Reply to: Permanent today contractor tomorrow

[Chris]

Thanks everyone,

Sorry if I rehashed the same question; I just wanted to make sure I have all the info. I've read the first timer guides and there is some useful info there too.

Regards

Chris

[Old Greg]

You could see this as an opportunity to move into contracting without the risk of giving up your job and having to look for a contract. Day 1 you're a permie - day 2 you're a contractor. OK, so you're in IR35, but it's then a springboard to move onto a new contract, hopefully with a couple of renewals under your belt.

Good luck.

[Chugnut]

Hi Again,

Thanks for the comments.

I was wondering if taking a break of one or two weeks before starting back as a contractor would make the divide clearer and therefore have less chance of falling under IR35.

Essentially resign, be out of work for a *short* period of time, and then start as a contractor.

I know the terms of my contract will be the same as any other contractor here and therefore shouldn't fall under IR35, so if investigated I'm sure I can prove otherwise, however I have no idea how much of a disruption (and cost) such an investigation would be and don't really want to automatically set myself up for one.

Regards

Chris

Chris, I can't see how any IR35 inquiry could overlook the fact that you used to work there as a permie. The 2 weeks break would just be viewed as a holiday by an inspector.

Remember that a well worded contract is only part of the picture, your actual working practices will be scrutinised by Hector, and they have previously done this via some HR gibbon who doesn't know the contractor or their working practices.

No-one here can give you the absolutes you seek. For goodness sake, don't fight an investigation on your own! Join the PCG is you haven't already. If you want the IR35 compliance of your contract verified, float it over to Bauer & Cotterell or QDOS. If you take out QDOS insurance for instance, they ask you to fill out a confirmation of working arrangements questionnaire. Since they will have to pay any penalties or back dated tax for the contract in question, this further illustrates the fact that they do not rely on the wording of a contract alone. Nor will Hector, and nor should you.

Are the other contractors there also previous employees though? Don't fall into the trap of thinking there's safety in numbers because it's quite possible everyone else is in the wrong. Try not to get swept up with the majority for the comfort of conformity. Easy to do though, I know.

Best of luck.

[malvolio]

ERrmm.... No. Sorry.

You would lose any investigation. On average they take about 2 years and cost around £10k in fees, plus the back tax and interest, plus a significant amount of frustration, stress and worry. You want to go contracting and be outside IR35, you are looking to go about it in about the only way left to get caught inside IR35. So perhaps really not a good idea.

If you want to go contracting, find a contract, not a re-interpretation of your own job that will save your employer lots of money and lose you what protection you currently have. IT also looks like you need to go read the First timer guides before you do something really stupid.

Understand?

[Chris]

Hi Again,

Thanks for the comments.

I was wondering if taking a break of one or two weeks before starting back as a contractor would make the divide clearer and therefore have less chance of falling under IR35.

Essentially resign, be out of work for a *short* period of time, and then start as a contractor.

I know the terms of my contract will be the same as any other contractor here and therefore shouldn't fall under IR35, so if investigated I'm sure I can prove otherwise, however I have no idea how much of a disruption (and cost) such an investigation would be and don't really want to automatically set myself up for one.

Regards

Chris

[malvolio]

Like what I said.

Yes, but two hours late!

[max]

Wrong, wrong wrong... Nobody got away with anything, the taxman was prevented from taking tax that was not due. Let's get the focus straight, please!

"I do know of somebody who got away with this. He was investigated, but HMRC gave up in the end"

Where was that posted? Edited? Or you make it up?

[VectraMan]

Like what I said.

[malvolio]

I do know of somebody who got away with this. He was investigated, but HMRC gave up in the end.

Wrong, wrong wrong... Nobody got away with anything, the taxman was prevented from taking tax that was not due. Let's get the focus straight, please!

[VectraMan]

I do know of somebody who managed to pay no more than his rightful amount of tax in this situation. He was investigated, but HMRC gave up in the end.

[max]

Yes, you can do it but you'll be fully within IR35, bang to rights. The next contract might not though.

That is not necessarily true...certainly not a sure thing.

I reakon go for it...get your hand in contracting to help you get the next contract, in 6/12 months.

It used to be pretty rare to get investigated....and with all the new contractors joining the gold rush this year, the changes are even less.

Won't last forever...and you'll kick yourself if you miss out!

[Chris]

Thanks for all of that.

It's not just the money that is the motivator (although it helps).

Thanks again

Chris

[malvolio]

You'd be taxed like an employee, so the money would have to be good enough to make up for your lack of benefits and security. And don't forget the 13% employers NI when you work that out.

Agree with all the above. Money shouldn't be the motivator (actually it never is, it's a comfort factor, but lets not get technical...).

Nevertheless, take your current total gross renumeration, divide by 1000 and that is your minimum hourly rate to break even. And for that you're giving up paid holidays, paid sick leave, pensions (OK, perhaps not so much pensions these days), career progression, paid notice periods, free training and the possibility of only working 9 months a year. Does it still look like a good idea?

You contract for the lifestyle; the rewards, while very welcome, are actually incidental.

[DaveB]

Not to mention HMRC would start taking a closer interest in the client as well since they would be seen as dodging Employers NI as well.

[VectraMan]

You'd be taxed like an employee, so the money would have to be good enough to make up for your lack of benefits and security. And don't forget the 13% employers NI when you work that out.