IR35 - Back to my old Perm Job as a Contractor? Please help

[ANONYMOUS786]

Hi, Im new here, and pretty new to contracting. I really need some help/advice quite urgently

I worked permanently for a company for around 5 years, which i quit 6 months ago. I was offered a contract in another organisation, totally different and ive been there 6 months now, due to leave shortly as it comes to an end.

I have a limited company setup and i claim expenses, and now, an agency has approached me for my old job where they recruited for pretty much my old job, same system and colleagues but now as a contracter. Ive been for an interview and they tell me that they only need me for 6 months max, supporting the same systems as i did previously when i was perm with them. The system they need supporting will be decommisioned soon so i finish when the system finishes, basically thats the reason why its a contract. The daily rate is too good to be true, very tempting but im buggered with IR35 when i read up on it. Ill be working in the same office as before aswell.

When i approached my accountant they told me that as long as the contract is IR35 compliant then thats no problem, as people do that all the time ie leave and go back as contractors, but thats not what google tells me! Ive read that this is why IR35 was introduced, for people like me who left perm and back as a contractor. However, my accountant also tells me that ive had a break for 6 months in between as ive contracted elsewhere so its not an immediate "Friday to Monday" situation.

The agency im going through says that she will be happy to change clauses in the contract to make it compliant if needed after i have a review of the contract from QDos (I havent got any insurance yet or purchased anything from QDos).

When i rang QDos, enquiring about their insurance and contract reviews (which i havent got yet), she said that they normally recommend 12 months gap between leaving perm and then going back as a contractor, and because my gap is 6 months, i would need to strengthen my contract by asking the client if i have the right to substitute etc and not be controlled by them. Now, i cant do that as more or less i doubt, that they will accept that but cant be sure. She also said that it would be good to get a terms of agreement signed by the 'client' ...not the agency....which contains clauses in like right to substitute, paying for any equipment ive smashed etc etc.
However, note that the agency contract has these clauses in there already (right to substitute etc) but QDos advised that its just a contract, and maybe not reality....as if there is an investigation by HMRC and they asked my ex employer if i have right to substitute and found that they wouldnt accept that, it will be negative

So you may already think im not IR35 compliant if i go for this, so, if i was to just go ahead and get insured with them (QDos IR35 insurance), then, if there is an investigation, do you think that they would still pay out? As the lady from QDos who i rang obvioulsy wants me to get insured but is just asking these questions because i pointed out my concerns to her. She said if there was ever an IR35 investigation and they found that i lied to them, they wouldnt pay out. I dont know what they classify as a lie? The contract clearly mentions many things in there about substitution etc etc, and can be changed to make it more compliant.

My employer wants me to start after a few days and i have not got my contract reviewed yet, or purchased the insurance. All i want to know is would i be safe with this insurance? Or any other approach recommended? Help needed asap please!

If you think that i would be safe to use this approach, then QDos have 2 insurances (one which covers for investigation and the other to cover also for tax liabilites also which costs £360, this would be recommended right?)

[Old Greg]

Others with more experience may disagree.

Get PCG membership for insurance to cover legal costs. Get your contract as good as possible. Get your mindset right. No staff meetings. Defined deliverables only. Put an extra 15k aside for worst case. Don't worry about it.

[Fred Bloggs]

You already know the answer, you're IR 35 caught. Ask them to increase the rate to cover the extra NIC's.

[Alias]

You already know the answer, you're IR 35 caught. Ask them to increase the rate to cover the extra NIC's.

WFBS

Make sure its done right and there will be minimal risk

[northernladuk]

You already know the answer, you're IR 35 caught. Ask them to increase the rate to cover the extra NIC's.

Don't agree with the approach to this one. In my eye there is a rate offered. It is up to you if you take it or not. You do your calcs and see what you come out with and then go back a negotiate. You do not ask the agent/clients to cover your business costs. They are yours and yours alone and do not wash them in front of agents/clients. 24 month rules/extra NIC's whatever is your problem. The only decision you have is if you take the rate offered.

