Fulltime staff to part time distant contracting

[danyjr]

Hi there,

Newly signed up on the forum after reading some of the informative posts here.

I have been working at a company for 6 years as a full-time staff. The project I've been working on is coming to a close within a year and I have been approached by a few companies/people to work on their projects instead. At this point in life I would like to give contracting a go as I need a more flexibility with regards to my employment.

My question is, can I quit my current job and immediately work as a part time and distant contractor for my current employer, working max 2 days a week for them as I will be involved in other contracts too?

I'm not trying to dodge NI/tax at all, I'm happy to pay what is due. I just don't want to create an issue for my current employer.

Thanks in advance!

[NotAllThere]

Does your contract with your employer allow for this? If you don't know, I suggest you have a quick look.

[danyjr]

NotAllThere There is no clause in my current (full time staff) contract that would prohibit this.

[ladymuck]

If you left your employer then returned to them as a contractor then that contract would be subject to full tax and NI as if you were still employed by them. It's not illegal it just won't be a B2B engagement due to your very recent previous working relationship with them. Being remote and part-time is irrelevant.

There is nothing to stop you having multiple concurrent contracts, this is normal business. There's loads of threads on having concurrent contracts here.

[northernladuk]

If you are going to make the jump then jump. Don't hang on to your employers coat tails. You'll be taxed as you were as an employee with none of the benefits and it's highly unlikely you'll find a part time contract.

[danyjr]

If you left your employer then returned to them as a contractor then that contract would be subject to full tax and NI as if you were still employed by them. It's not illegal it just won't be a B2B engagement due to your very recent previous working relationship with them. Being remote and part-time is irrelevant.

There is nothing to stop you having multiple concurrent contracts, this is normal business. There's loads of threads on having concurrent contracts here.

Does this mean I will practically fall inside IR35 rules? I can always ask my employer to bump up my rate to cover tax and NI, as well as the 10% pension they were paying me.

My question is, does my company have to do anything specific at the expense of hiring me as a contractor? Do they have to pay NI etc?

[ladymuck]

Does this mean I will practically fall inside IR35 rules? I can always ask my employer to bump up my rate to cover tax and NI, as well as the 10% pension they were paying me.

My question is, does my company have to do anything specific at the expense of hiring me as a contractor? Do they have to pay NI etc?

Yes you will be on an inside IR35 job. This is the exact scenario that IR35 was brought in to deal with when it was first made into law over 20 years ago.

Your LtdCo will have to account for every penny of that contract as if it is receiving it with the left hand and paying it to you as salary with the right. So, yes, that does mean paying "NI etc". It'll be a net loss once you factor in EerNI, unless you do what umbrellas do and do a backwards calculation to factor that in.

If you're going to go contracting, doing it with your current employer is about the worst way to go.

Interestingly, you don't mention that your current employer is on board with your scheme? Have you asked them?

[danyjr]

Thanks for your prompt reply.

My current employer are the ones who initially entertained the idea. It is more the fact that they need me because I have a lot of knowledge on the project (6 years) and my resignation will mean the knowledge will be lost. Hence why they also prefer a part-time contract as opposed to full-time.

I find it difficult to understand however why there are so many complications with working a couple of days at most for a company, or even on a task basis. I'm sure there are lots of companies that require an old employee to work on some legacy projects due to their knowledge and expertise on the project.

[eek]

Thanks for your prompt reply.

My current employer are the ones who initially entertained the idea. It is more the fact that they need me because I have a lot of knowledge on the project (6 years) and my resignation will mean the knowledge will be lost. Hence why they also prefer a part-time contract as opposed to full-time.

I find it difficult to understand however why there are so many complications with working a couple of days at most for a company, or even on a task basis. I'm sure there are lots of companies that require an old employee to work on some legacy projects due to their knowledge and expertise on the project.

True but in the UK that work is deemed by HMRC to be the work of an employee so any sane client should be treating it as either a paid part time role or an part time inside IR35 contract.

[ladymuck]

Essentially, the way the tax law stands in the UK, you cannot go from being an employee of a company on Friday to being a supplier to that same company on Monday and doing exactly the same work. As far as HMRC are concerned, that's a continuation of employment.

The part-time aspect is irrelevant. It's the previous relationship between you and the company that is the important factor here.

Think of it this way. BodgeIT PLC thinks its facilities department should be run by a different company. They have 5 people in the team. They transfer their contracts of employment over to FacilitiesRUs under TUPE. It's still the same people, doing the same work but the company on their payslip is now different. Your situation is essentially the same but instead of a whole department changing from BodgeIT PLC to FacilitiesRUS, you own FacilitiesRUS and are the only person moving.