From Permanent To Contract

[malvolio]

What is your point? The insurance is to pay for expert representation for members faced with an IR35 investgation, so that they have the best chance of defending their position as being an indepedent worker to whom IR35 does not apply and not a disguised employee. It is not there as a get out of jail free card, you have to have made some effort to establish your credentials as a freelance, and sitting in the same desk doing the same job for the people who last week were paying you as a permie and are now paying you gross does not fit that scenario.

The 1400-odd successes were victims of a misdirected assessment by HMRC and were sucessfully defended on that basis. The PCG provides enough information and guidance for a real contractor to put themselves properly outside IR35 and insures the cost of defending that position. There is no cherry-picking, everyone gets the same representation and the 1400-3 ratio implies we're gtting it right.

However, the OP is not doing anything to justify his position as a contractor, much less one outside IR35: I do not know of any case where the defendant has not had a supportable case for being outside but if the OP tried it, I suspect we would have.

[tim123]

The 1400-odd successes were victims of a misdirected assessment by HMRC and were sucessfully defended on that basis. The PCG provides enough information and guidance for a real contractor to put themselves properly outside IR35 and insures the cost of defending that position. There is no cherry-picking, everyone gets the same representation and the 1400-3 ratio implies we're gtting it right.

Spenj's point is that this 1400-3 ratio is ONLY the ratio of cases that where selected as, in you words "misdirected assessment by HMRC".

But stating the success rate of the cases that an insurer funds a challenge for, is a useless indicator if in 99% of the potential cases, the insurer refuses to fund a challange as 'hopeless'.

In order for someone to know if insurance is useful, one need's to know the total number of "ALL assessment by HMRC" and the ratio of those that the insurer decided to challenge, against those they they advise to settle as not worth defending. For some reason the PCG seem to want to keep this number a secret, and I for one find that action suspicious.

tim

[malvolio]

No, not at all.

All PCG members' cases were supported using the same insurance as any other member gets. No cases were refused, none were "selected", no member is refused representation. It is a measure of the PCG's success in helping people understand IR35 that all cases were won, but you cannot exptrapolate from there that that PCG only fights winnable cases.

It might be relevant to note that, unlike the PCG, a lot of providers only insure contracts they think they can win: PCG insures all members equally and unconditionally.

But my original point is that you should not simply join the PCG and then blindly ignore IR35. One day we may get a case which is blatantly not winnable, and it will be interesting to see what advice is given.

[gazelm]

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.

So where can we draw the line between contractor and disguised employee?
If I go back to the company after leaving, at some indeterminate point in the future, and I happen to be given the same desk and report to the man who was my manager in years gone by, does that necessarily mean that I'm a disguised employee?

What if I go back and get a different desk, still reporting to the same person?

What if I go back and get a different desk and work in the same department for a different person?

I don't want to stay there indefinitely, either as a contractor or permie.
I'm not doing this purely to try to evade tax - I actually want to run my own business.
I've handed in my notice, so as of the end of my notice period, I am no longer an employee of this company.
If they happen to need someone to do a piece of work for them and they come up with an acceptable offer, and I then end up working in an area that I've worked in before, then as far as I'm concerned it's just another contract job.
If it happens immediately after I leave permanent employment, then that's just convenient - I don't believe it should affect my status as a contractor.

I suppose what I'm asking is, as I have no real experience of IR35, is if I am going to work for the same company for some period of time (it's still an if, not a when) then what do I need to do to ensure that I'm not in IR35?
Is informing my former colleagues that I'm a contractor one of those things?
Does that really matter? As a previous poster said, is anyone really going to go and interview my former colleagues if I ge investigated?

[malvolio]

If you work for the same company doing broadly the same things, you are IR35 caught, it's that simple. Only if you were doing a significantly different role would you be able to demosntrate enough separation between old and new to justify a non-IR35 status; that, or take on a completely free-standing project with some degree of financial risk. Even then you might have problems.


