Reply to: Assessing IR35 working practices before signing contract

[Hobosapien]

My understanding was it couldn't be paid into my own pension that I pay into from my limited company and I didn't want a separate workplace pension just for three months.

Yes you'd need to pay it into your own pension after receiving the money so post PAYE/emp NI.

As you're in private sector then may as well use your Ltd as the agency should only try to force you down the umbrella route if contract is public sector where PAYE/Emp NI needs sorting out before any invoice amount reaches your Ltd. May as well keep it as simple as possible if possible.

[groovybeetlecar]

Thank you.

To be honest, with the public sector stuff this year, I found myself wishing I'd just gone through an umbrella all along with that contract because I really enjoyed the job and left in mid March as they were not able to articulate their response in enough time to give me any confidence. I've been in the bench since, so I may as well jump back on with a role. And I'm hoping it will provide a bit more meat around an area of my CV which may increase chances of getting a new role quickly. Oh, and I've negotiated my rate up a bit to offset it slightly.

All good, and I can sleep easily at night.

[VectraMan]

I followed up with my questions and decided that due to the nature of the work, the contract is inside and decided to proceed on that basis.

The whole world seems to think I'm mad. But I couldn't with any integrity state I was outside when everything pointed to it being inside. My accountant agreed that the role was very likely to be inside but didn't seem particularly practiced at dealing with that for a start, suggesting that I went umbrella, which I really don't want to do for three months particularly as I want to maximise my pension payments to offset things.

Anyway, thanks for all your help, sorry I've not come back to the thread for a couple of days - I've been travelling and missed the responses.

I did the Friday to Monday thing and after a lot of thought decided to simply be inside IR35. Some people told me I was mad, but I just felt to act as if outside and hope it didn't happen wasn't the responsible way to run a business.

Pay as much as possible of anything that goes into the upper rate into a pension instead and it's not so bad. If you have a Ltd. I think you'd be daft to sign up for an umbrella. As far as accounting you basically need to make sure that salary + employers NI + pension = 95% of the gross (including VAT FRS gain if appropriate). If an accountant can't handle that, fire them. In fact fire them anyway and learn to do stuff yourself.

[Lance]

Full explanation here:

That's a 2014 article. Shouldn't you be more interested in the current odds?

[groovybeetlecar]

Umbrella companies can do that due to needing to offer workplace pensions to their employees. See various threads in the Umbrella Companies sub section for more details. From my understanding it may be more beneficial via a brolly than contributing via Ltd (post PAYE if inside IR35 in public sector) due to how NI is handled.

My understanding was it couldn't be paid into my own pension that I pay into from my limited company and I didn't want a separate workplace pension just for three months.

TBH it's been a bit hard picking my way through this. There really must be very few people who voluntarily go IR35.

[Hobosapien]

...suggesting that I went umbrella, which I really don't want to do for three months particularly as I want to maximise my pension payments to offset things...

Umbrella companies can do that due to needing to offer workplace pensions to their employees. See various threads in the Umbrella Companies sub section for more details. From my understanding it may be more beneficial via a brolly than contributing via Ltd (post PAYE if inside IR35 in public sector) due to how NI is handled.

[groovybeetlecar]

Okay so...

I followed up with my questions and decided that due to the nature of the work, the contract is inside and decided to proceed on that basis.

The whole world seems to think I'm mad. But I couldn't with any integrity state I was outside when everything pointed to it being inside. My accountant agreed that the role was very likely to be inside but didn't seem particularly practiced at dealing with that for a start, suggesting that I went umbrella, which I really don't want to do for three months particularly as I want to maximise my pension payments to offset things.

Anyway, thanks for all your help, sorry I've not come back to the thread for a couple of days - I've been travelling and missed the responses.

[Hobosapien]

What would worry me is that some HR numptie would take a default position; probably one they perceive as less risky to their employer. What you really need is a manager who not only understands but is willing to fight your case. But as someone providing a service I'd find it very embarrassing if HMRC came along and wasted my ex-clients time investigating me.

