Reply to: perm to contract - same company

[Forbes Young]

see my latest post, cant Walk or lose lots of yet to vest options. Day rate has to be equivalent to perm salary as my kickup is keeping the options.

Any HMRC investigation would see straight through this, as you appear to be planning to continue in the same role and have the reasoning that you dont want to stop working there because of vested interests. My advice is to not operate via your own ltd company outside of IR35.

[northernladuk]

Utter rubbish. This is exactly why IR35 was brought in ie permie Friday, contractor Monday at same company doing the same role.




Your chances of being successfully investigated increase but it wont increase your chances of being investigated by hMRC on its own since there's no mechanism for anyone to tell them a prmie has become a contractor at the former employer.



No, HMRC like to play both sides of the coin. Unless then can bang you to rights on your contract being inside IR35 and doesnt match the upper contract, they wont waste much time on the contract wording. They concentrate far more on actual working practices.

Smalldog is under the spotlight for BN66 (as am I). I'd advise him to be very careful in the scenario he is considering. It wont make him any more liable for iR35 investigation but it could add considerably to the worry.

The good news is he's at least taking advice on this. Id be far more concerned with the actual working practices here. Although the employer is saying a contract is an alternative, the mindset within the company will be that SM is still a permie when \ if he takes a contract.

It may be very difficult to get the HR side of the company to be 'on side' if there was any future IR35 investigation.

To be frank, I wouldnt advise anyone to be permie Friday, contractor Monday at the same co if it can be avoided.

Absolutely this.

[smalldog]

I really don't see the benefit of going contracting here, since you want / need to stay and will be keeping your options. If you are keeping your share options, then you must be an employee, so there is no point in leaving and coming back as a contractor in an IR35 caught role on the same rate.

If you are staying and doing the same job, then you can't be made redundant (or rather you can, but not get a tax-free lump sum) since there is clearly a role for you to do.

Stick permie, get your options paid out, and then do whatever you want to do after that. Since you aren't going to go anywhere else, I can only see a headache for you by staying where you are as a permietractor.

I am tending to agree, doesnt seem a simple switch. Only real reason for going contract was potential of 18% or so uplift in take home for the remaining period of work. But worry of being investigated doesnt seem worth it. The options are part of EMI scheme some years back so yes only offered to employees, but board can decide to vary terms of vesting to what was originally agreed, i.e. sale of business.

So will stay as I am me thinks. too much hassle....

[TheFaQQer]

see my latest post, cant Walk or lose lots of yet to vest options. Day rate has to be equivalent to perm salary as my kickup is keeping the options.

I really don't see the benefit of going contracting here, since you want / need to stay and will be keeping your options. If you are keeping your share options, then you must be an employee, so there is no point in leaving and coming back as a contractor in an IR35 caught role on the same rate.

If you are staying and doing the same job, then you can't be made redundant (or rather you can, but not get a tax-free lump sum) since there is clearly a role for you to do.

Stick permie, get your options paid out, and then do whatever you want to do after that. Since you aren't going to go anywhere else, I can only see a headache for you by staying where you are as a permietractor.

[jmo21]

see my latest post, cant Walk or lose lots of yet to vest options. Day rate has to be equivalent to perm salary as my kickup is keeping the options.

How can they withold your options after redundancy? Surely they can't make you stay as a contractor to keep your permie benefits?

[BolshieBastard]

Perm to contract for the same company on it's own doesn't affect your IR35 status much, if at all.

Utter rubbish. This is exactly why IR35 was brought in ie permie Friday, contractor Monday at same company doing the same role.

Can it increase the chance of you being investigated - yes. Can it bring you grief in other ways, giving the fact that you will be made redundant, only to return as a contractor - yes. If as you say you are so valuable to the company why would they make you redundant in the first place?

Your chances of being successfully investigated increase but it wont increase your chances of being investigated by hMRC on its own since there's no mechanism for anyone to tell them a prmie has become a contractor at the former employer.

You IR35 status is determined by the contract wording AND the actual work place practices. If you continue working using the same pattern as before - you will be 100% inside IR35. But that doesn't mean you can't go for it, treat the contract inside IR35 and pay Salary/NI/TAX instead of dividends or use Umbrella. Your take home pay will suffer but it's not the end of the world.

No, HMRC like to play both sides of the coin. Unless then can bang you to rights on your contract being inside IR35 and doesnt match the upper contract, they wont waste much time on the contract wording. They concentrate far more on actual working practices.

