Moving from contracting to perm and closing company question

[hairymouse]

Take the permie job if it makes sense moving forward. ie. can you find work elsewhere ? If it was me I wouldn't let the IR35 issues cloud your judgement. It sounds like your chances of getting investigated and ultimately having to cough up are slim, and even if you did the money you have earned via the permie job would mitigate that. The 25K bit is to do with how you close your Ltd Co. The less than £25K route is easier and cheaper, talk to your accountant.

There's a good chance you could be on the bench for 6 months or more if you don't take the permie job. That will eat about 40 k of warchest. That's why I agree with the above, comparing the risk of HMRC doing their worst (slim possibility) with sitting on the bench and losing 40k (real possibility, happened to me).

[northernladuk]

Isn't that only if you're using Entrepreneur's Relief?
Pretty sure it won't apply if the remaining funds are paid as dividends.

Yep.

[Peoplesoft bloke]

If you close it immediately and go perm you can't go contracting via a LTD for 2 years again.

Isn't that only if you're using Entrepreneur's Relief?
Pretty sure it won't apply if the remaining funds are paid as dividends.

[BlueThunder]

Out of interest, if I took a permanent job at a completely unrelated company for say 6 months, and then went to the company I was going to join, would that make a difference? I'm just wondering what would break the "disguised employee" argument. (Other than doing a completely different role in the same company)

[rootsnall]

Thanks. Ive been trying to talk to my accountant, but getting zero replies recently (It is a large faceless accountancy firm, not a small, local one). I want to find out exactly how much I'd be liable for, should the worst happen.

One other thing: Any suggestions regarding making the company dormant or closing it entirely?

Work out how much NI you have avoided due to using a Ltd, ( so approx 25% of the dividends you have paid ), it's that plus possible penalties. I would close the Ltd if it was me. If you go via the < £25K route it's quick and pretty easy, your accountant will probably charge you a few hundred to prepare final accounts and produce a few letters to shut down PAYE, VAT etc. The big plus for that route is that it is your Ltd that owes the money, not you, if you lost an IR35 case. But it would be no more. They can chase you personally if you have been 'negligent' but as far as I am aware this has not happened. If you have had contract reviews etc then I guess that would help. I just closed a Ltd. Disclaimer - I have learnt most of this on here

[BlueThunder]

Take the permie job if it makes sense moving forward. ie. can you find work elsewhere ? If it was me I wouldn't let the IR35 issues cloud your judgement. It sounds like your chances of getting investigated and ultimately having to cough up are slim, and even if you did the money you have earned via the permie job would mitigate that. The 25K bit is to do with how you close your Ltd Co. The less than £25K route is easier and cheaper, talk to your accountant.

Thanks. Ive been trying to talk to my accountant, but getting zero replies recently (It is a large faceless accountancy firm, not a small, local one). I want to find out exactly how much I'd be liable for, should the worst happen.

One other thing: Any suggestions regarding making the company dormant or closing it entirely?

[northernladuk]

True.

Just a thought - I went through a third party recruitment company. They were the ones who paid my ltd, not the end client. Does this make a difference in any way? I send timesheets/invoices to them, not the end client.

No. It's about the work you do, not who pays you.

[rootsnall]

Take the permie job if it makes sense moving forward. ie. can you find work elsewhere ? If it was me I wouldn't let the IR35 issues cloud your judgement. It sounds like your chances of getting investigated and ultimately having to cough up are slim, and even if you did the money you have earned via the permie job would mitigate that. The 25K bit is to do with how you close your Ltd Co. The less than £25K route is easier and cheaper, talk to your accountant.

[BlueThunder]

Their asses wouldn't be on the line - if they felt that the working practices statement is unfair, they don't have to sign it.

True.

Just a thought - I went through a third party recruitment company. They were the ones who paid my ltd, not the end client. Does this make a difference in any way? I send timesheets/invoices to them, not the end client.

[LondonManc]

Thanks for the reply. I'm not bothered about not contracting again for 2 years, that is a side issue. There is more than 25k in the company. I only mentioned that figure as some of the posts seemed to suggest it would be easier to close the company if there was less than 25k in the accounts.

So, no amount of time away from the company would protect me then? What if I had another contract/perm job in between? My first client was 5 years ago, does that mean I couldn't join them perm either?


