you at high-risk for IR35, we recommend our umbrella company".

questions
If I can get the agency to change my job-title to 'Database Consultant' or something, would that be better?
Are the accountants just trying to flog me there umbrella facility do-you-think?
My perm salary was 43k, this 6-month contract pays 315pd, how does that compare?

richard

Regarding IR35 compliance, get specialist advice; even under IR35 you still make better money as a Ltd than you do with an umbrella so his advice would appear to be suspect (to be kind...)

As for rate, it doesn't, but not by much. £43k pa is £43 an hour so to get the same net take home as an outside IR35 LtdCo contractor and assuming an 8 hour day you should be on closer to £350.

HTH

[richard101]

dowh - thought my rate was big-time. My old formula was 2000 hrs = 1 year (which perhaps explains my ex-contractor status :-)) ... and now reading discouraging things about 'Brooksons' as well.

Oh well, I've still (better-rate) interviews lined-up for next week, and my only commitment sofa is paying for the LTD-Co, and agreeing to be called by HSBC on monday re: business account ... mmmm

[craig1]

Hi All
Agency says: "btw our Contracts are NOT IR35 friendly - in that our clients being large legal companies wouldn't buy anything 'dodgy' like having a substitute-contractor potentially turn up in your place"

Point them to the freebie PCG contract template and specifically the substitution clause (2.3) that says you can send substitutes but the client can reject them. The "security" bit of that handily covers compliance issues that law firms have to deal with.

See A05-01 here for the freebie draft

It's a bottle by the agency who won't push the client on these things, especially if they see a big-name law firm.

[Fred Bloggs]

... and now reading discouraging things about 'Brooksons' as well.

I believe you should avoid all the ex-MSC providers who morphed into "accountants". I believe you may get better service far cheaper from a long time established accountancy practice.

[Clare@InTouch]

IR35 is determined by the working conditions, not the written contract (although of course it helps if the match!). If you cannot get the contract changed but it's not correct then you could look into a Confirmation of Arrangements letter. Check out the Qdos website, they have a template there.

As for Brooksons - if you're worried at all just get a second opinion. Most firms won't charge you for a chat, and some will review your contract free of charge too.

[Wanderer]

Regarding IR35 compliance, get specialist advice; even under IR35 you still make better money as a Ltd than you do with an umbrella so his advice would appear to be suspect (to be kind...)

Agreed. Don't make the mistake of presuming you are IR35 caught, get some unbiased professional advice and trade outside if at all possible. Normally, I'd suggest that you trade outside IR35 and plead ignorance IF you ever got investigated but as you've been told that you are probably IR35 caught, you will have a bit of a fight to establish facts that point to being outside. IF you get investigated and it's a borderline case then all you will have to do is pay up the tax you avoided. I don't see that they can charge penalties because it's such a grey area and no one could be truly certain of their IR35 status.

dowh - thought my rate was big-time

Ahh, 43k = 43/hour * 7.5 hr day = 322 / day. That's close enough for our measurements.

[richard101]

I heard they only investigate for ir35 if there's some reason to. Therefore if I keep my head down its unlikely.

[malvolio]

I heard they only investigate for ir35 if there's some reason to. Therefore if I keep my head down its unlikely.

They will investigate if there is an irregularity or a discrepancy between various forms, or if you are routinely late filing returns or have to correct VAT returns. Or if you name comes out of the hat - they look to check 5 or so companies a week anyway. And you don't get investigated for IR35, you get investigated for errors as above, or for a VAT records check or a PAYE compliance or half a dozen other things that may turn into an IR35 check if you are a one man band

So keep things accurate and on time (another reason to use a good accountant), but it only lessens the risk. Simply keeping you your head down is not a particularly safe strategy!