Agency Contract is outside IR35 BUT my working practices are not

[Chico_sm]

hi All

Just wanted advice on whether I should take the risk and go and set-up my business on a LTD basis? Background: I currently contract with a client on a technical basis (not IT) via an agency. I have been with the same client for 4 years now

Only problem is that whilst my agency contract is currently utilised for contractors that operate as a Ltd company (outside IR35), I do not whole heartedly feel that my actual working practices with the client are outside of IR35

Any advice would be much appreciated

At this stage I just feel like taking the plunge.. and operate my own business on a Ltd basis for the obvious benefit being higher net take home pay. However, I am really concered about the consequences ie possible IR35 Investigation

[centurian]

hi All

Just wanted advice on whether I should take the risk and go and set-up my business on a LTD basis? Background: I currently contract with a client on a technical basis (not IT) via an agency. I have been with the same client for 4 years now

Only problem is that whilst my agency contract is currently utilised for contractors that operate as a Ltd company (outside IR35), I do not whole heartedly feel that my actual working practices with the client are outside of IR35

Any advice would be much appreciated

However, I am really concered about the consequences ie possible IR35 Investigation

Well short answer is that both the contract and the working practices need to be outside IR35 in order to be sure of beating an investigation.

Now the contract is reasonably black and white, although there are still a some grey areas.

Working practices are much harder to nail down. This is bad (because we like clarity), but can also be good, because it means an HMRC inspector actually has to do some hard work to determine whether in or out.

Has anyone heard of HMRC visiting a contractor client site to determine practices?

If HMRC launched an investigation and it went all the way to court, your employers, sorry clients would be called to appear and basically asked whether they thought you were an employee. This would probably go a long way to deciding the case. In the Dragonfly case, the AA didn't exactly support Bessell's position.

You mention you have been with them for 4 years. If you have been paying full PAYE for 4 years, then I'm sure HMRC would ask why you were taxing yourself as an employee for so long and suddenly decided you were 'a business'. Then may use this and working practices to show that you were 'part and parcel of the organisation'

With this in mind, I would be inclined to pay up, painful as it may be to swallow. If you move on, then consider going the Ltd route.

[melbourne720]

even if you are a ltd company, you can still be inside ir35 - just take your money as deemed income rather than dividends

[Fred Bloggs]

You're IR35 caught then. Starting your own ltd co at that client now will be seen as simply a sham to save tax by HMRC. You'd be hung drawn and quartered by HMRC if caught. IANAA etc...