Is it possible to move from perm to contract at the same company and be outside IR35?

[NibblyPig]

I took a permie job a while back when there weren't any contracts going around, and now things picked up I handed my notice in.

My boss wanted me to stay longer, but I declined as I was keen to get back to contracting.

He asked if I would contract for him to do some handover for a replacement that is joining just before I leave, as they couldn't get the replacement in any sooner. He wants me to do 18 days of handover as a contractor.

I understand contracting at the same job is a huge red flag for IR35. Is there anything I can realistically do? I'm pretty flexible in terms of how I deliver the work, but I guess with it being handover there's not much chance a substitution clause is going to hold up.

Better to pay up, risk it, or decline and apply elsewhere?

Any advice welcome. Thanks.

[TheCyclingProgrammer]

Short answer: yes, it is.

Longer answer: its the kind of thing IR35 was designed to prevent so you'd have to expect a somewhat higher chance of it being looked into, which means making your IR35 defence as solid as you can.

If a right of substitution isn't realistic, then you need to focus on the other two key factors of MOO and D&C. Your contract needs to make it clear that the client isn't obliged to offer you further work and you aren't obliged to accept it. You should ensure you are not under any significant direction and control beyond being given a list of deliverables/a brief. How you approach the work should be down to you - if you can have control over things like hours etc. this helps too.

If you haven't yet set up your Ltd co, the low risk approach would be to just use an umbrella for the one contract although bear in mind you won't be able to claim any travel/subsistence expenses for the contract.

[BolshieBastard]

I took a permie job a while back when there weren't any contracts going around, and now things picked up I handed my notice in.

My boss wanted me to stay longer, but I declined as I was keen to get back to contracting.

He asked if I would contract for him to do some handover for a replacement that is joining just before I leave, as they couldn't get the replacement in any sooner. He wants me to do 18 days of handover as a contractor.

I understand contracting at the same job is a huge red flag for IR35. Is there anything I can realistically do? I'm pretty flexible in terms of how I deliver the work, but I guess with it being handover there's not much chance a substitution clause is going to hold up.

Better to pay up, risk it, or decline and apply elsewhere?

Any advice welcome. Thanks.

IR35 was brought in to catch this very situation. Go figure.

[TheFaQQer]

Is it possible to move from perm to contract at the same company and be outside IR35?

Yes, it's possible.

But not in the scenario you describe. Either jack up the rate to cover the additional tax, or take the role and whack it all into your pension plan, or find something that isn't caught.

[malvolio]

All of which is wrong. The key test is "are you doing the same job?". If your new role is totally unrelated to the old one - for example your old role was bulk commercial programming and now you are to research and build a specific tool for a set objective - then you may well be fine. However the standard three tests have to be applied.

That said, meeting the requirement is quite hard to achieve and Hector, quite rightly, is not sympathetic to such cases. In your scenario, you don't get anywhere close. Use an umbrella and take the hit to be safe.

[Antman]

Risk quite high but the impact is low. What is the additional tax to pay on 18 days if you get investigated?

[TykeMerc]

All of which is wrong. The key test is "are you doing the same job?". If your new role is totally unrelated to the old one - for example your old role was bulk commercial programming and now you are to research and build a specific tool for a set objective - then you may well be fine. However the standard three tests have to be applied.

That said, meeting the requirement is quite hard to achieve and Hector, quite rightly, is not sympathetic to such cases. In your scenario, you don't get anywhere close. Use an umbrella and take the hit to be safe.

Since he's said the proposed 18 day contract is to ensure handover is completed then that scenario is totally out of the window, it's clearly a continuation of the permy role being left.
In the scenario you described in the first post I'd say no, sorry it looks to be IR35 caught.

[NibblyPig]

Thanks guys, my job would be simply handover so not doing any development (probably just documenting processes and tutoring the new guy) but as you say it's far too fishy, so I'll either pay up or see if I can stay employed permanently but have my salary adjusted for that period to match the rate I specified. And if that's too much faff, go elsewhere

[OrangeSquash]

Since it's only 18 days work, get clientco to pay appropriate rate to compensate and declare yourself inside IR35 for this engagement.
Move on.

[northernladuk]

Short answer: yes, it is.

In general yes it is but for the purposes of this situation no it isn't. He's just doing a continuation of his perm role which would be expected of anyone leaving and not an unreasonable request by a manager to an exiting permie.