How long before someone can contract?

[EnJo]

I’m currently working for a organization, which may be willing to take me on as a contractor. I was wondering if there is any legislation that mandates a minimum period of time before a permanent employee can be ‘re-employed’ as a contact.

I’m hoping there isn’t since I will be contacting via a company anyway, which I happen to own.

[cojak]

You will be caught by IR35 which was designed to catch people exactly like you - whether you use a Limited or not. You are a Friday - Monday contractor.

Take a look at the first timer's guides on the right, but go to IR35 first.

[captainham]

I’m currently working for a organization, which may be willing to take me on as a contractor. I was wondering if there is any legislation that mandates a minimum period of time before a permanent employee can be ‘re-employed’ as a contact.

I’m hoping there isn’t since I will be contacting via a company anyway, which I happen to own.

IR35 was made just for such a scenario. Have you read the guides on the top right of the page?

[cojak]

In case you haven't...

Contractors' Questions: Is contracting for my ex-employer inside IR35? :: Contractor UK

[jamesbrown]

As noted above, you'll be caught by IR35, unless you have exceptional circumstances (a fundamental change in working practices). Although not mentioned in the actual legislation, which is purposely vague, one of the intentions was to catch people that go from permie one day to contractor the next, doing essentially the same job. If you do have a fundamental change in working practices, it's worth getting professional advice on your situation.

[jmo21]

I'm guessing the OP was not aware of IR35, but the answer to his actual question is:

No, there is no legislation stopping you from doing this, or dictating a minimum period of time to wait.

But as the others have pointed out, you would likely fall foul of IR35.

That all being said, I would question who suggested this change from employee to contractor?

If your employer did, I'd be suspicious that they might try to make you redundant at some point in the future so not to have to worry about you being an employee and all that would entail.

[doomage]

Note its not illegal to do this, but it affects your tax status (the IR35 bit). Contracting may be preferable to you for reasons other than increased rate of pay, also you might be able to negotiate a higher rate to offset the extra tax required due to the fact you will be inside IR35.

There are other consideration such as employee benefits (holidays / sick pay etc) that you need to factor into your calculations.

[Wanderer]

I’m currently working for a organization, which may be willing to take me on as a contractor. I was wondering if there is any legislation that mandates a minimum period of time before a permanent employee can be ‘re-employed’ as a contact.

I’m hoping there isn’t since I will be contacting via a company anyway, which I happen to own.

HMRC call this a disguised employee and the brought in IR35 to counter people doing it as a tax avoidance move.

As others have said, there isn't a limit on going permie to contractor but it will affect your IR35 status. Have a look at the Business Entity Tests. If you score quite badly then you will be IR35 caught. The only way around it is to have a radical shake up of how you work (eg, employing other people to do the work for you) but I don't think that's what you have in mind...

Also be very wary of the client's motivation for you to switch to a contractor with no employment rights. Due to the amount of tax you will pay as a LTD company and the loss of pension, sick, paid holiday, redundancy, etc, your gross pay working as a LTD would have to be about double your permie salary to compensate and I don't think your employer would accept this.

Certainly don't leave a permie job with all it's rights and switch to contract for a small increase or worse still a "pro rated" permie salary.

[EnJo]

It was me that suggested it to my employer, which is currently being considered – I’m aware I forgo a number of benefits, but where I’m working the benefits are not so good anyway. At this organization the difference in contract and permanent rate is just insane (2.5x - assuming a 48 week year) -. The idea is permanent rate factors in ‘bench time’ – which is really a moot point for me since I’ve only spent 1 week on the bench in 2 years (I’m aware this could change but that is a risk I’m happy to take).

All contractors are subcontracted from a well know recruitment agency at this organization; so my employer will change as soon as I leave here.

I will read the IR35 guidelines tonight.

Thanks for the advice.

[jamesbrown]

I will read the IR35 guidelines tonight.

Thanks for the advice.

There's nothing stopping you working inside IR35, as others indicated. However, don't be tempted to convince yourself that you might be outside IR35 without professional advice and a review of your working practices. It's a rare case that you could move from employee to contractor without falling foul of IR35, and you'd need to carefully document all the changes that took place in working practices, which would need to be substantial; IR35 is ultimately all about working practices. Your client would need to be in agreement on these. If, after reading up, you think it's worth paying for professional advice on your contract and working practices, search the forum for some of the specialists recommended here (QDOS, Abbey Tax, Bauer And Cottrell,...).