from PAYE to Ltd

[marcoloco]

Hi,

I'm currently a permanent employee, but would like to start contracting through my Limited Company. First contract would be same company I'm currently working on permanent basis. My employer said it would most certainly fall into IR35 if I have worked for them as a permie (for 3 months) and then switch to contractor. Is that the case? Even when I sign only 6month contract, would it still fall to IR35 as I've been working for same company before as permie?

Regards,
Marko

[DaveB]

As has been said elsewhere, IR35 is pretty much voluntary and just because you were a permie there before doesn't automatically mean you will be caught by IR35 as a contractor, provided you go about it the right way.

Join the PCG and get their standard contract templates for a start.

Negotiate the working practices you will be following to ensure you have autonomy as a contractor to determine how/when/where you will work and what your deliverables will be.

Get a clear statement from the client as to what you are being hired to do. No open ended wishy washy stuff. You need a clear statement of what they want you to do and the time scale they want it in.

If all thats going to happen is that you will do the same job in the same way and be micro managed as you were before then yes, you will be caught by IR35. It's up to you to make sure you arn't.

[malvolio]

All very true, BUT...

Going from a perm to a contractor doing the same job at the same desk for the same person is exactly what IR35 is meant to stamp out. If you check out the recent Dacas/Muscat decision, for instance, you might spot that you would still be an employee in all but name, your current employer is still liable for your tax and NICs and you should be paid net.

So I think a bit more research is in order. Basically, what you are doing makes no commercial sense. All you are managing to do is to make claiming your employment rights a lot harder and mightily pissing off the taxman at your next SA...