I was looking at QDOS' offering and it doesn't appear that you even have to have a review to get them to cover any IR35 losses. Which surely can't be right.

It's HMRC that should be embarrassed for wasting the ex-clients time when the contractor has done due diligence and got a contract/working practice review signed off as being outside IR35. We can only do so much.

As regards insurance, I expect it's the same throughout the insurance industry, they'll take the premium even if they know they can't be in a position to pay out as worse case they refund the premium if forced to. For IR35 insurance I think there's a typical clause (that may only become apparent at the investigation stage) that they can refuse to defend the contractor if the case appears unwinnable (using their own biased criteria no doubt), which isn't the same as the initial outside IR35 determination being wrong. More likely the contractor has slipped up over the months/years so is no longer operating as outside, or the rules have changed during that time to make them now inside as perceived by HMRC and maybe the court.

[VectraMan]

How accurate is that information likely to be that HMRC obtain via an investigation, especially if from HR or from someone nowhere near the day to day activity of the contractor?

What would worry me is that some HR numptie would take a default position; probably one they perceive as less risky to their employer. What you really need is a manager who not only understands but is willing to fight your case. But as someone providing a service I'd find it very embarrassing if HMRC came along and wasted my ex-clients time investigating me.

I was looking at QDOS' offering and it doesn't appear that you even have to have a review to get them to cover any IR35 losses. Which surely can't be right.

[Hobosapien]

How accurate is that information likely to be that HMRC obtain via an investigation, especially if from HR or from someone nowhere near the day to day activity of the contractor?

If covered by one of the IR35 investigation insurances and it goes to court then depending on how thorough HMRC are in their investigations means how defendable the contractor's position is if the contract and working practices review was accurate and placed them outside IR35.

[northernladuk]

In an IR35 investigation, exactly what information can HMRC gather from the client company? Do they just speak to HR, or interview hiring managers, etc?
Can they go through emails? Calendar entries?
Just curious.

They are looking at working practices and how the contractor is treated by the client. They don't really need emails for that.

[yMyjgT]

In an IR35 investigation, exactly what information can HMRC gather from the client company? Do they just speak to HR, or interview hiring managers, etc?
Can they go through emails? Calendar entries?
Just curious.

[radish2008]

I don't believe those numbers and it would be a be daft to use them to base any kind of decision IMO but you've got to remember it's at the level it's at because people (well some) make the effort to stay outside. It's a bit like security. We have no thefts so why employ security staff? If people start thinking oh it's a low chance I'll not bother putting any effort in then there could be an increase in cases because people are soft targets.

I don't believe the low chance of getting caught should be any reason to take it just as seriously. Take 60000 people that don't bother with IR35 and what are the chances then etc...

I'm not inside and even if investigated I think I would win. I don't worry about it at all. As I've said in other threads it's been about since I started 10 years ago. It won't matter anywhere as they will just claw back the tax via the back door as they are doing now.

[northernladuk]

Also, if HMRC decide to have a crackdown on this particular area, then past numbers of investigations are totally irrelevant.

Indeed. Although it came to naught (for now), look at everyone who'd ignored IR35 sweating over the PS changes. It doesn't take a lot of effort so not worth ignoring IMO.

[FrontEnder]

I don't believe those numbers and it would be a be daft to use them to base any kind of decision IMO but you've got to remember it's at the level it's at because people (well some) make the effort to stay outside. It's a bit like security. We have no thefts so why employ security staff? If people start thinking oh it's a low chance I'll not bother putting any effort in then there could be an increase in cases because people are soft targets.

I don't believe the low chance of getting caught should be any reason to take it just as seriously. Take 60000 people that don't bother with IR35 and what are the chances then etc...

Also, if HMRC decide to have a crackdown on this particular area, then past numbers of investigations are totally irrelevant.