Reply to: IR35 - Contractor for the same company for OOH

[northernladuk]

@northernladuk, @WiB: Thank you very much! Really appreciate it!

Also sleep safe knowing the fact you've raised this, are concerned enough to ask and have an answer puts you in the top few percent of contractors. You'd be surprised how many don't have clue so just applying this diligence has shored up your defense no end.

[MagicMovies]

@northernladuk, @WiB: Thank you very much! Really appreciate it!

[WordIsBond]

@WiB: One final question on this - and probably a silly question (as this is my first entry into the world of contracting). Just because, I am voluntarily classifying one of the contracts as inside IR35, am I attracting undue attention from HMRC to start investigations on the other contract (I am getting both contracts reviewed by QDos) which is, as far as I can tell, definitely outside IR35?

I think they would only know that you had done so if they investigate you for IR35 on another contract or investigate your VAT or something.

But I can't imagine they would look at PSCs and say, 'Which ones have declared themselves inside IR35 on one contract, let's target them!' They want to find the ones that are obviously cheating on IR35, not the ones who actually take it seriously.

[northernladuk]

@WiB: One final question on this - and probably a silly question (as this is my first entry into the world of contracting). Just because, I am voluntarily classifying one of the contracts as inside IR35, am I attracting undue attention from HMRC to start investigations on the other contract (I am getting both contracts reviewed by QDos) which is, as far as I can tell, definitely outside IR35?

A friend asked this question and now I cannot get it out of my head! (Insert Thinking / Wondering emoji)

Thanks again to you and to everyone!

No. You are following the rules of the legislation to the letter and are applying the correct status to the correct contract. That shouldn't raise any flags that you are doing anything wrong.

To be honest it's likely it will all just get lost in your tax calcs anyway. It's not like you send a letter to HMRC to say this one is inside, it's just how you handle your tax affairs. Bearing in mind this gig is less than a days billing it's going to be very difficult to spot just looking at a tax return. You'll only need all this evidence if they come after you, which is very unlikely.

If anything it's a good thing for you that you've two pieces of work on. It was great for the old Business Entity Tests but they are now defunct. It's only good when then come looking for you and £400 a month really isn't going to be a flag for them.

Get your contracts checked, get insurances, get your accountant to set your taxes up and get on with it. It's not something that you should be losing any sleep over.

[MagicMovies]

I would not treat it as outside. Admittedly it is such a small amount that HMRC are unlikely to challenge it but there's some evidence that they choose some cases to challenge by throwing darts at a board whilst blindfolded.

If it is challenged, because it is a Monday-Friday scenario, because what you are doing is part of what you were doing before, and because it is support, they aren't going to let it go easily. They'll say you've just become a part-time employee, and that because it is a support role you are under SDC. I know not every support role is SDC but HMRC won't care.

If you treat it as inside IR35, it costs you nothing. You are making £400 and your monthly salary will be more than that. So just allocate £400 of your monthly salary to this contract and have it done.

It also could provide a very marginal benefit if you are investigated for IR35 on another role in the future. You can point to this and say, 'Of course I obey the law, I treated that contract as inside IR35 because it was.' In an area that is so subjective, where so many cases are somewhat nebulous, I'd take every little thing I could, especially because in this case it costs you nothing.

@WiB: One final question on this - and probably a silly question (as this is my first entry into the world of contracting). Just because, I am voluntarily classifying one of the contracts as inside IR35, am I attracting undue attention from HMRC to start investigations on the other contract (I am getting both contracts reviewed by QDos) which is, as far as I can tell, definitely outside IR35?

A friend asked this question and now I cannot get it out of my head! (Insert Thinking / Wondering emoji)

Thanks again to you and to everyone!

[MagicMovies]

I would not treat it as outside. Admittedly it is such a small amount that HMRC are unlikely to challenge it but there's some evidence that they choose some cases to challenge by throwing darts at a board whilst blindfolded.

If it is challenged, because it is a Monday-Friday scenario, because what you are doing is part of what you were doing before, and because it is support, they aren't going to let it go easily. They'll say you've just become a part-time employee, and that because it is a support role you are under SDC. I know not every support role is SDC but HMRC won't care.

If you treat it as inside IR35, it costs you nothing. You are making £400 and your monthly salary will be more than that. So just allocate £400 of your monthly salary to this contract and have it done.

It also could provide a very marginal benefit if you are investigated for IR35 on another role in the future. You can point to this and say, 'Of course I obey the law, I treated that contract as inside IR35 because it was.' In an area that is so subjective, where so many cases are somewhat nebulous, I'd take every little thing I could, especially because in this case it costs you nothing.

Perfect! Thank you very much. This makes so much sense.

