Redundancy & contracting for same co'y

[threaded]

There's a management course you can go on, something like "How to reduce headcount and save money on redundancy payments", same guy also does a fun one called "Find the Lady and other Three Card Tricks."

[mcquiggd]

When I first started contracting, I had resigned from a permanent role, and the company asked me to contract for 3 months to help them with the next release of a piece of software I had helped to write. IR35 had only just come into force.

On the advice of a contractor friend, I went for a fixed price deal, payable 25%, 25% then 50% in the final month (financial risk).

I also rented offices, bought my own equipment which was used for work, and had another contract with a different client running concurrently. Also had professionaly designed company 'presence' - in terms of flyers, a portfolio, business cards, website, etc.

The IR accepted I was outside IR35 - this is back in 2000 - I think it was the fact they could send a letter to my office that seemed to work for them. (It was early days. and they didn't have enough people to investigate, so maybe I was lucky!). The next 3 contracts were based out of the same office, and I have never had a problem over IR35.

Over time I gradually switched from the managed office to just using them as a mailing address, phone answering service, and temporary meeting room provider, and I just worked from my home office.

[VectraMan]

For a person to be made redundant, the job has to disappear. If he can go back and continue to do it, even part time, it has not disappeared, has it?

I don't know the exact rules, but surely a company can't reduce somebody hours from full time to part time, as that amounts to constructive dismisal. If the requirements are reduced from 5 days to 1 day per week, and the full time person turns down an offer of part time work, then surely making the full time person redundant and hiring a part time person is reasonable?

And duration has no effect on IR35. However, doing essentially the same role for the same employer on roughly the same terms - doesn't sound much like not being a disguised employee. It is precisely that which IR35 was aimed at stopping. So yes, he's caught for that income stream.

Agreed, but if you're working 1 or 2 days a week for one client, and working other days for other clients, then isn't that a pretty big pointer away from IR35? And if he does it through his other company that he'd setup with another person, then it would seem ridiculous to claim that in the case of one client of many when serviced by one particular consultant amounts to disguised employment, when none of the other clients do.

[dmini]

One company where I contracted earlier this year, there were a number of contractors there who had previously been made redundant, and then come back - so it can be done. I've found one reference on the internet to a "5 Mondays" gap - but you really need to talk to an employment lawyer. Your redundancy agreement may cover that - mine did!

On the tax side, talk to your companies tax office about tax codes. Mine is really friendly and helpful - some aren't. Assuming your limited company has your "Main" tax code, you will need to run any other work through on a BR code (22%) or the DO one (40%). Over the past few years I've had up to about 5 employers at the same time - even this year Ive had 3 at the same time. I prefer paying too much tax and then asking HMRC for a refund at the end of the year via self assessment - but that is your choice.

Self-assessment - by the way - is very unlikely to be optional!

[malvolio]

Are either of those things true if it's only 1-2 days per week?

For a person to be made redundant, the job has to disappear. If he can go back and continue to do it, even part time, it has not disappeared, has it? And duration has no effect on IR35. However, doing essentially the same role for the same employer on roughly the same terms - doesn't sound much like not being a disguised employee. It is precisely that which IR35 was aimed at stopping. So yes, he's caught for that income stream.

[VectraMan]

Get real advice - but if there is still a job to do, how can there be redundancy? You are being stitched up somewhere along the line.

If you have real other work to do, walk away from this one. If you do go back, incidentally, do not even think of trying to claim it as being outside IR35.

Are either of those things true if it's only 1-2 days per week?

You personal tax situation is going to be complicated by working for two companies, and you might end up getting stuck on emergency tax for the year (happened to me last year, and I didn't get the money back until this August). An umbrella is just going to pay you whatever money you get from that work as salary, so couldn't your other Ltd. just do the same?

[malvolio]

Get real advice - but if there is still a job to do, how can there be redundancy? You are being stitched up somewhere along the line.

If you have real other work to do, walk away from this one. If you do go back, incidentally, do not even think of trying to claim it as being outside IR35.

[8473]

I will shortly be made redundant as the requirement for the role to be carried out on a full-time basis has diminished. I'll be receiving a tax free redundancy payment. The intention is to form a Ltd company with a former colleague to provide consultancy services to a range of companies - we already have a number of clients lined up. However, my current employer has now asked if I would be interested in doing some consultancy work for them on a 1-2 days per week basis (same site, similar work). I would prefer that this work was kept independent from the Ltd company activities, so am thinking that I might use an umbrella company to deal with the tax & Er's & Ee's NI. I am aware that I won't be able to claim mileage as I'll be going to the same place of work and I don't foresee any other expenses, so essentially I just want a vehicle to sort out my tax and NI.

However, I suspect that there might be some issues ...

My main concern is whether continuing to carry out work for the employer, albeit it through a 3rd party, might affect the tax free status of my redundancy payment. Comments anyone?

Any other issues I should be aware of?