Moving to contracting- need your brain power!!

[jojingles]

Hi all,

Slightly long post but I could do with your collective assistance. I have been working permenatly for a company which I have helped grow from day one, in that regard I have built most of the systems and processes. The business is located 150 miles away and before COVID I used to travel and stay over etc. Since COVID and not being able to travel I have decided that I do not want to continue being away from my family etc and so I have decided to set up a company and do Small Business Consultancy work.

My current employers have requested that I do some consultancy for them as me leaving will leave them in a bit of a hole. I am happy to do this as I enjoy the work but the location and travelling is not right.

I am senior enough in the business that I work from home now, do not really have a manager and decided what I do and when I do it, so moving into contracting should not be so difficult.

We all want the contract to be outside IR35 and generally this will not be an issue as new projects will come up etc and these will be on a project by project basis. However as I am so integral to the business they need me to support the systems and process and generally have access to my knowledge if required.

I am considering doing a 6/12 month, 2 day a week or 15 hours retainer to cover this as it will give me a bit of security as I start my new business but I am concerned about the IR35 implications of this. The contract will be to provide advice or resolving ad hoc problems when they arise in the business. I am unsure how to document this so that it stays outside of IR35.

I know it will also depend on the working practices and for this I will operate a ticketing system where they can log an problem or issue they need my assistance on.

Do you think a contract for general business support by retainer is a problem or do you think this is fine and what recomendations would you suggest to document this correctly.

I understand that the company will determine the status but in that regard I will likely be dealing with this for them whilst I am still employed so I would appreciate any assistance.

Thanks

[Paralytic]

First question: can you confirm the client is not a "small" company for IR35 purposes?

Other than that, there should be no reason that a retainer based SOW cannot be written that ensures the work you do for clients is outside of IR35, nomatter who is doing the determination. You just have to ensure your client accepts you are no longer an employee but are now providing a service, and ensure your working practices follow that approach.

[NotAllThere]

IR35 is on a contract by contract basis, in combinations with working practices. I can't see how for the same client, if one contract were to be within IR35 (i.e. the contract would be employment in the absence of your ltd co), how the others could not be.

Therefore, you need your retainer to be a proper consultancy contract, and all contracts, including working practices, are outside IR35.

[northernladuk]

We all want the contract to be outside IR35 and generally this will not be an issue as new projects will come up etc and these will be on a project by project basis. However as I am so integral to the business they need me to support the systems and process and generally have access to my knowledge if required.

I can't see how this can even begin to be outside IR35. You are working for your old employer so are a Friday to Monday Contractor which is exactly what IR35 was designed for. Not a chance your working practices be outside in the environment you are talking about. Just from your description you fail D&C, MoO and there can't be RoS as per the bold bit. You'll be so part and parcel it just won't be true either.

You can't document something that isn't, and even if you managed to document it the working practices will be vastly different. There are some example in large orgs where this could be possible, say working in a completely different area of the business etc but leaving and carrying on the same activities? No chance.

[jojingles]

First question: can you confirm the client is not a "small" company for IR35 purposes?

Other than that, there should be no reason that a retainer based SOW cannot be written that ensures the work you do for clients is outside of IR35, nomatter who is doing the determination. You just have to ensure your client accepts you are no longer an employee but are now providing a service, and ensure your working practices follow that approach.

The company is not "small" so they will need to do the determination but that is something which we will work together on so we ensure it is outside. I suppose it is what would a SOW look like for a retainer based contract - this is the bit I do not have the experience of.

[jojingles]

I can't see how this can even begin to be outside IR35. You are working for your old employer so are a Friday to Monday Contractor which is exactly what IR35 was designed for. Not a chance your working practices be outside in the environment you are talking about. Just from your description you fail D&C, MoO and there can't be RoS as per the bold bit. You'll be so part and parcel it just won't be true either.

You can't document something that isn't, and even if you managed to document it the working practices will be vastly different. There are some example in large orgs where this could be possible, say working in a completely different area of the business etc but leaving and carrying on the same activities? No chance.

The bold part is my interpretation of my role within the business. I am leaving the business, this is my decision and I want to go in a different direction. I want to start up a small business consultancy working for businesses that are local to me. The contract with them is to get me started on my journey and to assist them in any way I can due to our relationship.