No harm in saying you want more I am all for that but to use your personal business costs to justify it isn't right IMO.

The OP is right and his account it is wrong. Clearly inside IR35.

IMO to the OP. Go get a proper contract. This will teach you nothing and give you no experience of contracting which was the whole reason for going for it. In 6 months you are going to know less about contracting that when you start. If you are going to do it, do it. Don't go half baked.

[ANONYMOUS786]

Im really confused now, although thanks for your advice people. The question to summarise is, that if im at risk then id rather not go for the contract. However, if insurance would cover me in this instance then i would.

I never understand, if insurance covers you if your IR35 compliant only, then whats the point getting insured?

Surely, insurance with Qdos or PCG (dont know the differences), is there for people like me in contracting, right?

[Clare@InTouch]

The point of the insurance is that HMRC may challenge you even if you're compliant, and then you're covered for the potential court fees and professional fees whilst you prove that's the case. I'd simply suggest full disclosure to the insurers upfront so that they can't refuse to pay out later on on the grounds that they were unaware.

If you're at risk, and it seems to me that you would be, then is the daily rate not enough to enable you to still make a good return even within IR35? Or to hedge your bets and take say 75% as salary, if you think there's a chance you could argue being outside?

[malvolio]

Im really confused now, although thanks for your advice people. The question to summarise is, that if im at risk then id rather not go for the contract. However, if insurance would cover me in this instance then i would.

I never understand, if insurance covers you if your IR35 compliant only, then whats the point getting insured?

Surely, insurance with Qdos or PCG (dont know the differences), is there for people like me in contracting, right?

Doesn't matter if you're caught or not, defending a case will cost up to around £15k. That's why you need insurance.

FWIW, as long as you are working to defined deliverables (and that includes "maintain this service for six months please") and you are left to decide how best to do it, an dyour contract aqnd working practices are aligned you may well be OK. IR35 is not an automatic fail just because you're selling your expertise to someone who neds it.

As for PCG vs QDOS: QDOS are commercial sellers of contractior insurances. PCG (Home | PCG) is a not-for-profit member-led organisation working to represent contractors, who unconditionally defend their members if they are chased by the taxman. Net result is much the same, but PCG has a rather different value-add.

Ass for rate - what you personally need to live on? Add 20% to cover the taxes. Add the cost of doing the job. Add 20% to cover the company's costs. Add 25% profit. That's your baseline; anything over that is bonus. There's no such thing as market rate, despite what agencies will tell you, the rate for a role is actually set by the client's budget. It's up to you to demonstrate you're worth whatever you charge.

[Qdos Contractor]

I never understand, if insurance covers you if your IR35 compliant only, then whats the point getting insured?

Surely, insurance with Qdos or PCG (dont know the differences), is there for people like me in contracting, right?

The fact is that it would be a real struggle to defend someone who had returned to their previous employer, doing exactly the same work. Our TLC insurance doesn't specify that you have to be 'compliant'; IR35 isn't black and white and even with a good contract and seemingly good working practices, there's always going to be a significant risk in the event of an enquiry (HMRC talking to end client, dodgy upper level contract etc).

But we can't cover someone who, on the face of it, has little or no prospects of success.

You could obviously get a more basic tax enquiry insurance policy that simply covered the defence costs. These tend not to be risk assessed.

[garethevans1986]

I've done this, left my perm role in October 2011, contracted between October and March 2012 at a different client, then contracted at my old perm place for 6 months.

I did however change my working practices, did work for other clients at the same time as this contract (both myself and the wife as we're both directors of the limited company).

The one thing I found was the client contact (IT Director) didn't understand IR35 (and the consequences to me) and especially when I refused to go on training paid for by the ClientCo, refused to be taken off the project I was working on to "cover support while x perm employee is on training next week".

I lasted 5 months before getting fed up with the

GE