IR35 Confusion -

[Paralytic]

Anyone know about 3? (its not for me) how will "contractors" fund other business activities if all their day rate is going into their personal account?

Find another income stream for the company, loan your own personal money into the business (directors loan account) or get a bank loan (unlikely unless it's the government BBL). Move to California and get angel investors.

[LondonManc]

If you’re employing someone that means they have a permie job. You’ve got to run a payroll for them and offer them a company pension. If you’re subcontracting, that’s something entirely different.

Is the person at client on a 50k salary and employees as a consultant who you charge out at 500 per day?

[pauljh]

So the issue comes down to a simple one:-

If the contract is your employee and you do no work for that client you have nothing to worry about - the person who is doing the work is paid via PAYE.

If the contract requires you to do work for the client then you have a problem as if you take money out as dividends you aren't compliant.

The contract lists my 2 employees and myself.
How would I determine what part of the dividend is from "my" day rate and what part is from my day rate I charge for my employees?

I'm getting DejaVu...

[eek]

The contract lists my 2 employees and myself.
How would I determine what part of the dividend is from "my" day rate and what part is from my day rate I charge for my employees?

I'm getting DejaVu...

You can't which is why I won't take inside IR35 work that requires me to do any actual work....

[GhostofTarbera]

IR35 Confusion -

Your business model is busted


Sent from my iPhone using Contractor UK Forum

[northernladuk]

Isn't this your third stab at this? First thread Sept 2019, Feb 2020 and then this one?

You managed to post the other two in the right part of the forums? Different forum for lucky third attempt?

They have said the contract will be inside IR35. so I've no idea how this will work for my employees and myself..

Your business model is all wrong for the clients needs.

Surely that would mean your LTD will get paid the money after all normal taxes have been paid? I assume they will want you to take an umbrella on or something so there is no risk paying you gross and relying on you to pay the proper taxes. Unless you can convince them otherwise and work like the agents do.

You business model is busted

This.

[pauljh]

Isn't this your third stab at this? First thread Sept 2019, Feb 2020 and then this one?

You managed to post the other two in the right part of the forums? Different forum for lucky third attempt?

Your business model is all wrong for the clients needs.

Surely that would mean your LTD will get paid the money after all normal taxes have been paid? I assume they will want you to take an umbrella on or something so there is no risk paying you gross and relying on you to pay the proper taxes. Unless you can convince them otherwise and work like the agents do.

This.

The model evolved and has fit my clients needs perfectly. No umbrella is required (they told me this), they will need proof my employees are "proper" PAYE, "I" am the only issue currently.

I think I might post this to 4chan in the future, 4th time lucky...

[northernladuk]

The model evolved and has fit my clients needs perfectly. No umbrella is required (they told me this), they will need proof my employees are "proper" PAYE, "I" am the only issue currently.

I think I might post this to 4chan in the future, 4th time lucky...

So the only issue is how do you make sure all the income from the client is distributed via PAYE. Your account could advise that?

This is just an accounting question not an IR35 one. Client says you are all inside. That's IR35 taken care off. Now just how to account for it.

How do you grow your business? Not with this client. You aren't running a business selling services, you are providing bums on seats. You are acting as an agency not a consultancy so the only growth is more bums on seats as the client requires them. You are mixing up your business approach. If you want to grow as a consultancy you find another client that you can engage in as a consultancy and sell them a service via a SOW approach which will put you firmly outside IR35.

Surely you realise that your current model has a finite timescale and will all fall apart once the client doesn't need you? If you do think it was going to go on forever as it is then you were inside from day one.

BTW... What are you doing about the fact you thought you were outside and now inside?

[pauljh]

So the only issue is how do you make sure all the income from the client is distributed via PAYE. Your account could advise that?

This is just an accounting question not an IR35 one. Client says you are all inside. That's IR35 taken care off. Now just how to account for it.

Currently I don't draw dividends or a salary, it is just building in my company to pay for other ventures (mainly programmer time for an internal project)

How do you grow your business? Not with this client. You aren't running a business selling services, you are providing bums on seats. You are acting as an agency not a consultancy so the only growth is more bums on seats as the client requires them. You are mixing up your business approach. If you want to grow as a consultancy you find another client that you can engage in as a consultancy and sell them a service via a SOW approach which will put you firmly outside IR35.

Surely you realise that your current model has a finite timescale and will all fall apart once the client doesn't need you? If you do think it was going to go on forever as it is then you were inside from day one.

Yes I never saw this going past 3 years, we are now only on one one massive piece of work (2 years work according to them (but I estimate 4-5 (yes I've told them this)) BUT as we are there we ofcourse get pulled in todo other things outside the original piece of work (like BAU), it would be disadvantageous to me to turn down BAU helping as it could sour the relationship (They could approach IBM and IBM could sweep in and take it all)

BTW... What are you doing about the fact you thought you were outside and now inside?

I'm going to discuss with them their determination and hopefully (if I can find someone to legally support this) provide evidence beyond my illiterate ramblings and indeterminate CEST result.

I ideally want someone to help me negotiate a new contract and help them define the SOW's so i am "safe", hence the request for paid help..!

[jamesbrown]

I ideally want someone to help me negotiate a new contract and help them define the SOW's so i am "safe", hence the request for paid help..!

Sounds like pointless window dressing to me. IR35 isn’t, and has never been, about words on paper. It’s about the hypothetical contract - what the relationship looks like, in the round, if you take a step back from words on paper and consider the facts.

If you’re getting pulled away on BAU work without a contract variation then this has almost certainly been inside all along. Your actual working relationship comes before the contract and, unless you’re proposing to change that fundamentally, no amount of SoW window dressing is going to help. In short, are they really going to treat you differently and you them? Not according to you, as you’re worried about “souring the relationship”. Be honest with yourself.