No idea what to do...

[crazybee]

I've always thought my circumstances have been slightly different to many contractors.

I setup as self-employed in 2005 and I've built up a reasonable client base over the years. Around 2014 i decided to take on some contract work and I've done regular work for the client ever since as an agency worker.

I've never been in one position or role for client and been involved with loads of different projects. It's also not my only source of income as I continue to provide work for other clients but I'd say it provides about 65% of annual turnover.

The work is good but blanket ban enforced from April. Rate increase has been offered as my skills are critical to a project but have to go PAYE via agency or umbrella. Really not sure what to do as I'd like to see current contract and project through to end of year. CEST tool indicates that I am outside IR35 but doesn't matter with blanket ban. Employee through umbrella or agency seems pretty bad considering I have company serving other clients.

If I went umbrella to see contract through and remained with agency am I painting a target on my back and suggesting I'm an employee? My other thought is that I'd be employed and self employed and still need to file SA tax return - could I claim back taxes if genuinely self employed but forced into umbrella for given role? Be interested to hear if anyone has any thoughts on my circumstances.

[eek]

6 years of potential backpay is over 1 year of income from that project were HMRC to come calling - I would be leaving

[GhostofTarbera]

I've always thought my circumstances have been slightly different to many contractors.

I setup as self-employed in 2005 and I've built up a reasonable client base over the years. Around 2014 i decided to take on some contract work and I've done regular work for the client ever since as an agency worker.

I've never been in one position or role for client and been involved with loads of different projects. It's also not my only source of income as I continue to provide work for other clients but I'd say it provides about 65% of annual turnover.

The work is good but blanket ban enforced from April. Rate increase has been offered as my skills are critical to a project but have to go PAYE via agency or umbrella. Really not sure what to do as I'd like to see current contract and project through to end of year. CEST tool indicates that I am outside IR35 but doesn't matter with blanket ban. Employee through umbrella or agency seems pretty bad considering I have company serving other clients.

If I went umbrella to see contract through and remained with agency am I painting a target on my back and suggesting I'm an employee? My other thought is that I'd be employed and self employed and still need to file SA tax return - could I claim back taxes if genuinely self employed but forced into umbrella for given role? Be interested to hear if anyone has any thoughts on my circumstances.

Do you work from home office, provide your own equipment, decide your hours, can sent in a sub etc?

Or work on client site like a permie would do?

If the later you are on the hook for about 1.25 years income in tax back payments


Sent from my iPhone using Contractor UK Forum

[crazybee]

6 years of potential backpay is over 1 year of income from that project were HMRC to come calling - I would be leaving

Multiple projects for this client over the years. First way back in 2013 for 6 months followed by 5 month break. Since then I have been involved with numerous projects.

1. 14 months
2. 9 months (ad-hoc 1-3 days per week)
3. 19 months
4. 20 months
5. 5 months (current)

I work from home most of the time and go on-site for ad-hoc meetings when required but I invoice and work for other clients at the same time. I have my own home office and I do have regular company outgoings and costs for equipment. This particular client requires me to use their laptop for accessing systems and platforms but I do use my own laptop for certain work.

Maybe it is time to move on though.

Thanks for your input.

[CosmicWave]

Considering your current length of stay with them, taking an inside role going forward is catastrophic for you (not for them - they will remain happy as usual, absuing the contracting system, and never having to pay employers' NI and using you like their employee still ).

Ditch them, like they would do you any day happily.


Ditch them now, and more importantly run far far far away from them!
Otherwise it will hurt you heavily as others have pointed out.

[cojak]

I expect the client to be quite upset but I agree with the previous poster.

Clients generally consider consider contractors to be flexible permies and only get put out when you prove otherwise.

Be professional when you terminate but don’t be swayed by pleas or threats.

[WordIsBond]

Multiple projects for this client over the years. First way back in 2013 for 6 months followed by 5 month break. Since then I have been involved with numerous projects.

1. 14 months
2. 9 months (ad-hoc 1-3 days per week)
3. 19 months
4. 20 months
5. 5 months (current)

I work from home most of the time and go on-site for ad-hoc meetings when required but I invoice and work for other clients at the same time. I have my own home office and I do have regular company outgoings and costs for equipment. This particular client requires me to use their laptop for accessing systems and platforms but I do use my own laptop for certain work.

Maybe it is time to move on though.

Thanks for your input.

I probably agree with the advice you have been given here. But first a couple questions.

1. Was there a break of more than two months between the contract you are on and the 20 month contract?
2. Are you currently doing any work for another client?
3. Have you been doing work for another client at any time during the current contract, or the prior 20 month contract?
4. Do you care about keeping your company open?
5. Does the client care enough about keeping you to pull strings with the agency to get you through a different one?

Reasons I ask:
1. If there was a real break (more than a one month holiday) then it becomes easier to argue it's a different engagement.
2. If you are currently doing work for another client, or have been during this contract, and you shut that down and go payroll via brolly, it's easier to argue that working practices have changed. Before, you were a contractor serving more than one client, you are becoming an employee.
3. If you were working for other clients during the prior 20 month contract, it might be hard to argue that the last five months were outside, but again it makes it easier to argue that the prior 20 months were different working practices, and so the risk is limited to the last 5 months -- which isn't very high.
4. If you don't mind closing your company (which isn't much of a big deal unless you have a lot of retained earnings), you could go payroll and close your company to mitigate the risk of historical problems. There's a risk HMRC would block the closure but IMO it probably isn't a high risk.
5. We believe that the greatest risk of a quick matchup by HMRC of outside to payroll transitions is from the agency reports. So if you are through a different agency, the chances of them connecting the dots quickly is probably lower.

The first three have to do with whether or not you have a good argument if HMRC come asking. The last two have to do with whether you could get your company closed before HMRC is likely to come asking.

And of course, none of us knows the risks. No one knows if HMRC will actually chase these kinds of cases. They may not even know yet. We think there's a real risk, but how great it is, and whether or not you'd have time to get your company closed before it materialises, is something no one can tell you. The advice you've been given above is based on guesses. Most people here would agree that the evidence of HMRC behaviour in the past supports those guesses, but how to quantify the risks, no one knows.

[andydd68]

You are in the same scenario as no doubt many thousands of others, yes, HMRC could come knocking..chances are they wont...if you look at the list of cases, they gave up on many thousands..followed a small number through and lost the majority.

Not that I believe them but HMRC did indicate they wouldn't be jumping on people who have switched from Out to In..of course having a brand new contract post April would be perfect but alas we cant all be that picky these days.

You are in similar situation to me, is it worth keeping Ltd Co. going ?, there are a growing of umbrellas offering a hybrid brolly/Ltd although I dont really see any benefit over having the two separate, its easy to setup and use a brolly should the need arise, Im not sure what HMRC expect contractors to do ?, all pack up their Ltds and all go perm/full time....thats just not going to happen.

[mikedarv]

So if you are through a different agency, the chances of them connecting the dots quickly is probably lower.

I know most agencies have a restriction period where you cannot move over to another agency for a certain amount of time.

I see my contract says 'The Company' and 'The Contractor', obviously these contracts are all written with Ltd company contractors in mind.

Does anyone know if this still applies if you move to another agency under umbrella terms?

[eek]

I know most agencies have a restriction period where you cannot move over to another agency for a certain amount of time.

I see my contract says 'The Company' and 'The Contractor', obviously these contracts are all written with Ltd company contractors in mind.

Does anyone know if this still applies if you move to another agency under umbrella terms?

Why wouldn't they be?