If you want to go contract and be safely outside IR35, you have to step away from your ex-employer and that means stepping off the cliff. Given you seem to want to do it in a nice, confortable, low-impact kind of way, your only real option is to accept this one is IR35 caught, pay the taxes and use the time set up your own company, learn how the contracting market works and source your next contract - which you could then probably do as a non-IR35. You chances of doing it any other way are slim to say the least.

[shoes]

Like most things implemented by this government IR35 is an utter mess. Many people are confused by what constitutes a 'disguised employee' versus a consultant. The rules themselves are perhaps purposefully vague to prevent contractors who are 'disguised employees' from simply doing what they need to to put themselves outside IR35. The reality has been that the vagueness of the rules has in fact worked in the contractors favour, since the rules are so open to interpretation that most contracts can be reasonably claimed to be outside IR35. Therefore in my view it is a more pragmatic and hassle free approach to declare yourself outside IR35 if it seems reasonable to do so. I cannot think of a situation where it would NOT be reasonable to do so. We are in business on our own account, run our ltd cos, pay employers NI, we are at risk of having our contract terminated with no notice, typically work on a per project basis, pay for our own training, sick days, holidays.

Don't give this idiotic government any more of your money than you absolutely have to. They will waste it on some incompetent implementation of some hair brained 'social justice' based leftie claptrap nonsense. Like IR35.

[The_Oracle]

Hello Msg Board

Hi everyone...newbie here!

Sorry to dig up an old thread, but i used the Search and found a post similar to my situation.

I'm currently in a perm role, which i reasonably enjoy although there are lots of things that annoy me. I went for an interview recently, and now i have a contract offer. The rate is ok, and based on the formula i've seen floating around (annual perm salary/1000 * hrs per day) is better than what my permie job pays. The work is perhaps less interesting than what i'm doing now, but assuming i'm outside IR35, i'd take home a lot more £s....so i'm very tempted.

When i hand in my notice, i'd like to think my firm will want me to stay and make a counter offer, which could be:

• Remain a permie and get a pay rise. But this would need to be huge to match a contract rate, so unlikely.
• Let me switch to a contract. My role / hours will be identical, so from reading this thread, it looks like i'll be inside IR35. According to the calculators, i'd need to bump up the rate by about 20% to make up for the extra tax i'd pay for being inside IR35. Does that sound about right? 20% is a lot, but there will be no agency taking a cut....so not sure if the firm will pay up.

If they did offer the contract at +20%, then it takes money out of the equation, and i need to weigh up the 2 roles based on the type of work, experience, environment, learning opportunities, etc.

Just wondering what everyone else would choose to do if they don't increase the rate by 20%. Would you stay and contract inside IR35, or leave and get more money? If i stayed, would i be more likely to get investigated when i move to a different contract and declare i'm outside?

Any advice / comments would be much appreciated.

The_Oracle.

[Halcyon]

funnily enough I remember the day that the post you are replying to was made. It was nice and warm.

you are not a contractor, you do not have the right mindset. Negotiate your pay-rise and enjoy your paid holidays and sick days. Sorry.

[thunderlizard]

I'm inclined to agree. If you had the contractor mindset you wouldn't be thinking about marking up 20% to sover IR35 risk. You'd be thinking about marking up £200% because of your ready-made company knowledge.

[d000hg]

I'm inclined to agree. If you had the contractor mindset you wouldn't be thinking about marking up 20% to sover IR35 risk. You'd be thinking about marking up £200% because of your ready-made company knowledge.

200% on top of the increase from perm -> contract rates? Yeah, that's a great mindset. If you want to spend a lot of time out of work. If he's that valuable to his current employer they'll offer him a 50% raise on his current salary.

Besides the question seemed to be about the choice between an inside or outside IR35 contract if the net profit is equivalent. I can't see why knowing you're inside IR35 is a problem - for one thing you know you don't need to worry about being caught out - unless it offends you to pay more tax and not be a 'proper' contractor