Switching From Perm To Contractor/Supplier For Current Employer

[chrysalis]

When I have the contract wording I would obviously like a legal opinion on whether I am an IR35 candidate. I'd love to hear recommendations on who I could get to review this.

[northernladuk]

When I have the contract wording I would obviously like a legal opinion on whether I am an IR35 candidate. I'd love to hear recommendations on who I could get to review this.

If you puy your PI/PL insurance through QDOS they will do a number of free IR35 checks a year. I believe a company called Baur and Cotterll (can't remember spelling) also check them for a cost.

[TykeMerc]

IR35 requires that you pay yourself in salary (subject to all Income Tax, employee NI and employer NI) and not a low salary plus dividends. There are also some expenses implications which I can't remember the specifics of sorry.
In essence your tax efficiency will be relatively poor so any financial benefits of contracting will be heavily moderated.
Please don't forget that as a contractor rather than perm you will not be paid for:-
Holidays
Sick days
Bank holidays
Pension
Training
Company insurances
Redundancy rights
Pay if the projects are delayed or cancelled
These are all factors that have a bearing on how much you need to charge to make contracting worth while.

You mention fixed price work in your original post, that can be a minefield which is typically countered in one (if not both) of two approaches.
1. Price is HIGH to compensate for unexpected changes, delays or dependencies
2. Scope and definition of work is very precise with a clear and mutually understood change control and exception process with a clear understanding that additional charges will apply.
Fixed rate work is decidedly risky unless you're very switched on, have a cool commercial head and are very good at negotiations.

Qdos are known to be good at IR35 reviews of contracts, but you should be up front with anyone who reviews the contract that you're going contract from perm at the same firm.

[Taxless]

[QUOTE=chrysalis;1344713]It is this that makes me a prime target for IR35, so to play safe - should I declare this from the start, then when we get another client, future contracts will not be IR35? [QUOTE]

If you were doing exactly the same work as before you might be closer to IR35 but from what you say you will be doing a whole lot more and the presence of a second person in the company should also help, particularly if they can undertake some of the project work.

I wouldn't be inclined to cave in on IR35 just yet, it will all come down to the actual working practices and terms of any contract.

It doesn't matter how many contracts you have, they could all potentially be in or out of IR35, again depending on the unique circumstances surrounding each contract.

It would be well worth paying for some input into this if the result were to ensure that you did not fall foul of IR35.

[b0redom]

Regarding the redundancy etc, I am not concerned by the whole thing. It has been acknowledged that I am the highly skilled and highly productive member of the team and am involved in helping them back fill some positions with support programmers.

This may come back and bite you in the ass. As a contractor, you need to take everything and anything the customer says with a wheelbarrow full of salt.

As I said, it may all be fine, but you should plan and negotiate for the worst. Sounds like the client is buttering you up, and if they love you that much they'd want to keep you and just offer you a pay rise rather than risk you leaving for a higher paying contract in 3,6,12 months.

[xchaotic]

3/ Fixed price contracts per project are good.

From the IR35 POV maybe so, but we are all so worried about what HMRC _might_ think that we are shooting ourselves in the foot with contracts like that.

The truth is IT is complex and is horribly difficult to estimate the amount of work, that's why the only sensible measure is a daily/hourly rate, unless you can really skew things on your side and do very little for loads of money.

In all other case hourly rates are better for covering your ass, so that you don't have to work overtime or if you do it is at least paid extra.

[Wanderer]

Some top advice from TykeMerc. Don't be dazzled by the "payrise" of going permie to contractor. Remember that you need to charge a lot of money to cover loss of job security/pension/sick/holiday/unemployment as well as running costs. Also if you are going into partnership with someone else, make sure that you have professional legal advice and a rock solid company structure (what if the partner wants out, stops working, pisses you off etc).

Your (effective) hourly rate should be your annual salary / 1000 so if you were on £50,000 then you are wanting £50/hour or £400/day. Don't undersell yourself.

[chrysalis]

Your (effective) hourly rate should be your annual salary / 1000 so if you were on £50,000 then you are wanting £50/hour or £400/day. Don't undersell yourself.

Out of curiousity... where did you get the number 1000 from?

[Wanderer]

Out of curiousity... where did you get the number 1000 from?

We made it up because noobies kept coming on here asking about contractor vs permie rates.

However, it is a pretty good rule of thumb but of course everyone is going to be different.