Reply to: IR35 risk of going permie in current contract?

[cosmic]

Place I'm working for is reducing contractors by 90%. Spoke to finance director and it's looking like most private orgs are going same route to be risk adverse. It's going to be tough times ahead for a lot but the silver lining is he said we have to look at our working practices to make sure the contract and business at treated like any other business and not some bum on seat.

That's good if you are out so companies can finally treat us contractors as official businesses and not an employee but on the other hand a lot of contracts will be reduced from now till 2020/21 as they don't want to take on that much risk.

[northernladuk]

And depends on clients appetite's to take on those outside and bore the risk themselves. A lot of FTC and inside roles and showing up more and more.

Will be interesting how BREXIT also impacts the UK flexible market

Could be but I'm optimistic on this one. Many clients are taking the right steps and getting proper advice so I think many highly skilled IT gigs will stay outside. Remember this affects anyone with a PSC. I don't know the number exactly but my client as drivers, depot staff, service desk and customer desk and a host of random business people with PSC's which will outnumber IT guys 3 or 4 to 1. There will be a good percentage going inside, they said 70-80% early on. That could quite easily be all of them and not one IT bod.

But yes, there will be some change and yes there will be those as you say. Just look at jobserve nowadays and there are plenty of inside PS gigs. The good news is they are up to £100 a day higher than private ones so still viable.

Maybe I'm wrong in doing so but I care not about how Brexit will affect it. It's being affected by much more at the moment so think it's going to be hard to say if it has and I really don't think it will.

[northernladuk]

So are you saying it would just be better to sit on the bench and draw the money out whilst finding a new outside role, as opposed to closing (taking all funds out) and accepting an inside / perm role? The longer the PSC's are open the more chance they are of being picked off. It feels as though we're effectively all sitting ducks. Slightly anxious times regardless of whether you are truly outside or not.

My comment about being crap was a bit brief. What I mean is, if you are a decent contractor with good skills and some flexibility to travel then I really don't see why you should resign yourself to a situation where you are 4 years in facing an inside determination and then plodding on. Drop it like a hot brick and go back to being a proper contractor. Or at the very least consider it. Bill's post is very brief, with no detail but it just reads to me his a bum on a seat at a gig he likes and wants to stay forever. Do so, but don't expect to be anything but an inside bod with a massive risk on your shoulders.

Plenty of people, including myself, left Public Sector gigs when the changes happened and I'll bet every single one of them doesn't regret it and hasn't suffered for it. Those that couldn't/wouldn't or didn't want to stayed which is fair dincum. Those people weren't facing the problems the private sector are with the GSK carry on. Retrospective taxation was just a rumour back then and, to date, has not happened, although compliance lady indicated it might to a few. I've seen nothing else from anyone else so I'm filing that under rumour for now.

[BillHicksRIP]

I appreciate the responses but I'm struggling a bit with them. The gig has run for 4 years because that's how long it's taken to do the work. The contract has been deemed outside by QDOS and my working practices would suggest I'd have a good case if ever investigated. The client has had a headcount freeze in place for a while as they're offshoring all the IT they can, which is what most big companies appear to be doing (they're a global giant with £40bn turnover last year). The bit I'm struggling with is, aren't most of us here who are in IT, in similar situations? Hired to provide specialised knowledge? I like the client and they know I can deliver things they have planned in 2020 so trying to figure out how best to continue doing that as a contractor. I'm puzzled by the get out comments, really.

[CompoundOverload]

Depends how crap you are.

And depends on clients appetite's to take on those outside and bore the risk themselves. A lot of FTC and inside roles and showing up more and more.

Will be interesting how BREXIT also impacts the UK flexible market

[northernladuk]

So are you saying it would just be better to sit on the bench and draw the money out whilst finding a new outside role, as opposed to closing (taking all funds out) and accepting an inside / perm role? The longer the PSC's are open the more chance they are of being picked off. It feels as though we're effectively all sitting ducks. Slightly anxious times regardless of whether you are truly outside or not.

Depends how crap you are.

[CompoundOverload]

Implications are exactly the same. He's old LTD has incorrectly paid tax. Nothing changes the situation. All that changes is the entity they'll investigate has disappeared.

HMRC could, if they spot it stop it closing. They could also re-open it to investigate it. He, as the sole person connected the company will still get clobbered.

Two things to consider here though. Firstly is he can't open another company for 2 years if he gets any tax benefits from the close down so could cost him a hell of a lot more if he does get a gig that is outside and can't use a LTD.

Second is yes, it's so obvious I can't believe HMRC won't see this coming. They've a list of PSC's that are outside and they all start closing down? Won't be hard to spot and enough people are doing it then it won't take much to start re-opening comanies to investigate. I think someone said it's never happened yet but then HMRC never went after 2k contractors in one fell swoop either.

Even closing a company to avoid IR35 obligations is going to come with considerable risk in these times.

So are you saying it would just be better to sit on the bench and draw the money out whilst finding a new outside role, as opposed to closing (taking all funds out) and accepting an inside / perm role? The longer the PSC's are open the more chance they are of being picked off. It feels as though we're effectively all sitting ducks. Slightly anxious times regardless of whether you are truly outside or not.

