First contract - caught by IR35?

[centurian]

- Left company after a year on £43k.
- Offered same role as contractor in same company at £350 per day with 3 month contract (likely 6 months plus if I want).
- Wondering, with the IR35 issue, is it silly of me to take the offer from my old company, even if it the short term or should I say no and continue seeking an external contract.

Firstly, I'd treat yourself as IR35 caught, plain and simple. You have too many important negative indicators going against you.

There's a general rule of 1000/1, which means a permie rate of £43K p.a equates to £43 p/h (or £344pd on an 8 hour day).

So the amount they have offered you is roughly the same as what you were on before when the allowances are considered (some of which are highly subjective). You may possibly end up net-ing more than before, but this will probably be due to little holiday, no sickness, avoiding the bench etc.

So do you take it, or wait. Well you have to balance up your likelihood of getting another contract elsewhere. The market tends to dry up around now until January (although it depends where you are based). So if you are waiting 2 months to land a gig, that's approx 40 x 350 you've lost out. Even if you get a contract for £400 p/d that is outside IR35, you will still be worse off than if you had taken this gig on offer.

However if you take the offer - and then some roles come up for £350-400 p/d that appear to be outside IR35, you'll kick yourself.

[BolshieBastard]

Hi all,

I have recently left a permanent contract with a company to take up a contract with the same company. I was with this company for 13 months before changing to contract.

Can any one tell me if I am caught by IR35?

Thanks

This was the major reason why the Government brought in IR35, permie on Friday, start as contractor Monday with the same company.

[heyya99]

Having done some research on IR35, it seems that I would most likely be caught by the tax even if I started at a new company. For example, in my line of work (software dev), I'm going to be working set hours, report to a supervisor, don't buy my own equipment, can't get someone else to do my work if I'm not there.

If this is the case, then my only dilema now is my invoicing system - own company or umbrella. The advice I've got from Nasa Consulting (they offer both LTD and Umbrella) is that if caught my IR35, Umbrella is the way to go.

What do you all think of that?

[TheFaQQer]

Having done some research on IR35, it seems that I would most likely be caught by the tax even if I started at a new company. For example, in my line of work (software dev), I'm going to be working set hours, report to a supervisor, don't buy my own equipment, can't get someone else to do my work if I'm not there.

You haven't read very much, by the looks of things. Would you really be working set hours for every client? Would the client really be telling you how to do your job? The client doesn't stop you buying your own equipment - they might stop you putting your equipment on their network, but some clients will let you use your own equipment (and some I've worked for expect you to have your own kit). What makes you think that you won't have a right of substitution?

If this is the case, then my only dilema now is my invoicing system - own company or umbrella. The advice I've got from Nasa Consulting (they offer both LTD and Umbrella) is that if caught my IR35, Umbrella is the way to go.

What do you all think of that?

If you are going to keep contracting (and on a good enough rate), then Ltd is still better than umbrella. Umbrella is another link in the chain to disappear with your money.

[Harmer]

Before you make any rash decisions you really need to get your written contract reviewed, doing the same work, provision of equipment, length of contract, hours etc are all additional factors to be considered after the fundamentals of IR35 have been considered. The courts are clear on the areas which should be looked at first and there are many comments on other threads covering the fundamentals but very basically and very briefly there are three fundamental factors: Are you required to provide your own personal service (ie do you have a right of substitution or not); are you controlled as to the manner in which you provide the services (does the end client tell you how to provide your services) and is there an obligation to provide you with work coupled with an obligation on your part to undertake the work.

Until these questions are addressed and the clauses in your contract looked at carefully then no one can answer whether you would or would not be caught by IR35.

[heyya99]

Ok, I've mailedmy ex-boss seeing I can get an increased rate. Unlikely but I think it's worth it since I neeed zero training and can be productive from day one. New contractors wouldn't be.

Then I'll get the contract analysed. Based on that, I'll see if Umbrella or Ltd is the way forward.

I'll keep you posted.

[malvolio]

New contractors wouldn't be.

.

Yes they would. That's why they're contractors. Still haven't really grasped the difference yet, have you...

[TheFaQQer]

Before you make any rash decisions you really need to get your written contract reviewed, doing the same work, provision of equipment, length of contract, hours etc are all additional factors to be considered after the fundamentals of IR35 have been considered. The courts are clear on the areas which should be looked at first and there are many comments on other threads covering the fundamentals but very basically and very briefly there are three fundamental factors: Are you required to provide your own personal service (ie do you have a right of substitution or not); are you controlled as to the manner in which you provide the services (does the end client tell you how to provide your services) and is there an obligation to provide you with work coupled with an obligation on your part to undertake the work.

Until these questions are addressed and the clauses in your contract looked at carefully then no one can answer whether you would or would not be caught by IR35.

It's nothing to do with what is written in the contract, it's the actual working practices that matter. From what has been said here, I'd say inside.

[heyya99]

Yes they would. That's why they're contractors. Still haven't really grasped the difference yet, have you...

There is not a single external contractor on this planet who could be learn the 5+ systems that my old company use in a day. It takes time to explain what they do and how they do it. I do not need this time. I can get right into it.

[heyya99]

It's nothing to do with what is written in the contract, it's the actual working practices that matter. From what has been said here, I'd say inside.

From reading what the HMRC says on their website, I'm pretty confident I would be caught. Still I will have the contract checked.