They will not be directing me or controlling what I do, the MOO is the concern with a retainer but we have had the conversation around this and we are all aligned that it will be a hands off relationship. The right of substitution element will exist as they are only interested in the outcome, some of this I can train to other people if required but in reality I will be doing the work.

The intention is definately not to work only for them or go from a Friday to Monday contractor.

[jojingles]

IR35 is on a contract by contract basis, in combinations with working practices. I can't see how for the same client, if one contract were to be within IR35 (i.e. the contract would be employment in the absence of your ltd co), how the others could not be.

Therefore, you need your retainer to be a proper consultancy contract, and all contracts, including working practices, are outside IR35.

I agree which is why I am concerned with a retainer, but people must have contracts to look after systems or process in a business but on a contract for services basis. I am just looking for how best to structure this.

Any help is appreciated!

[northernladuk]

The bold part is my interpretation of my role within the business. I am leaving the business, this is my decision and I want to go in a different direction. I want to start up a small business consultancy working for businesses that are local to me. The contract with them is to get me started on my journey and to assist them in any way I can due to our relationship.

But HMRC won't see that. They will see you continuing to do what you are doing but on a more adhoc basis. And they won't be far wrong.

They will not be directing me or controlling what I do, the MOO is the concern with a retainer but we have had the conversation around this and we are all aligned that it will be a hands off relationship.

The intention is definately not to work only for them or go from a Friday to Monday contractor.

They will be treating you exactly as they did before, so D&C will play. They will expect you to do the work as you are the only person that can do it so MoO will be there from them and they will not accept a substitute as they want you as you are so integral. Your level of seniority doesn't help either. The best way to start this is to actually apply a dose or reality and not try make this something it isn't. You are leaving but they want you to carry on doing what you were doing before which is IR35 in a nutshell. The Friday to Monday contractor is a phrase, it's not literal. You will be doing the same stuff you did before, either part time or full time. You leave, and the next time you do the same thing you would have done anyway is as a contractor so you are effectively Friday to Monday.

The right of substitution element will exist as they are only interested in the outcome, some of this I can train to other people if required but in reality I will be doing the work.

You will have to train them in your time at your cost and that person goes in and do the job so you underestimate what is required and the fact you say the reality is you will be doing all the work blows your own argument.

Just get them to up the rate and go via a brolly and all this goes away.

[jamesbrown]

I am leaving the business, this is my decision and I want to go in a different direction.

So then, leave the business and go in a different direction.

or go from a Friday to Monday contractor

We hear your words, but we see your reality.

Otoh, if the supply chain above YourCo is responsible for IR35, the risk is largely on that supply chain. I suppose there's a chance that HMRC may see (and succeed in arguing) your role in colluding with a false assessment and allow the liability to additionally fall on YourCo, as it can when fraud is involved.

[jojingles]

But HMRC won't see that. They will see you continuing to do what you are doing but on a more adhoc basis. And they won't be far wrong.



They will be treating you exactly as they did before, so D&C will play. They will expect you to do the work as you are the only person that can do it so MoO will be there from them and they will not accept a substitute as they want you as you are so integral. Your level of seniority doesn't help either. The best way to start this is to actually apply a dose or reality and not try make this something it isn't. You are leaving but they want you to carry on doing what you were doing before which is IR35 in a nutshell. The Friday to Monday contractor is a phrase, it's not literal. You will be doing the same stuff you did before, either part time or full time. You leave, and the next time you do the same thing you would have done anyway is as a contractor so you are effectively Friday to Monday.



You will have to train them in your time at your cost and that person goes in and do the job so you underestimate what is required and the fact you say the reality is you will be doing all the work blows your own argument.

Just get them to up the rate and go via a brolly and all this goes away.

Thank you for responses, I can see where you are coming from.

The other way is just to accept that this contract is within IR35 and continue to develop my business through my limited company as any new contracts would then be on an outside IR35 basis.

If I did this would it be worth using an umbrella or just deal with it all within the limited company.

Thanks again for your time, it's a minefield and just trying to get my head round it all.