Reply to: How does a FTC affect my Limited Company Status ?

[malvolio]

A fixed term contract between businesses is a very different thing to a fixed term contract as an employee. Think of it more as a fixed price contract. Your Co. agrees to deliver X by date Y for cost Z with penalties for missed deadlines and bonuses for early completion. Proper business to business arrangements. As I said in my original post, it depends on how flexible the client is willing to be.

Don't confuse FTC with Fixed Price. An FTC is a perfectly standard contract of employment but with a known fixed duration and no right to redundancy or career progression. It has nothing to do with B2B arrangements, and is highly unlikely to be convertible into something that has.

[DaveB]

If you are using the Ltd instead of a FTC, I think you'd have a tough time arguing being outside IR35. In which case you are going to pay the NI anyway.

A fixed term contract between businesses is a very different thing to a fixed term contract as an employee. Think of it more as a fixed price contract. Your Co. agrees to deliver X by date Y for cost Z with penalties for missed deadlines and bonuses for early completion. Proper business to business arrangements. As I said in my original post, it depends on how flexible the client is willing to be.

[DirtyDog]

Unless you take the standard contractors route of minimal salary + divi's that means you pay little to no NI either as employer or employee. Certainly less than you;d pay as Employee NI under an FTC.

If you are using the Ltd instead of a FTC, I think you'd have a tough time arguing being outside IR35. In which case you are going to pay the NI anyway.

[Sausage Surprise]

Unless you take the standard contractors route of minimal salary + divi's that means you pay little to no NI either as employer or employee. Certainly less than you;d pay as Employee NI under an FTC.

Ah yes good point

[DaveB]

With Ltd you'd also pay Employer's NI.
FTC PAYE and it's just Employee's.

Unless you take the standard contractors route of minimal salary + divi's that means you pay little to no NI either as employer or employee. Certainly less than you;d pay as Employee NI under an FTC.

[Sausage Surprise]

What NLUK says. It sounds like what's on offer is a fixed term employment contract. Putting it through as a B2B contract wouldn't change the realities of the role and the underlying working practices, it would simply enable the OP to pay himself through his Ltd but it would almost certainly be IR35 caught.

It's not necessarily a given that it would be inside, but it sounds like changing the offer from a FTC to a proper IR35 friendly B2B contract AND ensuring the working practices reflect that of a genuine B2B relationship would be a bit if a stretch.

With Ltd you'd also pay Employer's NI.
FTC PAYE and it's just Employee's.

[TheCyclingProgrammer]

Why would you need to treat it as within IR35 if you are providing consultancy services?

What NLUK says. It sounds like what's on offer is a fixed term employment contract. Putting it through as a B2B contract wouldn't change the realities of the role and the underlying working practices, it would simply enable the OP to pay himself through his Ltd but it would almost certainly be IR35 caught.

It's not necessarily a given that it would be inside, but it sounds like changing the offer from a FTC to a proper IR35 friendly B2B contract AND ensuring the working practices reflect that of a genuine B2B relationship would be a bit if a stretch.

[northernladuk]

Why would you need to treat it as within IR35 if you are providing consultancy services?

Because the perception of the client is that he is getting a permie, hence the permie FTC. He wants to use the resource as permie, using D&C, not allowing subs and all the other pointers to being outside. Remember, it is working practices that are key. If they client wants a permie and is going to treat you like a permie it doesn't matter what your contract or business setup is, you are a permie.

[Barley]

Could negotiate a similar B2B contract instead, if the client are willing, do it through the company but treat it as inside IR35 and put it through the payroll accordingly? Not sure if there is any benefit to doing it that way mind you (plus you'd have to weigh up against the benefits you'd lose by not being an employee, if any).

Why would you need to treat it as within IR35 if you are providing consultancy services?

[malvolio]

Clients use FTCs because they are scared of being done for employment rights and tax liabilities by rogue contractors. Invariably this is down to Human Remains not having a scoobie about modern contracting nor how to use them as an effective temporary resource.

However, since they are born of fear not science, the chances of turning one into a classic B2B are vanishingly small.

[TheCyclingProgrammer]

FTC are generally (always?) contracts of employment = you could not perform this through YourCo

Could negotiate a similar B2B contract instead, if the client are willing, do it through the company but treat it as inside IR35 and put it through the payroll accordingly? Not sure if there is any benefit to doing it that way mind you (plus you'd have to weigh up against the benefits you'd lose by not being an employee, if any).

[Bellona]

Thanks Dave !No need to google, off to read this.
Worth mentioning the option of contracting with the LTD at the FTC rate if I go for it and get to interview stage. Will keep this in my pocket for future scenarios as well.

You will be an employee of the client but that doesn't mean you have to shut down your Ltd. You can keep it going, but it will be regarded as dormant and you should file accounts accordingly.

details here: Life of a Company - Part 1 Annual Requirements - GP2 includes information on Annual Returns, Accounting references dates, Accounts, and Auditors You want section 8.

Having said that, if you get the gig you could always pitch it to the client to run it as a fixed term contact with your ltd for the same money. You'd be slightly better off that way and it would work out cheaper for them. Depends how much the FTC is worth and how flexible the client is willing to be.

[Bellona]

The two aren't mutually exclusive.

Yes, you essentially become permie - you will be paid via PAYE.

No, you don't have to cease trading - keep it dormant if you want (nil PAYE and nil VAT return plus annual return), or shut it down if you aren't going to need it in the future.

Thanks for that, i'll google how to do it. Didn't think of that

[Bellona]

Wow, you didn't spot the other FTC discussion right below this thread then?

Yeah, I did, although when I started typing it wasn't at that position in the pecking order and I got to about the fourth one and got bored of trying to trawl through the insults/banter to get to the core ( which perhaps I should have been more specific about)

How will my limited company be affected in terms or trading and do people think it is worth doing to enhance my reputation when I come back to contracting.

When I did my initial searches the threads I got were more about the income comparisons.

Sorry if you feel I am wasting your time

[DirtyDog]

Even I checked down the thread list before I posted it *polishes halo*


Aside from the relative reduction in pay, personally I couldnt accept a FTC for the reason on Limited Co impact. Im looking to buy a new house in the next year or two and dont fancy risking the potential negative impact a change in employment status would entail. Dont want to be in the position of less than 3 years solid accounts.

Have a read through some of the mortgage threads - some brokers don't require three years of accounts, as long as you are in contract.