IR35 Status Query

[agentunited]

Hi all,

I have a query concerning IR35 and I'm totally new to contracting world.

Actually I'd worked as a permanent employee for about 2 years for one consulting firm. They were more like agency since the actual work I do is at client location, they were there just for payroll tbh.

However with the client, I was a contractor from day one in the last 2 yrs. Few months back, I got a contracting role outside so I decided to quit my current job to go into contracting as I wasn't keen on billing 500£/day to the client and getting paid 1/3rd as sal from my consulting firm. In order to continue my work at the client location instead of quitting, my firm offered me the terms on contracting basis. Now, my relationship with the client is exactly the same - a contractor, but the relationship between the consulting firm and me had changed. The previous employer of mine is now acting like an agency as they take 1/3 from my billing and I get 2/3.

I wasn't initially not even aware of IR35 as this is my first ever contracting job and I had absolutely no idea what it is. I just sent my contract for the IR35 review to QDos based on my friend's suggestion and they passed it. Now after reading a lot about IR35, I'm little concerned about it.

The middle-man who is like an agency now was my previous employer, however, my relationship with the client is not changed as I'm still a contractor to them. Could you please provide some thoughts on this? If I'm in high risk category with IR35, then I shall look somewhere soon instead of worrying about this. Thanks in advance!

Kind regards,
Shaan.

[cojak]

Hi all,

I have a query concerning IR35 and I'm totally new to contracting world.

Actually I'd worked as a permanent employee for about 2 years for one consulting firm. They were more like agency since the actual work I do is at client location, they were there just for payroll tbh.

However with the client, I was a contractor from day one in the last 2 yrs. Few months back, I got a contracting role outside so I decided to quit my current job to go into contracting as I wasn't keen on billing 500£/day to the client and getting paid 1/3rd as sal from my consulting firm. In order to continue my work at the client location instead of quitting, my firm offered me the terms on contracting basis. Now, my relationship with the client is exactly the same - a contractor, but the relationship between the consulting firm and me had changed. The previous employer of mine is now acting like an agency as they take 1/3 from my billing and I get 2/3.

I wasn't initially not even aware of IR35 as this is my first ever contracting job and I had absolutely no idea what it is. I just sent my contract for the IR35 review to QDos based on my friend's suggestion and they passed it. Now after reading a lot about IR35, I'm little concerned about it.

The middle-man who is like an agency now was my previous employer, however, my relationship with the client is not changed as I'm still a contractor to them. Could you please provide some thoughts on this? If I'm in high risk category with IR35, then I shall look somewhere soon instead of worrying about this. Thanks in advance!

Kind regards,
Shaan.

Did you mention to Qdos your previous relationship with the agency and client?

(I feel an 'Oh Dear' coming on...)

[northernladuk]

Yup your knackered. You are not a contractor, you are a permie being paid in a different method. The whole idea of IR35 was to stop the Friday to Monday contractor which you plainly are. No question about it, one day paid as a perm, next day paid as a contractor....

Buy the best insurance you can, start looking for a gig quickly, leave and become a proper contractor rather than a greedy permie and hope this episode gets forgotten about IMO.

Kinda ironic your greedy view and lack of understanding is now going to put you out of a job. Hey ho......

Do some research while you are sweating it in that gig as well. You have a lot to learn...

[agentunited]

Yup your knackered. You are not a contractor, you are a permie being paid in a different method. The whole idea of IR35 was to stop the Friday to Monday contractor which you plainly are. No question about it, one day paid as a perm, next day paid as a contractor....

Buy the best insurance you can, start looking for a gig quickly, leave and become a proper contractor rather than a greedy permie and hope this episode gets forgotten about IMO.

Kinda ironic your greedy view and lack of understanding is now going to put you out of a job. Hey ho......

Do some research while you are sweating it in that gig as well. You have a lot to learn...

Hi,

thanks a lot for the reply. As I stated in my first thread, I didn't knew what's IR35 at all otherwise I wouldn't taken this way and would have taken other offer. It's only 2 months, not too much liability to HMRC and I shall try to move other job soon.

