New contract - new set-up

[zathras]

My agent has told me that the contract is IR35-friendly.

Err...

Run this by someone who might know the agent is almost certainly not qualified to make this assertion. Might I suggest David Smith of Accountax or Sarah Bauer of Bauer/Cottrell

However I have a distinctive uneasyness when it comes to brolly's so go the limited company route.

I've seen on some umbrella websites, that by joining them you're protected from IR35.

No they can't. Well not in the way you think.

Your position under IR35 is based on contract terms and the working practices. Neither of which will be in the purview of the brolly to guarantee. You could of course be an employee of the brolly but then IR35 would no more apply here than for any other traditional full time employment. Further any expenses claimed would be the same as for traditional employment (wholly and exclusively related to the current job)

[boredsenseless]

Err...

Run this by someone who might know the agent is almost certainly not qualified to make this assertion. Might I suggest David Smith of Accountax or Sarah Bauer of Bauer/Cottrell

However I have a distinctive uneasyness when it comes to brolly's so go the limited company route.

Got to agree - you are talking about huge amounts of cash if its wrong, talk to a tax and contract law expert not a cockney wide-boy agent

[Ansel]

Thanks for all your help.
A lot of contractors (on this site) seem to be anti-umbrella.

With a fair number of you contractors on this site I'd take that as the general opinion, so why are so many contractors with umbrellas? Are they just lazy a**ses?

[malvolio]

Awww... you guessed.

[Ansel]

Would you say old timers i.e. the more experienced contractors, are not likely to use umbrellas (cos they're supposedly wiser)?

[NoddY]

Would you say old timers i.e. the more experienced contractors, are not likely to use umbrellas (cos they're supposedly wiser)?

This is because they like to do their accounts in guineas, crowns and farthings.

[malvolio]

No. The simple answer is that some people cannot see a sensible reason to pay someone else to manage your money for you. It's not like we have complicated businesses or anything. If the whole point of freelancing is to be independent, why start by chaining yourself to someone else's business?

[Lucifer Box]

Would you say old timers i.e. the more experienced contractors, are not likely to use umbrellas (cos they're supposedly wiser)?

Pretty much. In my view, there is only one real genuine good use for an umbrella vs a Ltd and that is if you intend to be contracting for a very short time only before heading back to permiedom (a few months, say).

There are possibly also arguments if you are not a permanent UK resident and want to do things "by the book" but, then again, you could just disappear back home without paying any tax at all if you were that way inclined.

[Ansel]

How can using an umbrella protect you from IR35? IR35 gets you taxed as an employee. Using an umbrella gets you taxed as an employee.

It's like shooting yourself in the head to protect yourself from accidental death.

I found this on the PCG website....
Will an umbrella company protect me from IR35?
No. Many agents believe working through an umbrella company in itself will protect you from
IR35. IR35 status is determined by your working relationship with the agent and client and the
contracts these relationships are based upon. Therefore, IR35 applies in the same way to
umbrella companies as it does to limited companies

[malvolio]

There are flavours of brolly. One is where you work for them and they pay you as an employee, so clearly IR35 doesn't apply anyway. Another is where you are sort of partial shareholder, so you get a base wage plus dividends in proportion to your income - otherwise a big composite company - so you may or may not be IR35-able, just like anyone else. There are other smaller variants of that theme of course.

What is not clear is why the Revenue think that composites - which are clearly there merely to avoid paying tax - are apparently exempted from IR35 investigation whereas proper one man businesses are being chased merely for following the rules for limited companies. Go figure.