mortgage advice

[Elliebank]

My mortgage broker did run my situation through with an underwriter at virgin money (apparently) and they seemed to think it'd be OK?!! Yes we've paid the £99 mortgage fee and for the survey, but we may be able to use the survey with another lender.

I have contacted a contracter mortgage broker yesterday, he has got some info from me and he is going to approach some lenders on Monday, but he seems to think that the fact we only have 10% deposit AND are keeping our house on to rent will make us struggle to get one. We weren't originally keeping our house on but the sale fell through this week. We only have 10% deposit whether we sell the house or not, that was the equity in the house and now my parents are paying it till the house sells (which will be done eventually). Unfortunately when we bought this house we took out a 100% mortgage, my husband is on a pretty low wage, we've had 2 kids so I've been on maternity/part time so that's why we just have the 10%.

Re IR35 - you are all completely right and unfortunately I didn't realise all this when I took the contract on. I did do a little research and spoke with my 'employer' who worded my contract accordingly but after your comments I have realised that I am at great risk, after doing a lot of research today. So I was going to end the ltd company and go umbrella, I realise this will effect my take home pay but at the end of the day I'm still on a lot more than I was as perm. But then I saw I could actually keep the ltd co on and work inside ir35. I should be with this company for quite a while and may even go back perm so I defo don't think I should even try to say I'm outside of ir35. Any advice is much appreciated, I just wish I'd gone umbrella from the start.

[TheCyclingProgrammer]

If you're confident you're caught (and certainly on the facts presented it sounds like you should be if your working practices are unchanged, but do have your contract reviewed anyway), then there is no need to dump the Ltd Co and use an umbrella.

Working through YourCo will probably still be beneficial in the long term especially if you take on a new contract that is outside IR35.

You can work inside IR35 through YourCo, it just affects how you distribute the income from that contract and the expenses you can claim. In short, the profit from the contract has to be distributed through your payroll.

Read this:
http://www.hmrc.gov.uk/leaflets/guide_limitcomp.htm#4

You will get advice in here but your accountant should be able to sort this all out for you. If you don't have an accountant, then get one ASAP and make sure it's one that knows about contracting and IR35.

Given when you started, you should have plenty of time to get your house in order by the end of the tax year. Do it now, and you'll have nothing to worry about. Don't leave it.

Finally, I think you should follow Power Mortgages advice and try and recover your costs from your current broker and find a new one. Do a search on his forum for mortgages, there are several brokers on this forum that could help you. I've been working with Ben @ Power Mortgages and can recommend him.

[Elliebank]

Thanks. I do have an accountant and she is aware of IR35 but not sure how expert she is at it. What about my NI?

[TheCyclingProgrammer]

Thanks. I do have an accountant and she is aware of IR35 but not sure how expert she is at it. What about my NI?

It all gets calculated by your payroll. In essence, treat the income from the contract, minus allowable expenses, as salary and pay it through your payroll in the normal way.

If you're not sure how much your current accountant knows about IR35, then ask yourself why they never brought it up with you before regarding your current contract. Given it is with your previous employer, it should have set alarm bells ringing for them. If it didn't, I'd be worried. Consider finding a new accountant (again, representatives of many reputable firms post on here).

[Elliebank]

I'll still be able to offset my expenses won't I? I work from home and do a little travelling. Sorry it may say in that link you posted but gonna wait till the kids are in bed before I read that then I can read it properly!

[Elliebank]

Cross posted! Thanks

[TheCyclingProgrammer]

I'll still be able to offset my expenses won't I? I work from home and do a little travelling. Sorry it may say in that link you posted but gonna wait till the kids are in bed before I read that then I can read it properly!

The link I posted should cover what you need to know but a good accountant will be able to give you more detail.

Finally, despite everything, it's not necessarily a given at you ARE operating inside IR35. It ultimately depends on your contract and working practices. Get both of these reviewed by a professional. QDOS offer a contractor review service and they even throw in a few reviews with their insurance products.

http://www.contractoruk.com/ir35/ins..._employer.html

It's not impossible to work for your previous employer as a contractor and be outside IR35 if you can show either a lack of mutuality of obligation, direction and control (the fact you work from home might help here) or that you have a right of substitution. It's not possible to say for sure without knowing your exact circumstances or what's in your contract so I'll just reiterate that you need to speak to a professional about this.

[Elliebank]

OK thanks a lot for the advice, will get a review done.

[northernladuk]

Re IR35 - you are all completely right and unfortunately I didn't realise all this when I took the contract on. I did do a little research and spoke with my 'employer' who worded my contract accordingly but after your comments I have realised that I am at great risk, after doing a lot of research today. So I was going to end the ltd company and go umbrella, I realise this will effect my take home pay but at the end of the day I'm still on a lot more than I was as perm. But then I saw I could actually keep the ltd co on and work inside ir35. I should be with this company for quite a while and may even go back perm so I defo don't think I should even try to say I'm outside of ir35. Any advice is much appreciated, I just wish I'd gone umbrella from the start.

Yeah, your pay will go up a lot!!!!

Why, after reading your personal situation, did you decide to take on contract work? What will you do when your 'employer' uses the fact you have zero rights and no notice period to bin you off and you can't travel so end up for 2 to 12 months on the bench?

Finally, despite everything, it's not necessarily a given at you ARE operating inside IR35. It ultimately depends on your contract and working practices. Get both of these reviewed by a professional. QDOS offer a contractor review service and they even throw in a few reviews with their insurance products.

http://www.contractoruk.com/ir35/ins..._employer.html

It's not impossible to work for your previous employer as a contractor and be outside IR35 if you can show either a lack of mutuality of obligation, direction and control (the fact you work from home might help here) or that you have a right of substitution. It's not possible to say for sure without knowing your exact circumstances or what's in your contract so I'll just reiterate that you need to speak to a professional about this.

But don't kid yourself. You say

'employer' who worded my contract accordingly

Which would further lead to think that the contract is a sham just for you to carry on. The contract should reflect working practices, not meet guidelines. HMRC only have to chat to your employer and your contract defence will just fall around your ears. Reviews will not always give a true representation if they do not fully know all the facts and everyone in the loops is playing the game.

Don't consider getting a new accountant if your old one didn't bring this up. You must get one.

I would also suggest you don't dismiss the umbrella option too quickly. TCP is correct a LTD can still work slightly in your favour but it comes with responsibilities. An umbrella will be much simpler and not have the same level of responsibility. You mentioned your take home pay will change. I read in to this you don't fully understand how you are remunerated from an LTD.

[TheCyclingProgrammer]

OK thanks a lot for the advice, will get a review done.

Remember a contract review alone is not worth much if your working practices do not reflect it. As NLUK says, any contract can be worded so it isn't caught by IR35 but if it's a sham HMRC will look through the contract and evaluate your working practices on their own merits (and they can interview your ex employer).

If after everything it's determined you're definitely inside then all is not lost. You'll be paying a bit more tax but you'll still be earning more money overall (I'm guessing).

If you're contract is found to be outside and your working practices support this, then do not hesitate in taking out a PCG+ membership for extra protection.

Good luck.