IR35 problems for possible substitute

[kingcook]

Just wanted to get people's thoughts on this...

Let's say i decided to get a substitute in for 1 month while i'm away. I guess i could (a) employ the substitute on some temporary contract with my ltd co, or (b) use them as a sub-contractor if they have their own ltd co.

So, say (for whatever reason) i go down route (a) and after the 1 month the client decide to take on my ltd co's temp employee on a contract basis (this would be ok with me).

Would my ex-temp employee have any problems wrt IR35 in the future if they decided to start their own ltd co? (i.e. doing the same job, but via a ltd co)

[Sockpuppet]

Wouldn't change anything. IR35 would still be judged on the merits of the contract at the time the same as if they'd not done the months work.

[northernladuk]

Would my ex-temp employee have any problems wrt IR35 in the future if they decided to start their own ltd co? (i.e. doing the same job, but via a ltd co)

Just to give us a clue how we should answer could you explain how you think IR35 might affect this person.

[kingcook]

My thoughts were that one of the reasons IR35 was introduced was to stop people leaving a job on Friday, and going back on a Monday as a contractor via their own ltd co.

But i guess (as Sockpuppet says) if the contract (+ actual working conditions) stay outside of IR35, this would be ok?

[northernladuk]

My thoughts were that one of the reasons IR35 was introduced was to stop people leaving a job on Friday, and going back on a Monday as a contractor via their own ltd co.

But i guess (as Sockpuppet says) if the contract (+ actual working conditions) stay outside of IR35, this would be ok?

You are putting an incredibly simplistic scenario to a complicated bit of legislation. Going from permanent to contract can cause you to fall foul of IR35 because you are now being taxed as a company but doing a permies job. It is a little more complicated than just going back to a job. If you were not a full time employee of that first job and are not a 'hidden employee' of the second then you are still deemed outside IR35

[kingcook]

Cheers folks, i know it's a bit of complicated legislation as NLUK said. Just looking for thoughts.

My client seems interested in doing the substitute thing now. Are there any guides on this, or could anyone share any experiences (good or bad), or offer any advice no matter how big or small? Feel free to PM me if you like.

Bit more info: the substitute would be in for around 6 weeks. Get a temp employee casual contract? Get employee to go via umbrella, or insist they have their own ltd co?

This is starting to seem a bit daunting

[pmeswani]

Cheers folks, i know it's a bit of complicated legislation as NLUK said. Just looking for thoughts.

My client seems interested in doing the substitute thing now. Are there any guides on this, or could anyone share any experiences (good or bad), or offer any advice no matter how big or small? Feel free to PM me if you like.

Bit more info: the substitute would be in for around 6 weeks. Get a temp employee casual contract? Get employee to go via umbrella, or insist they have their own ltd co?

This is starting to seem a bit daunting

Are you a member of the PCG? I don't know off hand if they have any Contractor to Contractor type contracts. In terms of whether they go via Ltd or Umbrella, it shouldn't really matter as long as your subbie will take on responsibility for pay the tax. Whether they delegate that to an Umbrella or deal with it via a Ltd company, it doesn't really matter. Either way, make sure you get a copy of their Insurance documentation as well, for your records, so that if you need to make a claim, you are covered.

[kingcook]

Are you a member of the PCG? I don't know off hand if they have any Contractor to Contractor type contracts. In terms of whether they go via Ltd or Umbrella, it shouldn't really matter as long as your subbie will take on responsibility for pay the tax. Whether they delegate that to an Umbrella or deal with it via a Ltd company, it doesn't really matter. Either way, make sure you get a copy of their Insurance documentation as well, for your records, so that if you need to make a claim, you are covered.

Yes - i'm a member of PCG. Cheers, will have a look through their website (i've never really looked that much - i guess i should start!)

WRT insurance, good point. If i sub-contract to a ltd co/umbrella, then they should have their own insurance. But if i take on a temp employee at my ltd co, it will be my ltd co responsible for any possible **** ups.

[pmeswani]

But if i take on a temp employee at my ltd co, it will be my ltd co responsible for any possible **** ups.

If you do take on a temporary employee via your company, make sure you have an Employers Liability Insurance and make sure that the insurance covers temp. employee substitution.