From Permanent To Contract

**chicane** · 24 May 2007, 06:45

This is the exact situation that prompted the introduction of IR35. You could have a contract that says you'll be picking bananas in Jamaica on your own terms between the hours of 7pm and 3am, but it'll still be blatantly obvious to Gordo and his clan what's really going on.

**malvolio** · 24 May 2007, 06:59

Yep, agreed, it is indefensible from an IR35 persepctive. PCG aren't there to "get people off" their correct tax liability, they're there to defend people who otherwise would be required to pay it unnecessarily. Your situation ain't it, I'm afraid.

You might also ask yourself why your employer wants to move you out of a permie role but not tell anyone you've gone contract. You might get a bit more take-home but I bet they are saving money. And of course, no holidays, no SSP, no pension, no career, no employment rights, no health care, no training... Sure you've though this through properly?

**Cooperinliverp00l** · 24 May 2007, 07:11

if you are going to take the plunge into contracting i personally would go somewhere else. If you are being offered a gig at your existing place then really all your after is an increase in your money so why not say to them i will stay on as a perm if you give me a pay rise otherwise i'm going to walk away for good. I left my permie job 4 years ago and haven't been back yet even though they keep asking me back.

**rootsnall** · 24 May 2007, 07:22

Just do the sums, if the rate they are offering is lucrative enough to make up for paying the extra employer NI ( ie. accept you are caught by IR35, or take a gamble !? ) and loss of hols etc etc then take it. You are in a strong position on rate negotiations as there will be no agency margin for the client. Haggle hard as it sounds like they don't want to lose you.

**Vito** · 24 May 2007, 07:32

Sounds a good deal to me...just because you are going to be caught by IR35 doesn't mean its not still a good option...as long as you are earning twice as much then go for it

**Orangutan** · 24 May 2007, 08:12

Totaly agree - accept that its caught by IR35, work out what needs to be paid and if it stacks up financially (remembering no holiday, sick, training, pension etc) and not forgetting your insurances - go for it.

One other thing to remember - even though the company doesn't want your colleagues to know you are contracting, they will find out sooner or later.
How well do you get on with them, is there a chance you might need to rely on their goodwill in the future to get other roles.
For me, this would be the biggest factor.

Personally I'd negotiate staying on as a permi with either more money, less hours (or both!) and look for a contract somewhere else anyway.

**gazelm** · 24 May 2007, 17:39

Thanks for the advice guys, I appreciate your comments.

So I have three choices: negotiate a permie pay rise, take an inside IR35 contract, or move elsewhere.

I was originally going to move elsewhere, they actually caught me off guard by asking me to stay - I'll wait and see what actual concrete offer they come up with (they are 'talking to HR' to see whether they can take me on as a contractor or not) and then do the sums to see if that matches what I expect to get.

To be honest, the (provisional) figures that have been bandied about so far, and the complete lack of anything but the most basic benefits at this company, make it worthwhile to contract here. I've had a grand total of no training whatsoever while I've been here, there is no private healthcare, and they pay the bare minimum of sick pay and holidays. If I play my cards right, I could double my take home, even inside IR35.

I might use this as an opportunity to give myself a gentle introduction to contracting - get my company set up, get my accountant, get used to the day to day stuff, stay for a few months or a year and then go and get a 'proper' contract.

Anyway, I will see what happens in the next few days...

Cheers!

**gazelm** · 24 May 2007, 17:42

Oh, I almost forgot - To answer Orangutan, I do get on well with all the people in the office, there's no animosity - the boss has been very decent about the whole thing so far too, I don't fear any reprisals if it comes out that I've gone to the dark side.

I reckon the company just don't want me to go telling people I'd earn more than them.

**Vito** · 24 May 2007, 17:47

Before setting up your company you need to check if thats the most cost effective way of operating...its been a long time since I looked at the different options but given that this sounds like it would certainly be caught by IR35, I suspect you would be better setting up as a sole trader rather than setting up a limited company....but I may be very wrong on this.

From Permanent To Contract