[northernladuk]

Let's play devils advocate and assume he stays till the end of this year as an LTD. Could the OP see out the contract then upon completion take a sizeable chunk out of the company (assuming a war chest has been saved) and start proceedings to close down the company?

Then go back to the same client under an umbrella ?

What would be the implications of this? can they go after you for previous years once the company has been shut down?

I suspect alot of people might be looking into this option.

Implications are exactly the same. He's old LTD has incorrectly paid tax. Nothing changes the situation. All that changes is the entity they'll investigate has disappeared.

HMRC could, if they spot it stop it closing. They could also re-open it to investigate it. He, as the sole person connected the company will still get clobbered.

Two things to consider here though. Firstly is he can't open another company for 2 years if he gets any tax benefits from the close down so could cost him a hell of a lot more if he does get a gig that is outside and can't use a LTD.

Second is yes, it's so obvious I can't believe HMRC won't see this coming. They've a list of PSC's that are outside and they all start closing down? Won't be hard to spot and enough people are doing it then it won't take much to start re-opening comanies to investigate. I think someone said it's never happened yet but then HMRC never went after 2k contractors in one fell swoop either.

Even closing a company to avoid IR35 obligations is going to come with considerable risk in these times.

[northernladuk]

Doesn't really change anything IMO. In fact it's worse. They don't take permies on? So they use contractors instead. Not much else to discuss really.

[BillHicksRIP]

What I meant about not having the people is they've been off-shoring for years and cut permies to the bone, so that practically all of their IT function is run by one of the Indian bodyshops. I work in quite a niche area which the off-shores keep the lights on for but the client has other big projects on the cards that I've an idea they'll ask me back to do. I want to hopefully continue to deliver as a contractor on future long-term contracts for the client. That's all there is to it. -edit - Going permie is not an option as they don't recruit permies any more..

[CompoundOverload]

Firstly you don't go back. 4 years when you've said the client doesn't have the people and done nothing about it in that time period is a poor position to be in. If you are so desperate to take it then you're already acting like a disguised permie.

Mitigating a gig like that? Insurances and a lot of praying is all I can think of.

I know the devil in the details but on the face of that post you've potentially got a problem. If you are still there after April you've got a nightmare.

Let's play devils advocate and assume he stays till the end of this year as an LTD. Could the OP see out the contract then upon completion take a sizeable chunk out of the company (assuming a war chest has been saved) and start proceedings to close down the company?

Then go back to the same client under an umbrella ?

What would be the implications of this? can they go after you for previous years once the company has been shut down?

I suspect alot of people might be looking into this option.

[PCTNN]

On a similar vein, I'm 4 years into an outside IR35 which will run to the end of this year, probably. The client doesn't have the people to run what they need done so can see them asking me back in 2020. On the basis that a new contract will likely be inside-IR35, I'm wondering what I can do here to mitigate HMRC trying to prove the current contract was inside all along (it's not, to the best of my knowledge). Taking a long break between contracts is all I can come up with.

4 years and your client still don't have the necessary permie resources? Simply unacceptable.
This type of organisations are a cancer and the main reason hmrc is doing what they're doing. They're ruining it for everyone and I'd be happy if they all went bust.

If I was you, I'd move on asap. Either take a contract or a permie role, but in another company.

[northernladuk]

On a similar vein, I'm 4 years into an outside IR35 which will run to the end of this year, probably. The client doesn't have the people to run what they need done so can see them asking me back in 2020. On the basis that a new contract will likely be inside-IR35, I'm wondering what I can do here to mitigate HMRC trying to prove the current contract was inside all along (it's not, to the best of my knowledge). Taking a long break between contracts is all I can come up with.

Firstly you don't go back. 4 years when you've said the client doesn't have the people and done nothing about it in that time period is a poor position to be in. If you are so desperate to take it then you're already acting like a disguised permie.

Mitigating a gig like that? Insurances and a lot of praying is all I can think of.

I know the devil in the details but on the face of that post you've potentially got a problem. If you are still there after April you've got a nightmare.

[Paralytic]

On a similar vein, I'm 4 years into an outside IR35 which will run to the end of this year, probably. The client doesn't have the people to run what they need done so can see them asking me back in 2020. On the basis that a new contract will likely be inside-IR35, I'm wondering what I can do here to mitigate HMRC trying to prove the current contract was inside all along (it's not, to the best of my knowledge). Taking a long break between contracts is all I can come up with.

If you can articulate what will be different about your working practices when the new contract starts, then people here might be able to give their thoughts.

If you can't, then, er, well, reassess the bit I've emboldened above...

[BillHicksRIP]

On a similar vein, I'm 4 years into an outside IR35 which will run to the end of this year, probably. The client doesn't have the people to run what they need done so can see them asking me back in 2020. On the basis that a new contract will likely be inside-IR35, I'm wondering what I can do here to mitigate HMRC trying to prove the current contract was inside all along (it's not, to the best of my knowledge). Taking a long break between contracts is all I can come up with.