Cheers.I thought about that. Not sure if they would put their asses on the line that way. I'll certain look into what they'd be willing to say though.

I'm a bit paralysed at the moment. It is a nice company to work for, with good people in a convenient location. However, if I don't accept then who knows how long until I find another job in this climate, and I'll be using my companies money to live anyway. It seems I'm quite risk averse. I know a lot of people would take the job and pay the piper later on.

I'm led to believe if it was a different role then all would be fine, is that correct? I know someone who went perm, but in a different position.

There is the remote possibility I could see if they could offer a contract rather than perm, but that would leave me in the same position, no?

Their asses wouldn't be on the line - if they felt that the working practices statement is unfair, they don't have to sign it.

[BlueThunder]

Being taken on as perm doing the contract you did for 3 years is a pretty damn big flag for very obvious reasons. A gap of three months won't protect you one iota and the money you've got in the company has sweet FA to do with anything. If you close it immediately and go perm you can't go contracting via a LTD for 2 years again.

Why have you only got 25k in the bank after three years solid with a client? What were you going to do if they didn't offer you a perm role?

Thanks for the reply. I'm not bothered about not contracting again for 2 years, that is a side issue. There is more than 25k in the company. I only mentioned that figure as some of the posts seemed to suggest it would be easier to close the company if there was less than 25k in the accounts.

So, no amount of time away from the company would protect me then? What if I had another contract/perm job in between? My first client was 5 years ago, does that mean I couldn't join them perm either?

"I'll take the job if you'll just sign this working practices statement to cover my old contracts please."

You're welcome

Cheers.I thought about that. Not sure if they would put their asses on the line that way. I'll certain look into what they'd be willing to say though.

I'm a bit paralysed at the moment. It is a nice company to work for, with good people in a convenient location. However, if I don't accept then who knows how long until I find another job in this climate, and I'll be using my companies money to live anyway. It seems I'm quite risk averse. I know a lot of people would take the job and pay the piper later on.

I'm led to believe if it was a different role then all would be fine, is that correct? I know someone who went perm, but in a different position.

There is the remote possibility I could see if they could offer a contract rather than perm, but that would leave me in the same position, no?

[LondonManc]

"I'll take the job if you'll just sign this working practices statement to cover my old contracts please."

You're welcome

[northernladuk]

2 reviews said I was outside IR 35. I also took contractor insurance out for the last 2 years.

But did your working practices say you were outside. You should know enough about IR35 to know the difference between a contract worded outside and a gig who's working practices are clearly inside.

- I haven't found a new contract yet, but the end party contacted me to say they need perm staff, would I join? The start date is end of June, although I guess I could push it back later if needed.

Will the gap of 3 months protect me in any way, and will the fact I've got well over 25k in the company accounts cause a problem? I'm not sure if the best way out is to make the company dormant or start closing the company immediately. I have about 3 weeks until they want me to start.

Being taken on as perm doing the contract you did for 3 years is a pretty damn big flag for very obvious reasons. A gap of three months won't protect you one iota and the money you've got in the company has sweet FA to do with anything. If you close it immediately and go perm you can't go contracting via a LTD for 2 years again.

Why have you only got 25k in the bank after three years solid with a client? What were you going to do if they didn't offer you a perm role?

[GhostofTarbera]

Moving from contracting to perm and closing company question

You will be found inside IR35

Use the 25k (plus another large sum ) in your company to pay future tax bills


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[BlueThunder]

Hi guys.

I've just spent a few hours reading this forum as I'm looking for advice on moving from contracting to perm. My head is already spinning

Long story short;
- my software development contract (and those of other contractors) was cancelled mid-march because of the financial implications of you know what. I was working for this client for approx 3 years, and 2 reviews said I was outside IR 35. I also took contractor insurance out for the last 2 years.
- I haven't found a new contract yet, but the end party contacted me to say they need perm staff, would I join? The start date is end of June, although I guess I could push it back later if needed.

Will the gap of 3 months protect me in any way, and will the fact I've got well over 25k in the company accounts cause a problem? I'm not sure if the best way out is to make the company dormant or start closing the company immediately. I have about 3 weeks until they want me to start.

Any advice appreciated.
Cheers.