Smalldog is under the spotlight for BN66 (as am I). I'd advise him to be very careful in the scenario he is considering. It wont make him any more liable for iR35 investigation but it could add considerably to the worry.

The good news is he's at least taking advice on this. Id be far more concerned with the actual working practices here. Although the employer is saying a contract is an alternative, the mindset within the company will be that SM is still a permie when \ if he takes a contract.

It may be very difficult to get the HR side of the company to be 'on side' if there was any future IR35 investigation.

To be frank, I wouldnt advise anyone to be permie Friday, contractor Monday at the same co if it can be avoided.

[Bunk]

see my latest post, cant Walk or lose lots of yet to vest options. Day rate has to be equivalent to perm salary as my kickup is keeping the options.

If you can't walk, how can you switch to contracting? If staying there as a contractor means you keep your permie benefits then there's no question about IR35, it's inside.

[jmo21]

Sounds like it'd be easier to just delay the redundancy?

[smalldog]

^^ This

The other option is -> Walk !

see my latest post, cant Walk or lose lots of yet to vest options. Day rate has to be equivalent to perm salary as my kickup is keeping the options.

[FatLazyContractor]

Just because you are going to be inside IR35 or under Umbrella doesn't mean you will be out of pocket contractor - it all depends on what rate are you going to negotiate. Plenty of calculators out there, pick a rate that will bring a satisfactory take home pay while under Umbrella and ask for it.

^^ This

The other option is -> Walk !

[smalldog]

So staying perm is on the table, then how can you speak of redundancy? HMRC doesn't care about the details, redundancy must follow strict set of rules. If you are made redundant because of restructuring only to be re-hired (perm/contract doesn't matter) essentially doing the same job even if it bears different title HMRC will be all over your Employer.

Just because you are going to be inside IR35 or under Umbrella doesn't mean you will be out of pocket contractor - it all depends on what rate are you going to negotiate. Plenty of calculators out there, pick a rate that will bring a satisfactory take home pay while under Umbrella and ask for it.

Essentially I can just carry on until my role no longer exists, thats probably 6 months away. I can spend the 6 months on my current terms, or contract my choice. But they wont be paying me anymore than my salary, just an equivalent day rate. Reason being they are doing me a favour letting me keep options that havent yet vested.

[sal]

So staying perm is on the table, then how can you speak of redundancy? HMRC doesn't care about the details, redundancy must follow strict set of rules. If you are made redundant because of restructuring only to be re-hired (perm/contract doesn't matter) essentially doing the same job even if it bears different title HMRC will be all over your Employer.

Just because you are going to be inside IR35 or under Umbrella doesn't mean you will be out of pocket contractor - it all depends on what rate are you going to negotiate. Plenty of calculators out there, pick a rate that will bring a satisfactory take home pay while under Umbrella and ask for it.

[smalldog]

Perm to contract for the same company on it's own doesn't affect your IR35 status much, if at all. Can it increase the chance of you being investigated - yes. Can it bring you grief in other ways, giving the fact that you will be made redundant, only to return as a contractor - yes. If as you say you are so valuable to the company why would they make you redundant in the first place?

You IR35 status is determined by the contract wording AND the actual work place practices. If you continue working using the same pattern as before - you will be 100% inside IR35. But that doesn't mean you can't go for it, treat the contract inside IR35 and pay Salary/NI/TAX instead of dividends or use Umbrella. Your take home pay will suffer but it's not the end of the world.

Hi Sal, the company are going through a restructure and until the new heads are recruited then Im needed. Its a very amicable exit, ive been working with them for 5 years (off and on) just time to move on. I cant just walk either as got golden handcuffs (about 250k options) that havent yet vested, but if Im flexible and help them out during the change they will allow me to take them with me in 6 months time.

Its a real tough one, if Im going to be out of pocket contracting due to IR35 then might as well just stay perm! Guess thats what the govt want!!

[sal]

Perm to contract for the same company on it's own doesn't affect your IR35 status much, if at all. Can it increase the chance of you being investigated - yes. Can it bring you grief in other ways, giving the fact that you will be made redundant, only to return as a contractor - yes. If as you say you are so valuable to the company why would they make you redundant in the first place?

You IR35 status is determined by the contract wording AND the actual work place practices. If you continue working using the same pattern as before - you will be 100% inside IR35. But that doesn't mean you can't go for it, treat the contract inside IR35 and pay Salary/NI/TAX instead of dividends or use Umbrella. Your take home pay will suffer but it's not the end of the world.

[stek]

I'd say go in at three times your current rate/salary/wage/whatever.

Otherwise walk.