Agency Contracts inside IR35

[SteelyDan]

£500/day contract? Want 2 weeks in the sun on holiday? That's £5000 you won't be billing plus the cost of the holiday.

This kills me every year...and don't talk to me about Bank Hols!

[DirtyDog]

I've got some reading to do!!!!!!!

Cheers guys. I imagine contract wannabes are a pain in the backs side! Apologies.

Wannabes that show no interest in finding out what it's really about are a pain the backside. If you have looked into it all, then welcome!

There a few things more frustrating than to read a series of posts in a few months about how it's nothing like you expected, because things have gone pear-shaped. There are lots of contractors who became contractors because they were made redundant, saw the pound signs, and thought that this was the easy way to make lots of money.

Best of luck with it all.

[jmo21]

The point you need to bear in mind is that the higher rate you'll get as a contractor compared to a permie needs to be considered in light of the fact that you'll most likely spend indeterminate chunks of time on the bench with zero income. Not to mention that there isn't an employer paying you when you're on holiday, paying your NI, contributing to your pension etc etc. You need to factor in these considerations too.

This.

£500/day contract? Want 2 weeks in the sun on holiday? That's £5000 you won't be billing plus the cost of the holiday. 2 days sick during the contract? That's another £1000 down the pan (the regulars will say of course real contractors don't take days off sick!)

Car in the garage 1 day and can't get to the office, kid sick and needs to be looked after another day? That's another £1000 down.

Extension falls through at last minute and you are out the door on Friday? Takes a week to even get an agent to respond to your CV? Another week while waiting for an interview to get sorted out, another few days and you've been offered and signed a contract, and another week til you start, before you know it, 4 weeks are gone and that's £10,000 not billed. And what if that falls through at last minute?

It all adds up, and of course, you might be lucky and finish one contract on a Friday and have another lined up for the Monday and this all sounds like a scare story, but these are some of things you need to think about rather than saying "£500/day is way more than I earn as a permie"

[Daveitcont]

I've got some reading to do!!!!!!!

Cheers guys. I imagine contract wannabes are a pain in the backs side! Apologies.

[aoxomoxoa]

I go to work for money. As far as I can see, the potential is there to earn more money contracting than permanent jobs so yes money is a major reason to go contracting. No way would I go contracting if I earnt less money than a permanent role just cos I had more freedom. My wife wouldn't be to happy with that either!

The point you need to bear in mind is that the higher rate you'll get as a contractor compared to a permie needs to be considered in light of the fact that you'll most likely spend indeterminate chunks of time on the bench with zero income. Not to mention that there isn't an employer paying you when you're on holiday, paying your NI, contributing to your pension etc etc. You need to factor in these considerations too.

[DirtyDog]

I go to work for money. As far as I can see, the potential is there to earn more money contracting than permanent jobs so yes money is a major reason to go contracting. No way would I go contracting if I earnt less money than a permanent role just cos I had more freedom. My wife wouldn't be to happy with that either!

There have been a number of threads on CUK (particularly recently) about people who have been benched without a role for a significant amount of time. They are worth reading, just to give you some idea of whether there is money to be had which over the longer-term would be in excess of what you could earn as a permanent employee in that time.

If you think that your wife wouldn't be happy with the prospect that you might earn less money than in a permanent role, then you really, really need to do some research. Look at recent trends within your industry, rather than people looking at how lucrative contracting was in previous years. Make sure you do some analysis before we get the new thread of "I misjudged how much I could earn and my wife has left me".

The job descriptions for jobs that I have the skills for (vmware, wintel etc) all seem to be support roles. Ie supporting MS exchange or vmware environment. This sounds like they want a temporary support worker rather than a contractor for a specific project. Doesn't this lie inside ir35? Forgive my ignorance if I am way off.

Read the first timers guides. Do some research about with IR35 means and what the criteria for judging IR35 status are. Then decide whether the role is going to be inside or outside - you don't have to always be in or out, IR35 is judges on each individual contract that you perform. For example, directors of the PCG have a contract for their PCG work which is inside IR35, and (probably) contracts outside IR35 for the bulk of their work.

[Daveitcont]

Obviously I am being presumptuous according to a few replies and for that I'm sorry.

Thank you Wanderer for your reply it was very helpful.

To answer a couple of questions:

I go to work for money. As far as I can see, the potential is there to earn more money contracting than permanent jobs so yes money is a major reason to go contracting. No way would I go contracting if I earnt less money than a permanent role just cos I had more freedom. My wife wouldn't be to happy with that either!

The job descriptions for jobs that I have the skills for (vmware, wintel etc) all seem to be support roles. Ie supporting MS exchange or vmware environment. This sounds like they want a temporary support worker rather than a contractor for a specific project. Doesn't this lie inside ir35? Forgive my ignorance if I am way off.

Thanks
Dave

[DirtyDog]

I am currently a permie but giving serious consideration to contracting. I suppose it boils down to the attractiveness of earning more money.

It shouldn't be about the money. How does the "attractiveness of earning more money" look when you are without a contract for six months and still have expenses? There is a reason that contractors earn a higher daily rate equivalent than permanent employment - read the first timers guides to find out about contracting, rather than thinking "I'll earn shed loads of cash".

[Wanderer]

Having read up on IR35 and understanding it as much as a layman can, I then get very confused when I search the job sites.

Yep, every one is confused about IR35. Even HMRC can't understand it that well. A whole industry has grown up around contract reviews and defending status inquiries.

So obviously you guys can get round this but how? Accountant? Agency? Or can you stipulate that your contract has this and that so it sounds like it isn't disguised employment?

It's a terrible grey area and a lot of effort and anguish is caused by IR35. Here's what people do, in a rough order of priority:

• Get your contract reviewed (see Zero Liability's suggestions for the usual suspects)
• Keep an eye on your working practices. This is more difficult because it's so difficult to quantify up front. Some clients are good and accept contractors as a hired gun who gets given a job and works autonomously to complete it how and when they choose whereas other clients will attempt to embrace the contractor as one of the permies and this can be problematic. Unfortunately this often leads to friction between contractors and clients over minor things like the colour of their ID card (to mark them out as a contractor rather than a permie) or the use of the car park/canteen.
• Get insurance to cover your costs in the event that you get investigated. Some policies will also cover tax owed.

If you act in good faith and take reasonable care then HMRC can only demand the tax owed (plus interest) and not penalise you. There is also an argument that it's the LTD company which owes the tax not you personally and if the company has ceased trading and you have a good legal team then they can't come after you personally.

In short, don't let IR35 put you off contracting but don't completely ignore it either. Get professional advice and get on with doing business.

[Zero Liability]

Unless you can see the contract and have it reviewed (along with any knowledge you have of the working practices), it's a premature judgement to make. There's lots of firms offering review services, like Accountax, Qdos, Bauer & Cottrell etc.

[malvolio]

And don't go contracting for the money. There are good reasons why we get more per day than permies.

[cojak]

Why do YOU think those contracts were inside IR35?

[Daveitcont]

Hi Everyone,

I am currently a permie but giving serious consideration to contracting. I suppose it boils down to the attractiveness of earning more money. However, all I see when I research contracting is 'watch out for IR35!' Having read up on IR35 and understanding it as much as a layman can, I then get very confused when I search the job sites. It seems to me that pretty much 99% of all job descriptions for IT contracts sound exactly like they would lie smack bang inside IR35.

So obviously you guys can get round this but how? Accountant? Agency? Or can you stipulate that your contract has this and that so it sounds like it isn't disguised employment?

Confused wannabe!

Thanks in advance for any advice.

Cheers
Dave