IR35 - Will I be affected?

[rambo750]

Wondering if I can get some opinions on my situation here..

I work full-time as an IT manager during the week and have been registered as self-employed for the last 3 years for my web/software development business that I've been running on evenings & weekends. I'm planning to convert this part-time business into a limited company for various reasons (limited liability,tax etc..).

My full-time employer is fully aware that I run a part-time business and are more than happy to let me do this.

I have developed some software through my part-time business that helps improve certain admin tasks in a typical business. My full-time employer now wishes to purchase this software for use in their business. The software can be charged for per module or per user and there may be some customizations specific to them which would be charged for separately.

I've been doing research on the differences in limited vs sole trader and I came across the wonderful world of IR35. I am unsure whether I would be affected by IR35 in this scenario?

I don't consider myself a 'contractor' contracted to do this work for the following reasons:

• I can do this work whenever I want and can refuse to do the work if I so wish
  I develop these systems from home using my own equipment
  I sometimes outsource certain elements to other people i.e graphic designers because I'm no good at graphics!!
  I have other clients
  I am full-time employed as an IT manager and not a Software Developer, there is no expectation of me (or the time!!) to do this in my full-time job

But am I right?

I have discussed with my accountant and she doesn't believe I will be because it's completely separate to my main employment, I have financial risk and it is not intended to be anything more than a sale of an application that I have created personally.... but I'd just like some more reassurances before I go ahead with this.

Thanks in advance.

[Moscow Mule]

If you are self employed, you get taxed on your income anyway, so IR35 is totally irrelevant.

If you are selling a product (via ltd) and customisations for said software, you are 99.99999% sure to be outside of IR35.

IMO

[SueEllen]

I agree with Moscow Mule.

In your shoes I would be more worried about:
1. The contract between you as an employee and your employer. Lots of permanent contracts have horrible clauses in them so for example your employer can claim the work you do as their own.
2. The contract between you as a provider of the product and your employer. If the contract between you isn't water tight, and there is a bug in the software your employer could turn into your nightmare customer.

[Greg@CapitalCity]

Just to pick up on the point made my Moscow Mule, IR35 relates to the provision of personal services. From what you outline above, you are selling a product, not a service - which puts your company outside the scope of IR35.

[LisaContractorUmbrella]

Agree with SueEllen 100% - IR35 is definitely not your main concern

[centurian]

But am I right?

Yes, this is slam dunk outside IR35.

Out of interest, please take the IR35 business entity test and report back to us. I think you would come out as medium risk - possibly even high risk as there would be no requirement for insurances.

If you do come out as high risk, don't worry about it for a second. But it would help confirm our belief that these tests are a pile of turd if they can't identify those outfits clearly outside of IR35.

[Old Greg]

You are just about the only person 100% outside IR35 on this board.

[ecc83]

You are just about the only person 100% outside IR35 on this board.

Are you kidding? We're all outside IR35.. like the old joke about everyone in prison being innocent...