IR35 - Tell Me What to Do!

[fiisch]

OK, slightly facetious title, but I've eyeballed a lot of threads recently all with the variation of the theme Option 1 - Perm role; Option 2 - Contract Role, an I've come to the conclusion that I don't yet know enough about the impact of IR35 to make an informed decision and that it's very much down to individual circumstances.

There is something different in my office this week - the atoms are vibrating a little more vigorously, there's hushed whispers of "IR35" in every corridor you walk down, and department managers suddenly have calendars blocked out with above average number of meetings with recruiters.

My Position
Currently contracting as a BA in the City - 2 hour each way commute, £500/day, very much enjoying the project, confident (as I can be) that my determination of outside IR35 is representative. Only contracting for just over a year, dependent wife and child, considering another.

I would like a shorter commute and more certainty, but the drop in income would be a challenge. It is unlikely it would be worth me commuting to the City for a perm role. Contract just renewed, runs until May, however IR35 assessments being conducted shortly, and I'm half-expecting a blanket-inside IR35 determination which seems to be the current trend.

Given the current situation, my wife has started to apply for part-time work.

I've concluded I need to use the tools of my trade and do an impact assessment so I can fully understand implications of an inside determination and whether I'm willing to swallow, ask for a rate increase or walk.

Questions
1. Does anyone have a link to a reliable Umbrella take home calculator? Have used Contractor Take Home Pay & Expenses Calculator | Parasol thus far, but not entirely satisfied if this is accurate. I need to understand what the difference between take-home would be, and whether the reduced amount still merits taking the added risk of being a contractor, and/or what rate increase would be required to offset the impact.

2. If there is a determination of inside IR35 and you elected not to operate in this manner, would you work your notice (any implications of this?) or walk immediately?

3. Are you doing anything differently now because of the legislation? How would you respond if your client advised that you are to be determined inside?

Apologies for my perhaps slightly naïve understanding of all this - from reading threads on here, it is clear this is far too murky and involves some element of risk-assessment/individual judgement.

[northernladuk]

What would suity do?

[fiisch]

What would suity do?

Afraid this is lost on me...!

[Paralytic]

What would suity do?

[dx4100]

[Grasser73]

I would definitely hold-off on another wife.

[Bluebird]

I've been in a similar position to you when IR35 was not an issue ( well not much ).

I found the stress of worrying about contracts and renewals etc too much when I had a wife and two children who needed me.

Sickness & Holidays meant a drop in income.

I was much more relaxed with a permie role.

I then ventured back into contracting when there was sufficient funds built up to mean that the worry was mitigated.

It's about quality of life for me.

[DeludedKitten]

2. If there is a determination of inside IR35 and you elected not to operate in this manner, would you work your notice (any implications of this?) or walk immediately?

On the assumption that your contract is IR35-friendly then if there is a blanket determination that you are inside then clearly the contract is wrong because the right of substitution is not reflected in reality, or there is more direction and control than in the contract, or there is an obligation to offer and accept work. Those are three pretty fundamental clauses in the contract to break, so you'd have good reasons to walk out.

That said, the determination is yours until April (assuming the legislation is eventually introduced and passed, which it will be). You could just ride it out until February, get the notice in so that you still get paid before April, and maximise the income that way. Then you just potentially have the stampede of everyone doing the same thing to fight against.

[webberg]

Relying on the terms of a contract that does not reflect the role and how you and your client approach working practices, is foolish.

IR35 tests work on the facts of the role and if there is a conflict between the actualite and the words, the facts always win.

A substitution clause without teeth or any practical way it could be exercised, is useless and will be rejected as influential in any dispute that reaches a Tribunal.

Your client may decide to "blanket IT35" for any number of reasons, all of which boil down to how much getting it wrong may cost them. You might therefore expect them to go "safe" for a period, perhaps until they see how HMRC react to their 2020/21 returns - say late 2021. After that they may cautiously start hiring contractors again - who knows.

I would say therefore:

Regard this turmoil as a 24/30 month issue and if that means being permie for that period in a job you like and a commute you can handle, suck it up and re-evaluate at the end of the period.

If you want to stay contracting, go and get bespoke advice.

In terms of differences in take home between contracting and permie, the former might give you 75% of gross invoices at the expense of potential enquiry and administration. Umbrella (compliant) or permie, around 65%.

Ask yourself if the 10% is worth it.

[Manic]

<Snip>

In terms of differences in take home between contracting and permie, the former might give you 75% of gross invoices at the expense of potential enquiry and administration. Umbrella (compliant) or permie, around 65%.

Ask yourself if the 10% is worth it.

Unless you have high expenses such as travel/rent/hotels, and/or you income split (Income below child benefit threshold, utilise spouses 7.5% band) where the difference will be more profound.