No, ain't greedy n all, it was just a counter offer that I stupidly accepted without knowing there is something called IR35. Btw, I attended the interview and I work on my own at client location, all they did is to find my CV and sending it to the client and billing every month, for this they don't deserve more than 10%

[northernladuk]

Remember as well... Your ex employer is billing you out to the client but will also pay you when you are on the bench as a dead loss. You have just given them the ability to bin you off as soon as they want. You want to hope that they can't swap a permie into the role you are going and then walk you off site with no notice. That is what I would do if I was running a consultancy.

[TheFaQQer]

Yup your knackered. You are not a contractor, you are a permie being paid in a different method. The whole idea of IR35 was to stop the Friday to Monday contractor which you plainly are. No question about it, one day paid as a perm, next day paid as a contractor....

Buy the best insurance you can, start looking for a gig quickly, leave and become a proper contractor rather than a greedy permie and hope this episode gets forgotten about IMO.

Kinda ironic your greedy view and lack of understanding is now going to put you out of a job. Hey ho......

Do some research while you are sweating it in that gig as well. You have a lot to learn...

Not even a "what does your accountant say?"

How is the OP working - self-employed, umbrella, or through their own Ltd? Obviously, depending on that, they might not be IR35 caught.

If there is back tax owing, and you want to stay in the job, you may be better off trying a mea culpa with HMRC and pay what you owe - there wasn't an obvious deception, just ignorance (which I know is no excuse, but might avoid penalties).

I wonder who would insure this situation, to be honest - as far as I can see, the only way to avoid it would be to either (a) not get chosen for an investigation; or (b) some technicality which gets you off the hook.

[northernladuk]

Not even a "what does your accountant say?"

How is the OP working - self-employed, umbrella, or through their own Ltd? Obviously, depending on that, they might not be IR35 caught.

If there is back tax owing, and you want to stay in the job, you may be better off trying a mea culpa with HMRC and pay what you owe - there wasn't an obvious deception, just ignorance (which I know is no excuse, but might avoid penalties).

I wonder who would insure this situation, to be honest - as far as I can see, the only way to avoid it would be to either (a) not get chosen for an investigation; or (b) some technicality which gets you off the hook.

That would be advice for a 'contractor' which the OP clearly isn't.

[agentunited]

Remember as well... Your ex employer is billing you out to the client but will also pay you when you are on the bench as a dead loss. You have just given them the ability to bin you off as soon as they want. You want to hope that they can't swap a permie into the role you are going and then walk you off site with no notice. That is what I would do if I was running a consultancy.

I agree that point and I was quite aware of these risks but not IR35. I guess it will continue till Dec at the least but knowing IR35 now, I hope to switch to another job within June. I'm better off even inside IR35 tbh, plus from my new contract my notice period came down from 3 months to 2 weeks which is a big advantage to me to other job easily.

[agentunited]

Not even a "what does your accountant say?"

How is the OP working - self-employed, umbrella, or through their own Ltd? Obviously, depending on that, they might not be IR35 caught.

If there is back tax owing, and you want to stay in the job, you may be better off trying a mea culpa with HMRC and pay what you owe - there wasn't an obvious deception, just ignorance (which I know is no excuse, but might avoid penalties).

I wonder who would insure this situation, to be honest - as far as I can see, the only way to avoid it would be to either (a) not get chosen for an investigation; or (b) some technicality which gets you off the hook.

Old contract was closed and a new contract through Limited. My contracting started only from Feb-2013, just a couple of months.

[TheFaQQer]

Old contract was closed and a new contract through Limited. My contracting started only from Feb-2013, just a couple of months.

Right - so talk to your accountant. Declare yourself inside IR35 for this contract (which has only been going for a couple of months) and pay the appropriate NI and PAYE.

When you get another contract, if it's inside IR35 then keep paying yourself as now, if not then move to paying dividends instead (since you'll probably already have earned your NI stamp, there is no need to keep paying a salary).