From Permanent To Contract

[Ardesco]

I've just handed my notice in at my permanent job and the company have said that they'd like me to stay on, if necessary as a contractor.

I'd be doing a slightly different role, but working at the same desk, with the same people, and they don't want anyone else I work with to know I'm contracting.

So when IR comes into the company finds him sitting at the same desk he has for the past god knows how many years, ask's his co-workers if he decides what to do and when to do it, and they turn round and say he is still a permie, you think he is going to be classified as outside IR35 ??

I sure as hell don't think so.

[oraclesmith]

Well, has anyone had that situation ? eg. HMRC coming in and sitting by your desk, scanning round and firing off questions at random colleagues in the office ? Does it happen ?

Or do they interview your client contact or a senior manager and find out what contractual arrangements are in place, how much control the business thinks it exerts over the contractor etc?

I agree that not allowing anyone to know you're a contractor is a problem, but is it insurmountable ?

Anyhow, my advice is to go for the contract anyway and work out the tax situation with your accountant, not here! If you go limited company, you can always minimize the impact of an IR35 investigation by paying yourself a realistic PAYE salary and forget about the few quid you would save by having very low salary and divis. And look for the next contract pretty soon too, because it will be more difficult to get.

[Ardesco]

As far as i'm aware HMRC are ignoring the contracts and looking at the working situation when it comes to IR35 investigations. If he does get investigated he WILL get clobbered.

It all comes down to a question of "do you want to hope you don't get investigated?", because if he is investigated it's game over.

I'm not saying he shouldn't take the contract, just up the rate to cover the cost of being caught by IR35.

[oraclesmith]

I'm sure they do look at the working situation, but does that mean talking to random co-workers rather than the key people in the arrangement ?

For example, if you are supposed to be working on something confidential, it's likely that the client will not want you sounding off about your working arrangements with your co-workers. One idea may be to put a formal two-way confidentiality agreement in place, which will explain to HMRC why co-workers think you are still an employee and why the client is also not allowed to inform co-workers. In my opinion.

[shoes]

It sounds like an opportunity to me. When discussing rates with your employer tell them this is definently an inside IR35 arrangement, and have them adjust their rate to still make it worth your while. They clearly want you there and its a good reason to be upping the rate. Without telling them you are doing so arrange your affairs to be outside IR35, and hope you don't get investigated. You get the higher rate and the lower taxation. If the taxman investigates just pay up what you 'owe'.

[Ardesco]

I'm sure they do look at the working situation, but does that mean talking to random co-workers rather than the key people in the arrangement ?

For example, if you are supposed to be working on something confidential, it's likely that the client will not want you sounding off about your working arrangements with your co-workers. One idea may be to put a formal two-way confidentiality agreement in place, which will explain to HMRC why co-workers think you are still an employee and why the client is also not allowed to inform co-workers. In my opinion.

If hector think they can screw you with IR35 legislation do you really think they will take a common sense point of view?

If you don't agree with me you are entitled to your opinion but I would still assume contract is inside IR35, and use this as a bargaining chip to get a higher rate. Lets face it if they really want you they are going to be flexible with the rate.

[max]

Fud

Wow...so much Fear, uncertainty and doubt!

>I doubt it would cover you because you are blatantly caught by IR35 no matter what your contract says. This is exactly the thing that IR35 was brought in to prevent.

the people that brought IR35 in wanted to prevent a lot of things. They were living in a fantasy land and expected everyone to roll over and take it. Thanks to the PCG...contractors fought back.

>If you do get investigated you WILL loose, no two ways about it
rubbish! Such a silly thing to say. Get a grip.


>As far as i'm aware HMRC are ignoring the contracts and looking at the working situation when it comes to IR35 investigations. If he does get investigated he WILL get clobbered.
rubbish! Such a silly thing to say.

Take the contract, set up a Ltd Co...join the PCG for the investigation insurance, and enjoy the wedge. When new contracting opportunities come up, move on and upwards.

[gazelm]

Take it easy fellas, didn't mean to kick off an argument

Thanks for the advice though, interesting to get some different viewpoints on the situation - you've all been a big help.

I still haven't sorted out what I'm going to do, negotiations are ongoing and they haven't offered me enough yet to make me stay. I reckon if I do stay it'll be as a contractor, with PCG insurance and the best contract I can get, and a rate high enough that I won't cry too much if Gordo takes a big bite out of my pay packet. If not, I'll aim for a contract elsewhere. Either way, I'll be happy.

The first offer has been made, the counter offer is soon to be made, and one way or another it'll all be sorted out next week.

Cheers!

[malvolio]

But go back to my first post in this thread and read it again. PCG insurance is not there to get you out of IR35; if your position is untenable, the experts the insurenace pays for will advise you to pay the tax. And speaking as someone who has a reasonable grasp of the realities of the legislation, you will be fully and firmly caught by IR35.

So you have two choices, use an umbrella and pay full PAYE and NICs as their employee, or get your own company and pay full PAYE and NICs in line with the IR35 regulations. That's it, pure and simple. Anything else is evasion, not avoidance, since you are deliberately mis-stating your tax position.

Contracting is not a game. We have enough cowboys screwing it for the honest ones. Don't add to their number.

[spenj]

Malvolio,

I'm am seriously confused about PCG insurance now! I asked how many cases were contested in a previous thread (Hays Contracts and IR35, started on 5th May) and your reply was as follows :

There are no uncontested cases - what would be the point? Any PCG member that gets the brown envelope is told to call the office and get the ball rolling. Every case is pursued. Usually, it gets stopped very quickly, the 1400 are ones that have gone (or have threatened to go) to the commisioners and have had a bit more work.

If you need it, you get representation. As I keep saying, PCG Insurance cover is unconditional for all members.

Please can you clarify as the insurance is not so useful and the success rates not so impressive if they "cherry-pick" cases which are bound to win.