Permie offered contract with the same company

[Proximo]

I have an interesting opportunity, need some help to assess whether it's sensible or not.

I have been a permie with a corporation for nearly two years now. I have not done contracting before. There is a project that another part of the company wants us to do; we do not have the resource for it and it also clashes with our priorities (what is else is new?)

I am being told in an indirect way to do it in my own time. They can give me overtime but since I have a good relationship with my manager he has offered to bill my time on the project as an external contractor. This is more attactive to me as I can negotiate my own rate. We ran this through HR and I have also checked my employment contract (it basically defers back to the manager) and everything looks ok.

This is a clear project with a beginning and an end and fixed requirements. The total work involved is around 10-14 days of effort. I would be doing this on the weekends. I do not expect to make more than 3-4k out of it.

I have the following questions:

1) Is it practical for me to do this on a contract given the above?
2) If yes, is LTD the best option or should I go with an umbrella?
3) Do I fall within IR35 given the above?
4) Any other gotchas?

Thanks,
Prox

[northernladuk]

Sounds like a terrible idea to me and yes you would fall inside IR35.

[mudskipper]

I have an interesting opportunity, need some help to assess whether it's sensible or not.

I have been a permie with a corporation for nearly two years now. I have not done contracting before. There is a project that another part of the company wants us to do; we do not have the resource for it and it also clashes with our priorities (what is else is new?)

I am being told in an indirect way to do it in my own time. They can give me overtime but since I have a good relationship with my manager he has offered to bill my time on the project as an external contractor. This is more attactive to me as I can negotiate my own rate. We ran this through HR and I have also checked my employment contract (it basically defers back to the manager) and everything looks ok.

This is a clear project with a beginning and an end and fixed requirements. The total work involved is around 10-14 days of effort. I would be doing this on the weekends. I do not expect to make more than 3-4k out of it.

I have the following questions:

1) Is it practical for me to do this on a contract given the above?
2) If yes, is LTD the best option or should I go with an umbrella?
3) Do I fall within IR35 given the above?
4) Any other gotchas?

Thanks,
Prox

If you really want to do this, then find out whether your employer would be happy for you to bill them as you and stick the extra income on your tax return - no brollies/limited.

But the overtime option sounds much more practical and less hassle.

[Contreras]

I have an interesting opportunity, need some help to assess whether it's sensible or not.

I have been a permie with a corporation for nearly two years now. I have not done contracting before. There is a project that another part of the company wants us to do; we do not have the resource for it and it also clashes with our priorities (what is else is new?)

I am being told in an indirect way to do it in my own time. They can give me overtime but since I have a good relationship with my manager he has offered to bill my time on the project as an external contractor. This is more attactive to me as I can negotiate my own rate. We ran this through HR and I have also checked my employment contract (it basically defers back to the manager) and everything looks ok.

This is a clear project with a beginning and an end and fixed requirements. The total work involved is around 10-14 days of effort. I would be doing this on the weekends. I do not expect to make more than 3-4k out of it.

I have the following questions:

1) Is it practical for me to do this on a contract given the above?
2) If yes, is LTD the best option or should I go with an umbrella?
3) Do I fall within IR35 given the above?
4) Any other gotchas?

Thanks,
Prox

5) As self-employed ?
6) Negotiate a better overtime rate?
7) Decline the offer as working a 7-day week for 7 weeks is madness.

Yes it'll be inside IR35. What your employer is doing is reducing their NICs bill. If you go ltd then that totally becomes your problem. As self-employed the company would be on dodgy ground, IMHO, as they have a responsibility to apply PAYE. Even going via umbrella seems dodgy for similar reason.

You need to check if you are better off (after tax) compared to accepting an overtime rate, because it is doubtful IMHO.

[Proximo]

5) As self-employed ?
6) Negotiate a better overtime rate?
7) Decline the offer as working a 7-day week for 7 weeks is madness.

Yes it'll be inside IR35. What your employer is doing is reducing their NICs bill. If you go ltd then that totally becomes your problem. As self-employed the company would be on dodgy ground, IMHO, as they have a responsibility to apply PAYE. Even going via umbrella seems dodgy for similar reason.

You need to check if you are better off (after tax) compared to accepting an overtime rate, because it is doubtful IMHO.

Got it, thanks.

I think I would be marginally better after tax, however it is not worth having the taxman over my head.
Looking into what triggers an IR35 investigation, I think this sort of odd engagement pattern would probably stand out.

[Proximo]

If you really want to do this, then find out whether your employer would be happy for you to bill them as you and stick the extra income on your tax return - no brollies/limited.

But the overtime option sounds much more practical and less hassle.

Is this similar to what Contreras is saying, basically negotiate a higher overtime?

[mudskipper]

Is this similar to what Contreras is saying, basically negotiate a higher overtime?

Overtime would be the simplest/safest/cleanest solution.

The alternative is to send them an invoice from you for the amount, then, on your tax return declare it as extra income.

[Proximo]

Overtime would be the simplest/safest/cleanest solution.

The alternative is to send them an invoice from you for the amount, then, on your tax return declare it as extra income.

Looking at the Self Assessment form, is that the option: "I have been getting untaxed income that cannot be collected through my PAYE tax code" ?

Who would I be invoicing the company as, if I don't set up my own Ltd?

[mudskipper]

Looking at the Self Assessment form, is that the option: "I have been getting untaxed income that cannot be collected through my PAYE tax code" ?

Who would I be invoicing the company as, if I don't set up my own Ltd?

As yourself.

[northernladuk]

Got it, thanks.

I think I would be marginally better after tax, however it is not worth having the taxman over my head.
Looking into what triggers an IR35 investigation, I think this sort of odd engagement pattern would probably stand out.

You are clearly inside IR35 so this is irrelevant. Go down then over time route if at all possible. Remember this is still you employer. If this weird arrangement goes south it's going to affect your employment so just stick to being an employee.