Reply to: £1,000 more take-home pay

[Mr Crosby]

How much corporation tax does he pay?.

[cojak]

Er.. I don't actually have holidays - I take 'holiday' here and there in order to run the odd 3 day ITIL course for various companies.

[Rebecca Loos]

time off

Maybe it's just me and the fact that my initial contract and any extensions are usually quite short, but I usually know my holiday requests well in advance so I am able to tell the PM, before contract or extension are signed, that I am having "4 weeks off here" and a "long weekend there" etc etc. It has never been a problem so far - well sometimes the exact timign is, but then I agree to move the holiday by X weeks, which means they implicitely agree to the holiday.

It is particularly you of extensions because then they know whether they really like you or not - and so less likely to be put off by a big holiday request

Oh and I am nowhere near the top of the fgood chain!

[cojak]

I do all the things you've just put down. I may not be as high as you but I'm getting there. Thanks for the reassurance.

It will be a pleasure working with you one day....

*tips hat*

[malvolio]

Current contract is through SQ and is actually the standard PCG-approved one rebadged for their use. The previous one with Alexander Mann had a few minor changes to bring it in line. I once tried to negotiate with Computer People and got nowhere so walked away (and severely pissed off Computacentre who needed me that week) - another reason I won't ever talk to CP again.

As regards time out, don't forget I sit towards the top of the food chain these days so have probably a lot more freedom of action anyway, but I can't remember the last time I asked for time off: usually it's an email saying I'm not in on (insert dates here), although I will defer, deputise or delegate anything that needs doing during that period so work doesn't stop (and obviously I don't take time off when I'm really needed).

It's all about attitude though - behave like an independent, make sure your client knows who is doing whom the favour, never ever let them down on a deliverable, out-perform not only their permies but also the big consultancy wuckfits whenever possible. That way, you control your destiny,which is what it's all about.

[cojak]

Malvolio, a quick q.

I've a good contract that makes me non-IR35. For future reference; have you experience of using your own or amending a 'boiler-plate' IR35 contract with a big agency? Or do they just say 'take it or leave it'?

Or do I just say "I'm taking 3 days off" and be a trainer irrespective of the contract?

[malvolio]

They are not rulings, they are the points that have demonstrated that a given contract was not one of employment hence IR35 cannot apply. The key ones are:

D&C - They can tell what needs doing but not how it is to be done. Does your manager write your code for you? Do you get penalised for being at your desk 5 minutes later than permanent staff? Do you have to get written permission to have a day off (and if you do, why are you a contractor anyway)?

MOO - if there is no work for you to do, do they have to pay you. Conversely, if you do no work, are they still obliged to pay you?

Substitution - can you sub part or all of your work to someone else? You don't have to do it, your contract merely has to allow for it. If the permission of the client is required, such permission should contracually be "not unreasonably withheld"

Now tell me you can't sort your working arrangements to get somewhere close to those criteria. As for the contract, Bauer and Cottrell, for instance, charge £150 to negotiate it outside IR35 and will save you roughly £5k on the average 3 monther.

As to why "most contractors" think they're caught - well (a) I don't think they do and (b) most of them that do have never bothered to find out how it is judged properly and take any old tulip contract rather than find out. It's the same logic that applies to using brollies - can't be arsed to do it properly so would rather give away an extra lump of money so they don't have to be bothered.

As for offshore tax arangements - it was reserved as an action in the 2004 PBR and will be addressed as time permits and when the potential tax revenue makes it worth while doing.

Clear enough? I repeat, IR35 is largely voluntary.

[absoft]

Inside/Outside

Malvolio,
You say 'The ways in which you can avoid a definite ruling that you are caught are so well documented that only people chained to their desks and with no discretion about how they perform their task should be inside it ' Where are these 'rulings' documented please?

But it seems to me that most traditional contractors ARE caught by IR35 which is why it was introduced. Why would ParasolIT have more than 50,000 contractors on PAYE if IR35 were that easy to avoid? Wouldn't they all be in low-salary, high-dividend schemes so long as they weren't chained to their desk? As for me I am clearly in IR35 as I fail every one of the conditions for being outside it !

When do you think the 'offshore get rich quick' schemes will be closed down?

[malvolio]

And so you see the whole problem. The ruling of IR35 is so arbitrary and so open to debate on a whole range of factors that you cannot have a Yes or No answer. Why do you think we keep complaining that it is an unfair tax, and that the more switched on amongst us can see that it is largely voluntary? The ways in which you can avoid a definite ruling that you are caught are so well documented that only people chained to their desks and with no discretion about how they perform their task should be inside it (Which may be your case, I have no idea of course).

However, what is clear is that you should either avoid offshore get richer quicker schemes or, if you do go into one, make sure your escape route is well planned. They will be closed down.

Actually what really creases me is that people look for complex deals to save 2% on retained income while happily paying 20% extra tax via IR35. Wrong priorities or what?

[absoft]

Out of my depth here

I was only looking for a straightforward Yes/No answer. I am working within IR35, can I use Hexagon Services; Yes/No?
and Does 'IR35 Friendly' mean the composite scheme is meant for contracts caught by IR35 or not; Yes?No?

I gather the answer to both must be No. Its a pity therefore that these composite companies don't make this clear !

[Scaroth of the Jagaroth]

Malvolio is correct. Although what is called an IR35 friendly contract (and by that, we mean that is contains clauses relating to substitution, no MOO, fixed deliverables, etc) is very useful and gets you off to a good start, if it comes to a showdown with HMCR it is only the real working arrangements that matter. If your boss says "he comes in every day, works 9 to 5, and does whatever I tell him to", you are sunk, no matter how whizzy your contract is.

If your contract is IR35 friendly and matches your working practices, a confirmation of arrangements letter from the client has been found to be useful by some. Some clients, of course, won't help you out with this anyway.

[malvolio]

They are emphasising Hector's view that it is the actual working arrangements that count, at the end of the day, and that the contract is merely there to cover the gaps. To take a simple (if extreme) example, if the contract says nothing about hours of work but the manager says you have to be there between 9 and 5 and you accept that condition in reality they you have estabished Direction by the client, are a disguised employee, and are liable for IR35.

British Law is intended to make the contract the ulitmate arbiter of reality. Sadly, agencies regularly issue contracts that are not aligned to the real world, and a few are honest enough (or naive enough) that they say so.

[absoft]

Strange DoubleTalk

I asked the following straightforward questions of Hexagon:
'Are your services appropriate for a UK contractor working inside IR35?. Please can you say what is meant by 'IR35 friendly' in the description of your Composite Service ? Does it mean the service is meant for contracts caught by IR35 or not?'

and got the following reply which in total was:

'We are IR35 friendly, however it is up to the individual Contractor ( you ) to
ensure you remain that way ( as we will not be with you at your place of
work )'

I am none the wiser !

[malvolio]

Where do you start...?

I can't even be bothered to write a Malvolio-style bad termpered reply to that!

[Ivor1]

The thing is I read in the Financial Times a week or to ago about the deal Hector had done with the banks over employee bonuses. When I was a permy when you got a £10k plus bonus they paid it in the same way alot of composites do, ie via dividends in a company you become an employee of and with one share.

The IR came after these setups, but in the end the IR agreed that the DIDNT have to pay the outstanding TAX or PENALTIES or INTEREST, but only the outstanding NI. I think the next person who gets stung for IR35 should use these cases, dont think the IR could talk there way out of that.