Contracting for Company where I was previously Permanently Employed and IR35

[lazz]

Hi all,

I know there are IR35 implications for returning to a previous employer as a contractor however I think my situation may be slightly different.

What would be the implications if I returned straight away to do a small part of my job where I was previously permanent. Note that this will only be a couple of days and month and would make up a small % (maybe 10%) of my total companies fees (i.e I would have other contract/s that would supply the majority of my companies income).

Any help on this would be most appreciated. I'm sure this has been asked before but couldn't find it after a forum search.

Thanks

[tractor]

...

Hi all,

I know there are IR35 implications for returning to a previous employer as a contractor however I think my situation may be slightly different.

What would be the implications if I returned straight away to do a small part of my job where I was previously permanent. Note that this will only be a couple of days and month and would make up a small % (maybe 10%) of my total companies fees (i.e I would have other contract/s that would supply the majority of my companies income).

Any help on this would be most appreciated. I'm sure this has been asked before but couldn't find it after a forum search.

Thanks

If you have multiple concurrent contracts with different clients, that is a big positive. HMRC view would I am sure, be very different from yours. The likelihood of you being investigated above anyone else though, is small.

[Pondlife]

IR35 is determined on a contract by contract basis. Therefore, this particular contract and it's earnings should (most likely) be considered as inside, whilst your co's other earnings may not.

[jamesbrown]

As with any other engagement, you should have the contract and working practices professionally reviewed, and you should make this situation clear to the reviewer. Working with a previous employer is not automatically caught, providing the working arrangements have changed significantly, although spending only a fraction of your time on this contract alongside other contracts is not, in itself, that important (it is positive, but not a determining factor).

[ContrataxLtd]

Hi all,

I know there are IR35 implications for returning to a previous employer as a contractor however I think my situation may be slightly different.

What would be the implications if I returned straight away to do a small part of my job where I was previously permanent. Note that this will only be a couple of days and month and would make up a small % (maybe 10%) of my total companies fees (i.e I would have other contract/s that would supply the majority of my companies income).

Any help on this would be most appreciated. I'm sure this has been asked before but couldn't find it after a forum search.

Thanks

Hi Lazz

As you rightly point out, returning to a former employer could be a big indication that the contract would be caught by IR35 but it is on a contract by contract basis. If the contract AND working practices (in reality) would put you outside IR35 then you could be fine.

Also, you could probably quite easily mitigate the affects of IR35 in this situation anyway. Assuming a turnover of £100,000 with £10,000 coming from this specific contract then paying a salary of £10,000 (which you would probably do anyway) would put you in the clear so to speak as you would have complied with the IR35 rules.

Martin
Contratax Ltd

[jamesbrown]

Hi Lazz
Also, you could probably quite easily mitigate the affects of IR35 in this situation anyway. Assuming a turnover of £100,000 with £10,000 coming from this specific contract then paying a salary of £10,000 (which you would probably do anyway) would put you in the clear so to speak as you would have complied with the IR35 rules.

Martin
Contratax Ltd

Yes, that's a good point. Pension contributions are another consideration.

[TheCyclingProgrammer]

Working for a former employer, especially so soon after leaving employment, may increase your risk of being investigated (I have nothing to back this up, its just my opinion). There's also an increased risk of being treated like an employee simply because you used to be one.

It does not, however, mean you are automatically caught by IR35 just because you used to be an employee. The normal IR35 tests apply just as they would to any other contract.

As everyone else has said, have your contract and working practices reviewed and due to the potentially higher risk, really do your due diligence in ensuring your working practices put you outside.

[Murder1]

IR35 is determined on a contract by contract basis. Therefore, this particular contract and it's earnings should (most likely) be considered as inside, whilst your co's other earnings may not.

Always found the IR35 on a contract by contract basis contradictory especially given HMRC's own BET's cover topics not contract specific (lost payments, office rental, advertising etc). I personally would have thought that maintaining multiple clients at once is far more an indicator to being outside IR35 than most other things.

That said, returning to a place you worked permanently so soon would be a risk in my book.

[lazz]

Thank you all so much for your insight. I will definitely take all the advice into account

[TheCyclingProgrammer]

Always found the IR35 on a contract by contract basis contradictory especially given HMRC's own BET's cover topics not contract specific (lost payments, office rental, advertising etc). I personally would have thought that maintaining multiple clients at once is far more an indicator to being outside IR35 than most other things.

That said, returning to a place you worked permanently so soon would be a risk in my book.

BETs are largely a risk assessment tool - they are indicative of your risk of investigation according to HMRCs own criteria. They do not determine your IR35 status.

Multiple contracts might score you points on the BETs and reduce your investigation risk but they change nothing with regards to the IR35 status of each individual contract.