Reply to: 1 year rule for contractors. Fact or opinion?

[Project Monkey]

I think HMRC would come sniffing if you kept wrapping up your Ltd every 12 months.

I know some clientco's get hung up on the 2 year thing if they have fixed term contractors (i.e. permies with an end date), but can't see how this would affect IR35 outsiders.

[Fred Bloggs]

One of the issues is actually getting through to the client people that you actually do not want to be an employee of their company even if you do actually like working there. They usually fail to understand why that would be the case. It was a problem for me at GSK. I lost count of the number of times I told them I didn't want a staff job there.

[ASB]

The fact is it's a risk. The lawyers are very risk averse as are clients and will tend to offer advise on this basis. I don't think the advice is particularly helpful though.

The reality also is that somebody providing their services through a ltd company could potentially be found to be an actual employee of the end client. Indeed this happened in 2006, although the facts of the case were pretty unusual.

emplaw.co.uk - Latest British Employment Law News

[TykeMerc]

Big 'NO', it’s like the 2 year rule that everyone confuses as well.

Which refers to expenses and temporary workplaces and again has nothing to do with supposed employment rights (unless you're a temp not a contractor and then I don't know the rules).

There are an awful lot of urban myths around this stuff.

[Fred Bloggs]

I was at GSK on an 18 month job when they brought in the 11 months and 2 weeks rule (I'd been there about 4 months). You had to leave and be away for a year before they'd take you back. Naturally enough as soon as the rule came in, stacks of contractors had to leave. Lots of jobs got into a mess and the rule was quietly forgotten about.

[BoredBloke]

What he said ^^^

I've had my Ltd for 17 years.

Some clients do have odball internal rules. In recent years I've come across Barclays and the 52 week rule, HBoS had a 'two year' rule for contractors because a 'lawyer' told them that it 'stopped them becoming employees' and I worked at two smaller companies whos legal depts told them that contractors had to leave for two weeks every twelve !! none of this has anything to do with your Ltd though.

It's amazing that these big companies fall for this line. Years ago when I was leaving GSK I was told that the one day a week work I'd agreed with my boss could not be done because I'd breached their 18 month rule. I'd been there 3.5 years! They told me it was all down to IR35 and contractors trying to obtain employment rights. I offered to sign these away as I didn't wnat to be their employee. In the end they decided to let me go direct and gave me a very IR35 friendly contract! Why the hell can't they be that helpful with all their contract staff?

[Danielsjdaccountancy]

This made I laugh!!

Big 'NO', it’s like the 2 year rule that everyone confuses as well.

[northernladuk]

I think we can file that in the 'NO SH1T, SHERLOCK' drawer.............

This made I laugh!!

[TestMangler]

some companies may not understand the real meaning of IR35 to set this kind of rule

I think we can file that in the 'NO SH1T, SHERLOCK' drawer.............

some companies may not understand the real meaning of IR35 to set this kind of rule

What he said ^^^

I've had my Ltd for 17 years.

Some clients do have odball internal rules. In recent years I've come across Barclays and the 52 week rule, HBoS had a 'two year' rule for contractors because a 'lawyer' told them that it 'stopped them becoming employees' and I worked at two smaller companies whos legal depts told them that contractors had to leave for two weeks every twelve !! none of this has anything to do with your Ltd though.

[TestMangler]

Absolutely.

If nothing else I'd be willing to bet that at least 75% of the Ltd Co contractors on here have companies exceeding 12 months old, me included.
Apart from some clients having oddball internal rules there's no truth or sense to it.

What he said ^^^

I've had my Ltd for 17 years.

Some clients do have odball internal rules. In recent years I've come across Barclays and the 52 week rule, HBoS had a 'two year' rule for contractors because a 'lawyer' told them that it 'stopped them becoming employees' and I worked at two smaller companies whos legal depts told them that contractors had to leave for two weeks every twelve !! none of this has anything to do with your Ltd though.

We have customers working for a London council for more than 4 years.

Absolutely.

If nothing else I'd be willing to bet that at least 75% of the Ltd Co contractors on here have companies exceeding 12 months old, me included.
Apart from some clients having oddball internal rules there's no truth or sense to it.

[TykeMerc]

He has no idea what he's talking about.

Sounds like it could be some kind of mix up with a companies rules over retaining contractors like NLUK says

Absolutely.

If nothing else I'd be willing to bet that at least 75% of the Ltd Co contractors on here have companies exceeding 12 months old, me included.
Apart from some clients having oddball internal rules there's no truth or sense to it.

[ahalgryn]

Thanks!

Thank you guys for your comments. Glad to see I'm not the only one that thought this was a bit obscure.

[jmo21]

He has no idea what he's talking about.

Sounds like it could be some kind of mix up with a companies rules over retaining contractors like NLUK says