IR35 Advice

[atsushi]

Many thanks for all of your comments. It adds some confidence to my plan of action.
Ill get some professional advice on the contract and see what is possible.
Thank you again!

[Scruff]

Did you get a redundancy payout, since there is an element of tax-free money which is usually paid out and the length of time between you leaving as a permie and rejoining as a "disguised employee" is pertinent to maintaining the tax-free portion...?

I would definitely have the contract reviewed by QDOS or Bauer & Cottrell, as well as taking advice from a specialised contractor accountant.

[CloudWalker]

1st contract with same employer ? would have been safer to use a brolly than ltd. but keep your head down and you should be ok.

[TheFaQQer]

I am not convinced it does put a target there. (If investigated it is quite likely it is an easy win for them).

But, how and why would it increase the probability of investigation ?

Surely all HMRC will have is the returns, and the SATR. None of this says "I'm contracting at my previous employer".

Perhaps part of HMRC intelligence is to try and glean this information from other sources. Then yes, entirely possible.

I agree. In which case, maybe the best course of action is to be outside, but put aside all the money just in case there is an investigation in the following six years. Or just stick a load of it in a pension plan to reduce any amount that would be taxable if found inside.

[ASB]

Look, whilst it *is* possible to work as a contractor for a former employer and be outside IR35, the fact that your first contract is for your former employer puts a rather large target on your back saying "investigate me".

I am not convinced it does put a target there. (If investigated it is quite likely it is an easy win for them).

But, how and why would it increase the probability of investigation ?

Surely all HMRC will have is the returns, and the SATR. None of this says "I'm contracting at my previous employer".

Perhaps part of HMRC intelligence is to try and glean this information from other sources. Then yes, entirely possible.

[TheFaQQer]

The two big negatives I can see are

I am currently working on my first contract with my previous permanent employer.
...
There is a non competition clause so that I may not take contracts in the same field unless agreed with the client.

Get the contract reviewed, making it clear that the contract is with your previous employer and see what the experts say. You could still take the work on, just declare the contract as being inside IR35, pay the tax, and increase your rate to account for that.

[sal]

Why don't you get your contract reviewes by QDOS and do it properly?

+1 Giving the circumstances, you will be a prime juicy target for IR35 investigation . So you have to prepare ironclad defense in advance, that's why need professional expert advice.

[malvolio]

Indeed, this is partially why IR35 came about. It was called F2M, Friday to Monday.

Also agreed, but there are circumstances where it wouldn't apply, which is why the OP needs to understand the situation fully before he makes a decision.

It's also worth remembering another recent case about a roaming engineer claiming expenses and being told by HMRC that each mini-assignment was a permanent workplace so expenses weren't claimable.

[tractor]

...

It sounds as though you are trying to engineer the contract to make it read as though you would be outside IR35 but if you left your permanent employer and then go straight back in as a contractor it's highly unlikely that the reality of the situation would put you outside

Indeed, this is partially why IR35 came about. It was called F2M, Friday to Monday.

[LisaContractorUmbrella]

It sounds as though you are trying to engineer the contract to make it read as though you would be outside IR35 but if you left your permanent employer and then go straight back in as a contractor it's highly unlikely that the reality of the situation would put you outside

[TheCyclingProgrammer]

Look, whilst it *is* possible to work as a contractor for a former employer and be outside IR35, the fact that your first contract is for your former employer puts a rather large target on your back saying "investigate me".

One of the keys to the Direction & Control argument is that your client doesn't treat you like any other employee and that you aren't seen as "part & parcel" of the organisation. If you've previously been a full-time employee, its very likely that they will continue to treat you as if you were still their employee. Having to use client equipment and work on-site for security/confidentiality reasons might be fair enough but IMO I still think you'll have a tough time with the D&C argument.

The nature of your contract also makes it sound like MOO could be an issue but its hard to be certain without seeing the contract. You need to work hard at making sure the scope of your role is well defined. You need to make sure you have the right to turn down new work. If the project you're working on ends, then so should the contract. I would push back hard on the "general engineering support" aspect of your contract.

So that leaves you with your Right of Substitution. A genuine RoS clause can be an automatic get out clause however you would need to demonstrate that the right is genuine and that you do not need permission from the client to use a substitute (the only reasonable condition on a RoS clause is that the substitute is fully qualified to do the role). If you're genuinely able to use a substitute then this should be enough to put you outside of IR35. If you can find the opportunity to actually use a substitute, this strengthens your case even more.

Whatever way you look at it though, you're putting yourself at risk. RoS could be your saviour though. You need to get this contract reviewed professionally and see what the outcome is.

[malvolio]

You could do worse than read the guides on the PCG website, especially the Guide to Freelancing and the Guide to IR35. You have no idea how much you don't know!

But to answer your main question, if the rules under which you work are applicable to anyone performing that work, including all current staff and contractors, then it can't be a differentiator and therefore has no effect on your IR35 status. The rest of it sounds fairly positive to me.

[vwdan]

You seem to have totally missed the elephant in the room which was:

I am currently working on my first contract with my previous permanent employer.

This is the kind of behaviour IR35 was brought in to stop. Now, don't get me wrong, I've done work for my old employer but it's the odd day here and there for a specific piece of work - you take on a 'proper' contract and you're on the back foot straight away. How is the way you'll be working in future going to truly differ from the way you worked before?

[northernladuk]

Why don't you get your contract reviewes by QDOS and do it properly?

[atsushi]

Hi, I am a total rookie to the contracting world and I'm looking for some advice on my contract terms. I have set up as a limited company with business bank account etc.

I am currently working on my first contract with my previous permanent employer.

I'd like to remain outside of IR35 if possible and would appreciate some constructive input.

A little bit of background - The type of work that takes place is usually highly confidential. So my client's customers usually have confidentiality clauses and exclusivity clauses which limits the terms at which I can work. (I believe?) You will see below that they want me to sign a blanket contract to cover their legal needs with their customers the fixed period (approx 6 months). But are willing to agree, in separate following contracts on the specific jobs that will take place. (I assume that is so that there is no legal record of my company doing the specific confidential job, but allowing me to have some type of control over the jobs that I do)

So as I interpret the draft contract, the cons are:
I am required to work from the offices which the client provides. (for confidentiality reasons)
I am required to use the client's computer, email address and phone to do the work.(confidentitality)
The contract is for a fixed period where I am required to provide 'general engineering support' for the client. (not specific jobs; apparently this is not possible due to the confid. and exclusivity agreements with the client's customers)
The client agrees to pay all expenses for off site work trips.
The client has drafted the contract on their letterhead.(does it matter?)
There is a non competition clause so that I may not take contracts in the same field unless agreed with the client.

Some pros are:
The client is willing to agree there is no mutuality of agreement
The client is willing to agree, in writing, separate to this contract that any work taking place must be agreed upon by both parties. (I am a bit confused on how to view this as I will be under 2 contracts? I have been pushing to be working on a per job basis and this is their way of helping my request)
The client is willing to accept a substitution clause.
I have requested there be a clause which states I am allowed to take on other clients and perform duties when necessary as long as it doesn't affect the ability to complete the required jobs with the client.

How would some of you experienced contractors view this situation? How at risk is this to IR35? Any suggestions on how to improve the situation?

Many thanks for your time!