Reply to: Purposefully within IR35

[desir]

Thanks for all the replies. I think I have it sussed now.

[VectraMan]

When operating within IR35 with a ltd company, you can still claim 5% of turnover as an allowable cost as well as travel & accommodation to place of business (up to 2 years), insurance costs, some subs & have your company pay for your pension contributions. The balance then goes through the payroll. So generally still better off than operating through an Umbrella if you had a contract for longer than a few months. Also, the next contract you win may be outside of IR35, then you could take dividends and save on tax and NI.

You also gain by being on the VAT FRS, and if you're prepared to do your own accounts then probably your only cost will be the £14 annual return fee.

[Forbes Young]

I need to form a limited company to take on some contracting work as the agency/client will not accept me as self-employed or PAYE and I don't wish to use an outside Umbrella/PSC.

Would the following assumption be correct;

If HMRC receive enough revenue, at least as much as they would from me being PAYE, then even if I fall within IR35; there is not any issue of non-compliance as revenue is at least equal.

When operating within IR35 with a ltd company, you can still claim 5% of turnover as an allowable cost as well as travel & accommodation to place of business (up to 2 years), insurance costs, some subs & have your company pay for your pension contributions. The balance then goes through the payroll. So generally still better off than operating through an Umbrella if you had a contract for longer than a few months. Also, the next contract you win may be outside of IR35, then you could take dividends and save on tax and NI.

[Zero Liability]

I think in your situation it may be worth just clarifying due to the number of years worked via an umbrella, but when I've asked Qdos consultants this question before, they say that operating via an umbrella is neither here nor there as far as they're concerned with regard to IR35, so largely it would seem to be a matter of being able to affirm their propositions for the TLC; they do not stipulate a contract review for their policies. The fee protection can be taken even if you believe you are inside, subject of course to not already being in the crosshairs of an investigation and some other caveats. So best get in touch with them before taking anything out.

[slatt]

Thanks all

It sounds like it might actualy be worth looking into this little further then!

[Zero Liability]

With regards to getting IR35 insurance, what is the likelihood of them covering someone who is completely and utterly caught by IR35, where the only way around it would be to move contracts?

I am pretty much in that situation and have been with an umbrella company for the past few years as I didn't think I could go Ltd on this current project.

Personally I'd much rather be Ltd but I do like the current work, so until I complete the project (which is still quite a few years away, current projections say 2020) I'm stuck sheltering under an umbrella.... unless anyone has any bright ideas?

Not sure about IPSE but Qdos will cover you for fee protection but not tax losses if you can't affirm the questions they ask to their satisfaction.

They've also stated that switching between umbrella and ltd is irrelevant as to whether they will offer cover, but obviously there is nothing to cover for the years you were working through one as far as I'm aware. Still worth clarifying with them relative to your circumstances.

[ContrataxLtd]

With regards to getting IR35 insurance, what is the likelihood of them covering someone who is completely and utterly caught by IR35, where the only way around it would be to move contracts?

I am pretty much in that situation and have been with an umbrella company for the past few years as I didn't think I could go Ltd on this current project.

Personally I'd much rather be Ltd but I do like the current work, so until I complete the project (which is still quite a few years away, current projections say 2020) I'm stuck sheltering under an umbrella.... unless anyone has any bright ideas?

Hi Slatt

You could still go Ltd even if caught by IR35, you would probably be better off compared to an Umbrella company due to savings in VAT (Flat rate scheme), 5% allowance that doesn't have to be paid as salary and normally more flexibility in expenses.

You could also whack a good chunk of cash into a pension and reduce the effects of IR35 if this is something you could afford to do.

Martin
Contratax Ltd

[TheFaQQer]

That was what I was thinking of doing, but i assumed it was such an obvious no go that I didn't want to waste their time

If you think you are caught by IR35 and they agree, then it's not going to be something that they will cover. If they disagree, then they won't insure it.

IPSE membership is something different, though, since it isn't an insurance policy - they say that they will fight for their members, but whether they would (or should) in an open and shut case is something that only they will answer.

[slatt]

you could always ask them rather than us.

That was what I was thinking of doing, but i assumed it was such an obvious no go that I didn't want to waste their time

[TheFaQQer]

With regards to getting IR35 insurance, what is the likelihood of them covering someone who is completely and utterly caught by IR35, where the only way around it would be to move contracts?

If you can honestly answer the questions they ask, and (if necessary) pass a contract review, then they will cover you. If you can't, then they won't.

I doubt they would cover you for changing from an umbrella to limited mid-contract, but you could always ask them rather than us.

[slatt]

With regards to getting IR35 insurance, what is the likelihood of them covering someone who is completely and utterly caught by IR35, where the only way around it would be to move contracts?

I am pretty much in that situation and have been with an umbrella company for the past few years as I didn't think I could go Ltd on this current project.

Personally I'd much rather be Ltd but I do like the current work, so until I complete the project (which is still quite a few years away, current projections say 2020) I'm stuck sheltering under an umbrella.... unless anyone has any bright ideas?

[ChimpMaster]

Agree re: the IPSE+ membership but certainly worth ensuring your working conditions meet the requirements (ambiguous though they are) of being outside of IR35. Ultimately if you are ever investigated for IR35, this is what IPSE are going to have to defend.

[Pondlife]

Qdos TLC35

This.

Plus I have IPSE+ for the reasons in Faq's other post (for now)

[SueEllen]

Interesting. Make me wonder what's the point of IPSE membership if that's the case.

According to posters here who have been investigated the fact they are represented by IPSE's agents means HMRC drops the case at some point.....

Also QDOS haven't lost cases either due to a similar reason.

[TheFaQQer]

Interesting. Make me wonder what's the point of IPSE membership if that's the case.

Business interruption insurance, agency / client default insurance, jury cover, sickness cover etc. For that insurance cover alone, it's worth the fee.

Plus their significant lobbying efforts to get what contractors want.