Reply to: Beyond 24 month and declaring inside IR35, will it be worth it??

[robin]

I'm in support an on around this figure, yes I could get more if I specialized but I don't want to I'm happy doing what I do and to a lot of people on these boards its not a lot but its still more for me compared to when I was permanent.

In the past people have said 'You should go perm at that rate' why? a big thing always said about contracting is the flexibility and more freedom of working can't that be enough regardless of the money.

To me the money is a bonus the main thing is I much prefer this way of working.

Sorry went a bit off topic but it annoys me a bit whe its get commented on how low the rate is and almost why bother! :-)

In this situation though unless I could get a rate rise I would go after 2 years, I would probably be climbing the walls by then anyhow!

[gingerjedi]

I negotiated a higher daily rate after 24 months to offset this impact.

That's what I'm planning to do, I'm the only one left from my agency as they have started using another so they risk having no foot in the door if they don't bow to my demands.

[MickeyP]

Agree they are unconnected. From a financial perspective though the inability to claim mileage etc might have an impact, especially when on a lower rate; this will have a bearing on how hard you push yourself to find something else.

I negotiated a higher daily rate after 24 months to offset this impact.

[doomage]

Being at the same client for over 24 months and IR35 status are unconnected in my opinion. If you were outside IR35 for the first two years then there's a fair chance you will be outside IR35 post two years, unless your working practices have completely changed (I also do support activities and consider myself outside). Get some insurance and carry on, no? As a company director you have a duty to do what's best for your company and walking away from work is not one of those things.

Agree they are unconnected. From a financial perspective though the inability to claim mileage etc might have an impact, especially when on a lower rate; this will have a bearing on how hard you push yourself to find something else.

[centurian]

Being at the same client for over 24 months and IR35 status are unconnected in my opinion. If you were outside IR35 for the first two years then there's a fair chance you will be outside IR35 post two years, unless your working practices have completely changed (I also do support activities and consider myself outside). Get some insurance and carry on, no? As a company director you have a duty to do what's best for your company and walking away from work is not one of those things.

I think you're partially right, but there was a recent court case where the conractor was deemed outside for the first few years, then inside thereafter.

There was a change in contractural terms which is what caused the court to reach this decision, but at the time, it probably didn't seem to be a big deal to him.

I think this becomes the problem with large engagements - complacency. A few little, small things which seem inconsequential at the time can come back to bite you.

[Jessica@WhiteFieldTax]

Is there any credence to the theory (which admittedly just popped into my head) that contracting on a lower rate is less likely to lead to an IR35 investigation? I mean, the taxman is hardly missing out on much is he?

Given the fairly low rate of HMRC IR35 compliance work over recent years, its hard to say, but rate isn't likely to come into it. They aren't that sophisticated in selection.

Arguably if they increase the volume of compliance work then lower rates are more at risk (a) easier to pick off (b) more likely to be quasi employment than high earning "genuine" consultants. But its a guess really.

[MickeyP]

Being at the same client for over 24 months and IR35 status are unconnected in my opinion. If you were outside IR35 for the first two years then there's a fair chance you will be outside IR35 post two years, unless your working practices have completely changed (I also do support activities and consider myself outside). Get some insurance and carry on, no? As a company director you have a duty to do what's best for your company and walking away from work is not one of those things.

[gingerjedi]

Is there any credence to the theory (which admittedly just popped into my head) that contracting on a lower rate is less likely to lead to an IR35 investigation? I mean, the taxman is hardly missing out on much is he?

Does anyone have any stats on the day rates of those investigated?

tbh I would hang in there contracting whilst declaring outside or look for something else. 24 month rule might be a kicker though. Good luck.

Wasn't >£220 a day bandied around when contractors at the BBC came into the spotlight?

I am of the opinion that it certainly wouldn't be good value for the taxpayer to pursue me, I could probably cover any costs with savings and a small loan anyway as contracting has at least allowed me to live debt free.

I'm most probably going to carry on with my head in the sand as the reward to risk ratio is stacked well in my favour though I'll still have to move on from my current role as I cant get around the 24 month rule anyway.

[doomage]

Is there any credence to the theory (which admittedly just popped into my head) that contracting on a lower rate is less likely to lead to an IR35 investigation? I mean, the taxman is hardly missing out on much is he?

Does anyone have any stats on the day rates of those investigated?

tbh I would hang in there contracting whilst declaring outside or look for something else. 24 month rule might be a kicker though. Good luck.

[FiveTimes]

Could it be time to switch to umbrella ? as the cost of running your ltd probably isnt worth it ?

[gingerjedi]

You need to start looking for more than £170 a day.

I'm in support, rates have gone backwards due to high number of former employees accepting crappy rates.

I know I need to specialise and move on like you said, just stuck in a rut with the lack of opportunity at the moment.

[captainham]

I have moved into a support team and I'm pretty much part of the furniture with the permies so I am most probably caught, reading the scenarios I wouldn't stand a chance though it certainly isn't fair considering my lack of any permy benefits whatsoever.

Oh well, thanks anyway.

This is why you invoice considerably more than the permies get paid though, that's (part of) the point of contracting.

[Sausage Surprise]

Because it's 112 mile round trip every day and the permies are on £24k whilst I invoice for £44k.

I am fed up with the travel and depressed rates and I would consider permy if it was on my doorstep, the added pressure is 2 young kids and wife only working 12 hours a week which would make a permy wage very tight indeed.

I've been contracting for 9 years BTW so I have moved around a fair bit.

You need to start looking for more than £170 a day.

[gingerjedi]

For people in your situation it makes me wonder whether you should be contracting at all (this isn't meant to be an insult though some on this board may see it that way).

If you're working in one place >2 years, presumably you're happy and settled there. Why not ask for a PAYE role? You'd be negligibly worse off than if inside IR35 (plus you'd have lost travel expenses anyway), but you'd get all the benefits, holiday pay, sick pay, probably company pension contributions etc.

Otherwise, if you do want to be a contractor then I'd suggest you should be getting out of there anyway, you'll likely gain more experience moving to somewhere new, plus from a geeky point of view it'll reset the 24 month clock (unless your new client is next door) and will enable you to reassess your IR35 position.

Because it's 112 mile round trip every day and the permies are on £24k whilst I invoice for £44k.

I am fed up with the travel and depressed rates and I would consider permy if it was on my doorstep, the added pressure is 2 young kids and wife only working 12 hours a week which would make a permy wage very tight indeed.

I've been contracting for 9 years BTW so I have moved around a fair bit.

[gingerjedi]

Around £2150 (4 weeks) with the VAT rate scheme, depending on your tax code.
Have you considered having a proper IR35 review?

I have moved into a support team and I'm pretty much part of the furniture with the permies so I am most probably caught, reading the scenarios I wouldn't stand a chance though it certainly isn't fair considering my lack of any permy benefits whatsoever.

Oh well, thanks anyway.