Very, very, very urgent IR35 advice needed please!!

[530iM]

Hi,

I am currently trading as a sole trader.
I have been offered an IT contract which will definitely fall under IR35 ruling.
Me and the company offering the contract are aware of IR35, but not experts on the subject.
Could anyone advise me on the following 2 options...

1/ Should I take a lower £ per hour rate, and both parties sign upto the fact that the 'employing' company will pay the IR35 defecit.
2/ Should I take a higher £ per hour rate, and both parties sign upto the fact that MYSELF will pay the IR35 defecit.

Does anyone know any pitfalls or advantages with any of the following options?
By using the available IR35 calculators, I think it is possible to calculate an hourly rate that will result in me 'taking home' the same amount in both scenarios.

I do not wish to set up a LTD company, but want to remain a sole trader despite the other tax advantages available.

Please advise me if you can, I need to accept the contract by the end of the week!!!!

Thankyou in advance.

530iM

[Zippy]

Hi and welcome.

I'm sure the Ltd Co ninjas will be along shortly but I'm not sure why anyone needs to sign up for IR35 'responsibility'?? Surely you are just doing a job for an agreed rate and can't you negotiate an IR35 friendly contract anyway? Don't quote me - I'm still Ms Umbrella(changing real soon)

[530iM]

From what I understand HMRC will always go after the LTD company who employs a Sole Trader as a contractor , whan IR35 is due.

Can anyone confirm this.

Thankyou.

[VectraMan]

Does IR35 even apply to sole traders? I suppose the expenses would work out differently, but you can't do the low salary/dividends scheme which is kind of the point. Expecting your employer to make up the difference is a bit of a cheek as there's no way you could have earned as much as the calculators say.

Go Ltd., and if you really don't want to perhaps you should just join an umbrella.

[VectraMan]

From what I understand HMRC will always go after the LTD company who employs a Sole Trader as a contractor , whan IR35 is due.

Can anyone confirm this.

Thankyou.

I think one of us is very confused, and I don't think it's me.

[530iM]

This will by me old full time employed job that I will be doing, I dont really think I could convince anyone otherwise.

Do many contractors manage to get contracts written to escape the clutches of IR35, or does IR35 normally apply to the majority of IT contracts?
I was under the impression that 95% of IT contracts come under IR35.

Thankyou.

[DimPrawn]

What rock have you been living under?

100% of contractors working in disguised employment fall within IR35.

However, there are many successul directors of small consultancy companies for whom the legislation does not apply.

[530iM]

Not confused, I just dont know..


If a LTD company takes on a contractor ( who is also LTD company), if IR35 requires m or tax to be paid, then HMRC will chase the contractor.

If a LTD company takes on a contractor ( who is a sole trader ), if IR35 requires more tax to be paid, then HMRC chases the LTD company who employed the contractor.

I am sorry if I come accross as confusing, but if abnyone knows if the above statements are correct, please let me know.

Regards.

[530iM]

What rock have you been living under?

100% of contractors working in disguised employment fall within IR35.

However, there are many successul directors of small consultancy companies for whom the legislation does not apply.

I have been living under the rock of normal full time employment, hence I am quite ignorant to the contracting world...hence the questions

[530iM]

Btw...ALL replies are welcomed, sorry if i came across as 'abrupt'