Assessed as Inside from April or a Blanket Ban - it's time to leave

[Paralytic]

all the contractors i know are moving from outside to inside with the same client and same role
they have no idea they can be target for retrospective tax.

Which clients?

Or do you mean outside to no determination and Umbrella? Still a potential risk, but very different.

[SouWester]

Going permie less risky then?

Was motivated by IR35 to register after lurking for many years...

I have been offered permie with my current client, or the option to go umbrella (blanket determination... [yawns]).

I have to say I was pretty shocked by the quotes I got from reputable umbrella companies - I didn't realise that I would be paying my own employers NICs (but with a moment's thought this makes perfect sense).

So, if I went umbrella I would recieve LESS take-home than a permie on the same annual gross income, without any of the benefits. This is not "a bit more tax".

Curently on £100k gross (44 weeks x 5 days x day rate). Permie role offers £70k. Delta is 3 weeks leave and £200 per month (in favour of umbrella). Flexibility is a double-edged sword so I have assumed equal.

Clincher for me will be risk of our dear friends at HMRC taking an undue interest in little ole me (or rather, my NI number). I have read all the preceding posts in this thread, but none offer opinions on risk of HMRC investigation on going permie with the client.

From my research the critical ID is my NI number. Based on this, going permie with the client does not increase my risk of HMRC investigation like going 'inside' with the same agency does.

Difficult to qualitfy relative risk of the different options, but I believe that by going permie with my client I would not be attracting any more risk of an HMRC than I am carrying today.

Any comments on this?

B

[cojak]

Was motivated by IR35 to register after lurking for many years...

I have been offered permie with my current client, or the option to go umbrella (blanket determination... [yawns]).

I have to say I was pretty shocked by the quotes I got from reputable umbrella companies - I didn't realise that I would be paying my own employers NICs (but with a moment's thought this makes perfect sense).

So, if I went umbrella I would recieve LESS take-home than a permie on the same annual gross income, without any of the benefits. This is not "a bit more tax".

Curently on £100k gross (44 weeks x 5 days x day rate). Permie role offers £70k. Delta is 3 weeks leave and £200 per month (in favour of umbrella). Flexibility is a double-edged sword so I have assumed equal.

Clincher for me will be risk of our dear friends at HMRC taking an undue interest in little ole me (or rather, my NI number). I have read all the preceding posts in this thread, but none offer opinions on risk of HMRC investigation on going permie with the client.

From my research the critical ID is my NI number. Based on this, going permie with the client does not increase my risk of HMRC investigation like going 'inside' with the same agency does.

Difficult to qualitfy relative risk of the different options, but I believe that by going permie with my client I would not be attracting any more risk of an HMRC than I am carrying today.

Any comments on this?

B

Close down your Ltd once you’re permie. Then HMRC will take much less interest in you as getting anything from you after closure is marginal and they have much easier fish to catch.

[SouWester]

Close down your Ltd once you’re permie. Then HMRC will take much less interest in you as getting anything from you after closure is marginal and they have much easier fish to catch.

I was planning to do that anyway, but you make a good point on HMRC interest.

Hi-ho, hi-ho, permie I will go...

...for a few months anyways, but shhh don't tell nobody!

[cojak]

I was planning to do that anyway, but you make a good point on HMRC interest.

Hi-ho, hi-ho, permie I will go...

...for a few months anyways, but shhh don't tell nobody!

If it's only for a few months then you won't be able to close your Ltd - that's for when you don't need it for a couple of years.

If you close and then want to contract before then you're going to need to use an umbrella.

[northernladuk]

If it's only for a few months then you won't be able to close your Ltd - that's for when you don't need it for a couple of years.

If you close and then want to contract before then you're going to need to use an umbrella.

Which is a very important point and something I expect we are going to have to help people with in the coming year. Gone perm/brolly and shut ltd without thinking about the longer term implications.

[SouWester]

...posting here as I didn't know this so assume some others didn't either...

Agencies are required to send HMRC an 'employment intermediary' report. It is likely that the details in this report are what HMRC may use to fish for people to investigate after April.

Here's a link with the fields in the report: How to use the employment intermediaries template - GOV.UK

The collection template and rules are clearly designed to be sucked into a database, at which point the data is easy to interrogate.

It would be easy to query before & after April data for the same agency, identify NI/UTR numbers that have changed from 'A-D' to 'F', and then release the hounds. It would be just as easy to do this for each NI/UTR, and drop the 'within the same agency' filter, meaning the 'change agency = safe' assessment made earlier in this thread may not be correct.

Anyone got a view on this? Just because they can of course, doesn't mean they will... does it?

Interestingly, it includes inside leg measurements for you/me (the contractor/employee) and what we've been paid, but does not include any data on the identity of the end client. Assuming HMRC does not have report/data access to the identity of the end client in any other data source (and why would they?), it would appear that going permie with the end client would not in itself be cause for concern at HMRC.

This 'intermediary report' was clearly created for use alongside IR35. As such, it's not clear why HMRC does not appear to be interested in the identity of the end-client as this is nominally the focus for IR35. Adding a couple of extra fields for company number and name of the end client would not be a big change, given the level of detail already collected.

Meh. The case for permie grows stronger I'd say. Thoughts?

B

[SouWester]

Which is a very important point and something I expect we are going to have to help people with in the coming year. Gone perm/brolly and shut ltd without thinking about the longer term implications.

Understood. I am going to do it anyway for personal reasons (ex is still a shareholder), and also as I am very much looking forward to ditching my accountant (terrible), and even if it's dormant you still have to report to companies house and HMRC. I guess its down to personal circumstances, for me it makes sense.

I do think the view that HMRC would go after easier targets is valid, at least for the employers NICs part.

[SouWester]

If you close and then want to contract before then you're going to need to use an umbrella.

Maybe I am missing something here... cojak can you explain why I would "need" to use an umbrella? I can't just spin up another Ltd if/when time and conditions are right? (assuming of course that they will be again at some point)

B

[northernladuk]

Understood. I am going to do it anyway for personal reasons (ex is still a shareholder), and also as I am very much looking forward to ditching my accountant (terrible), and even if it's dormant you still have to report to companies house and HMRC. I guess its down to personal circumstances, for me it makes sense.

I do think the view that HMRC would go after easier targets is valid, at least for the employers NICs part.

You've missed the point. My comment was in relation to Cojaks which you asked a question on and I'll expand in a sec. At a guess I'd ask if you understand a dormant company. Nearly everyone that comes on here mistakes dormant for not being used.

Maybe I am missing something here... cojak can you explain why I would "need" to use an umbrella? I can't just spin up another Ltd if/when time and conditions are right? (assuming of course that they will be again at some point)

B

Depending on the situation with the LTD and how you shut it down there are rules in place around length of time before you can open another, which is 2 years. It's around how the money that is extracted was taxed. If there is a tax benefit to shutting it you can't open another just like that.