Is it possible to move from perm to contract at the same company and be outside IR35?

[Willapp]

My 2p worth would be that if you care about maintaining this relationship, then agree to postpone your perm leaving date by the 18 days without making a fuss about the salary. Be very clear that this will be the only such postponement! After all, ((contract rate - permie rate) x 18) probably isn't that much money, especially if there's a chance that the contract rate may be zero.

If you're not so worried about burning bridges, then decline and move on.

This happened to me, and I declined and moved on.

This seems the most sensible suggestion to me. If you care enough to want to do a handover, just delay your leaving date to cover it. Granted you won't earn as much as they might've offered, but for 18 days is it really worth even arranging a contract? If the money is that bad then maybe compromise and say you'll stay an extra 10 days as perm but that's it. Or as the other poster suggests, if you don't mind burning bridges then tell them to sod off - after all it's not your problem if you worked your contractual notice period and they didn't find a replacement soon enough.

[TheFaQQer]

That's not how it works. Its the tax and additional penalties that is the true cost. Admittedly this might not be high in the grand scheme of things but could still be quite punative in relation to the net 'pay' for the 18 days.

I'd also add on the cost of fighting the investigation (which would be pretty stupid) and the cost of fighting any other investigations into other contracts that gets triggered by this one.

[Ebenezer]

My 2p worth would be that if you care about maintaining this relationship, then agree to postpone your perm leaving date by the 18 days without making a fuss about the salary. Be very clear that this will be the only such postponement! After all, ((contract rate - permie rate) x 18) probably isn't that much money, especially if there's a chance that the contract rate may be zero.

If you're not so worried about burning bridges, then decline and move on.

This happened to me, and I declined and moved on.

[BolshieBastard]

Risk quite high but the impact is low. What is the additional tax to pay on 18 days if you get investigated?

That's not how it works. Its the tax and additional penalties that is the true cost. Admittedly this might not be high in the grand scheme of things but could still be quite punative in relation to the net 'pay' for the 18 days.

[northernladuk]

Short answer: yes, it is.

In general yes it is but for the purposes of this situation no it isn't. He's just doing a continuation of his perm role which would be expected of anyone leaving and not an unreasonable request by a manager to an exiting permie.

[OrangeSquash]

Since it's only 18 days work, get clientco to pay appropriate rate to compensate and declare yourself inside IR35 for this engagement.
Move on.

[NibblyPig]

Thanks guys, my job would be simply handover so not doing any development (probably just documenting processes and tutoring the new guy) but as you say it's far too fishy, so I'll either pay up or see if I can stay employed permanently but have my salary adjusted for that period to match the rate I specified. And if that's too much faff, go elsewhere

[TykeMerc]

All of which is wrong. The key test is "are you doing the same job?". If your new role is totally unrelated to the old one - for example your old role was bulk commercial programming and now you are to research and build a specific tool for a set objective - then you may well be fine. However the standard three tests have to be applied.

That said, meeting the requirement is quite hard to achieve and Hector, quite rightly, is not sympathetic to such cases. In your scenario, you don't get anywhere close. Use an umbrella and take the hit to be safe.

Since he's said the proposed 18 day contract is to ensure handover is completed then that scenario is totally out of the window, it's clearly a continuation of the permy role being left.
In the scenario you described in the first post I'd say no, sorry it looks to be IR35 caught.

[Antman]

Risk quite high but the impact is low. What is the additional tax to pay on 18 days if you get investigated?

[malvolio]

All of which is wrong. The key test is "are you doing the same job?". If your new role is totally unrelated to the old one - for example your old role was bulk commercial programming and now you are to research and build a specific tool for a set objective - then you may well be fine. However the standard three tests have to be applied.

That said, meeting the requirement is quite hard to achieve and Hector, quite rightly, is not sympathetic to such cases. In your scenario, you don't get anywhere close. Use an umbrella and take the hit to be safe.

[TheFaQQer]

Is it possible to move from perm to contract at the same company and be outside IR35?

Yes, it's possible.

But not in the scenario you describe. Either jack up the rate to cover the additional tax, or take the role and whack it all into your pension plan, or find something that isn't caught.

[BolshieBastard]

I took a permie job a while back when there weren't any contracts going around, and now things picked up I handed my notice in.

My boss wanted me to stay longer, but I declined as I was keen to get back to contracting.

He asked if I would contract for him to do some handover for a replacement that is joining just before I leave, as they couldn't get the replacement in any sooner. He wants me to do 18 days of handover as a contractor.

I understand contracting at the same job is a huge red flag for IR35. Is there anything I can realistically do? I'm pretty flexible in terms of how I deliver the work, but I guess with it being handover there's not much chance a substitution clause is going to hold up.

Better to pay up, risk it, or decline and apply elsewhere?

Any advice welcome. Thanks.

IR35 was brought in to catch this very situation. Go figure.

[TheCyclingProgrammer]

Short answer: yes, it is.

Longer answer: its the kind of thing IR35 was designed to prevent so you'd have to expect a somewhat higher chance of it being looked into, which means making your IR35 defence as solid as you can.

If a right of substitution isn't realistic, then you need to focus on the other two key factors of MOO and D&C. Your contract needs to make it clear that the client isn't obliged to offer you further work and you aren't obliged to accept it. You should ensure you are not under any significant direction and control beyond being given a list of deliverables/a brief. How you approach the work should be down to you - if you can have control over things like hours etc. this helps too.

If you haven't yet set up your Ltd co, the low risk approach would be to just use an umbrella for the one contract although bear in mind you won't be able to claim any travel/subsistence expenses for the contract.

[NibblyPig]

I took a permie job a while back when there weren't any contracts going around, and now things picked up I handed my notice in.

My boss wanted me to stay longer, but I declined as I was keen to get back to contracting.

He asked if I would contract for him to do some handover for a replacement that is joining just before I leave, as they couldn't get the replacement in any sooner. He wants me to do 18 days of handover as a contractor.

I understand contracting at the same job is a huge red flag for IR35. Is there anything I can realistically do? I'm pretty flexible in terms of how I deliver the work, but I guess with it being handover there's not much chance a substitution clause is going to hold up.

Better to pay up, risk it, or decline and apply elsewhere?

Any advice welcome. Thanks.