[northernladuk]

If you treat it as inside IR35, it costs you nothing. You are making £400 and your monthly salary will be more than that. So just allocate £400 of your monthly salary to this contract and have it done..

I guess this is the crux of it really. Could just stick it all in the pension as well. One for the accountant.

I do not have a TLC with QDos. As this is my first foray into the world of contracting, I was told that it can be added later on by them. Also, a lot of my friends who have been contracting have mentioned that for now, it is not needed.

It's never needed until it's needed. Not sure adding it later will help if you are investigated for a period you didn't have it. IPSE+ is a no brainer with the other benefits and you can make the money back smashing the perkbox rewards. TLC is what, £250 a year. It's peanuts so why take the risk? If you are so hung up on IR35 surely it's one to have and then relax?

[MagicMovies]

@northernladuk: Thanks once again! No, I do not have a TLC with QDos. As this is my first foray into the world of contracting, I was told that it can be added later on by them. Also, a lot of my friends who have been contracting have mentioned that for now, it is not needed.

I do have Tax/IR35 Enquiry Insurance. I do not have an IPSE+ tax insurance. I do plan to take one after the first month is invoiced as I do want to support their cause :-)

Regarding your questions - No, the contract is through my previous employer, i.e., A Data Ltd and not the client, C Client of A.

I did try doing a fixed payment type approach but that didn't work out unfortunately, primarily because in addition to the stand by, there may be some call outs for which there will be additional pay which cannot be calculated accurately in advance.

[WordIsBond]

I would not treat it as outside. Admittedly it is such a small amount that HMRC are unlikely to challenge it but there's some evidence that they choose some cases to challenge by throwing darts at a board whilst blindfolded.

If it is challenged, because it is a Monday-Friday scenario, because what you are doing is part of what you were doing before, and because it is support, they aren't going to let it go easily. They'll say you've just become a part-time employee, and that because it is a support role you are under SDC. I know not every support role is SDC but HMRC won't care.

If you treat it as inside IR35, it costs you nothing. You are making £400 and your monthly salary will be more than that. So just allocate £400 of your monthly salary to this contract and have it done.

It also could provide a very marginal benefit if you are investigated for IR35 on another role in the future. You can point to this and say, 'Of course I obey the law, I treated that contract as inside IR35 because it was.' In an area that is so subjective, where so many cases are somewhat nebulous, I'd take every little thing I could, especially because in this case it costs you nothing.

[northernladuk]

@northernladuk: Thanks! Sure, will get QDos to do the review. Can you please advice on whether the IR35 assessment is sufficient or should I go ahead with the Full IR35 Review? I am thinking that the IR35 assessment which is included (since I am taking Public Liability and Professional Indemnity with QDos) is sufficient. Is there any value add in doing the Full IR35 review?

Bearing in mind the amount of money you'd make out of this I'd just have the basic contract check done. Can't see it worth spending 100's on a £400 a month gig TBH.

Who's issued the contract? Is it the client? Best way may have been to create some kind of call off, service credit or even fixed payment type approach if they were open to the idea which would have made IR35 a non issue. They may not understand or be willing to go down this path though.

Do you have TLC35 or IPSE+ tax insurance as well for you main contract?

[MagicMovies]

@northernladuk: Thanks! Sure, will get QDos to do the review. Can you please advice on whether the IR35 assessment is sufficient or should I go ahead with the Full IR35 Review? I am thinking that the IR35 assessment which is included (since I am taking Public Liability and Professional Indemnity with QDos) is sufficient. Is there any value add in doing the Full IR35 review?

[northernladuk]

Must admit I'm not sure where WiB is coming from re it being inside. Permies don't do just on call support, it's only a fraction of his original role and lots of other things. Also for thst amount of money it's hardly worth it HMRC fighting for it.

I'd just get the contract checked, treat it as outside and get on with it personally.

BTW don't get your accountant to review your contract. They do accountancy stuff. Get a contract specialist like QDOS, Baur and Cottrell to do it.

[MagicMovies]

@northernladuk: Oh, I was just basing that on the statement by @WordIsBond (see above).

The net result should be that being inside IR35 will likely cost you very little.

Or have I mis-understood the question?

[northernladuk]

Lastly, the hours will actually be significantly higher but the pay is pretty low on a monthly basis - probably, just over £400 per month. So, in that event, being inside IR35 is beneficial isn't it?

What's your thinking around that?

[MagicMovies]

@WordIsBond: Thanks, much appreciated especially on the other advice regarding salary / pension contributions. I will speak to my accountant regarding the same.

Is there anything specific in what I have mentioned that brings about the conclusion that the OOH contract is definitely going to be inside IR35?

Lastly, the hours will actually be significantly higher but the pay is pretty low on a monthly basis - probably, just over £400 per month. So, in that event, being inside IR35 is beneficial isn't it?

Thanks once again!