Reply to: A question of timing - short term contractor needs when / if to leave

[Dhrucku]

Also consider the fact that some (most?) clients pick the easy way out and simply won't engage with PSCs past April 2020, so it's not even about inside / outside, it's more of an "all contractors out" approach.

It does but the option of wanting flexible workforce will not go away.

It will take the market a bit of time to balance out but these roles (originally done by PSC contractors) will be available by another means (PAYE, Umbrella, FTC). I understand that these will not be so lucrative as operating via LTD company were but they'll eventually be there or thereabouts.

Chase the pay not the way of getting paid.

[dsc]

Also consider the fact that some (most?) clients pick the easy way out and simply won't engage with PSCs past April 2020, so it's not even about inside / outside, it's more of an "all contractors out" approach.

[cojak]

would this be more of an issue for OP as he is working for said 'pharma' company or does the above rules apply to every contractor?

Every contractor in that situation.

[redman123]

Testing

[boxingbantz]

You really have chosen the worst time to start contracting.

[GhostofTarbera]

any comments on the above whether this is wise / good approach?

IR35 is not new it’s been about since 1999 only change is client makes determination


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[hammertime1985]

any comments on the above whether this is wise / good approach?

[hammertime1985]

if I were the OP, I'd be calculating what the potential backdated PAYE would be if HMRC came calling for the first 5 months of the contract (1)

And then work out what the 6th month will bring in (assuming it is inside IR35). (2)

If (1) is greater than (2), hand in notice so as to stop working at the end of February, with the last invoice being settled at the end of March. This will reduce the risk of/if HMRC come calling.

But if (2) is greater than (1), and you can't find another contract, it might actually be worthwhile sticking around and setting some funds aside just in case HMRC do come calling. You'd need to keep it there for a number of years though.

I am in a similar conundrum whereby I started a new engagement for a new client for six months (Oct - Apr) with a view to extending further. Got the role via an agent and had the contract / deliverables etc reviewed by a 3rd part tax adviser, who agreed this is outside. Agent and I agreed I would proceed as if the engagement was outside until we know what the client wants to do re the determination post April- still up in the air with regards to this.

I am still unawares and I'm getting nervous. I'll follow up with the agent in the new year. However I have a contingency plan where I will hand notice in (two weeks) on the 19th February so last day is 4th March and final payment (30 days after invoice raised) is paid on the 3rd April, thus paid before 5th April and not caught by the new rules.

Then re-assess the market again post April. Ball ache I know but I'd rather err on the side of caution than take a major risk.

[Paralytic]

if I were the OP, I'd be calculating what the potential backdated PAYE would be if HMRC came calling for the first 5 months of the contract (1)

And then work out what the 6th month will bring in (assuming it is inside IR35). (2)

If (1) is greater than (2), hand in notice so as to stop working at the end of February, with the last invoice being settled at the end of March. This will reduce the risk of/if HMRC come calling.

But if (2) is greater than (1), and you can't find another contract, it might actually be worthwhile sticking around and setting some funds aside just in case HMRC do come calling. You'd need to keep it there for a number of years though.

[GhostofTarbera]

My contract started 1st October (sorry) so is for 6 months - ends 31st March 2020

My current payment terms are 4 weeks

So based on the advise, this would mean leaving first week of March?

If my contract was extended and I accept it, my previous employment could be liable as being deemed inside IR35?

What a complete and utter sh*t!

Thanks for all the advice!

Are you mad?

Has client said after that it’s within IR35 or not?




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[Snooky]

If my contract was extended and I accept it, my previous employment could be liable as being deemed inside IR35?

In theory, yes. But I think it's highly unlikely HMRC would come after you for 6 months of that tax differential, there are far bigger targets out there. But to play it safe you could work out what you might owe and put it aside in some investment, or even buy a Certificate of Tax Deposit, and hold on to that until HMRC can no longer issue a status query on your tax return (6 years after this coming 5 April, I believe, but others will probably correct me).

[Mrlossy]

My contract started 1st October (sorry) so is for 6 months - ends 31st March 2020

My current payment terms are 4 weeks

So based on the advise, this would mean leaving first week of March?

If my contract was extended and I accept it, my previous employment could be liable as being deemed inside IR35?

What a complete and utter sh*t!

Thanks for all the advice!

[Mrlossy]

If you do wish to leave, and once you're aware of payment terms, then you could also become aware of the terms of notice and leave just before end-ish March, ensuring payment before cut off dates. If nothing else at this stage, it might afford some peace of mind.

This will allow you time to consider;

1. An FTE job
2. A further contracting job, by when things become better known to the world.
3. Things being better known to the world.

Thanks for the responses.

I actually started Oct 1st so it was a 6 month contract.

My payment terms are 4 weeks after submitting timesheet.

I do possibly have the opportunity to extend my contract, however if I don't am I best leave early to ensure payment has been made by a certain date?

I take it if I stay to March 31st I risk having to pay backdated tax and Nics on the previous 6 months? This is the bit I'm confused about.

Again, really appreciate the replies.

[simes]

If you do wish to leave, and once you're aware of payment terms, then you could also become aware of the terms of notice and leave just before end-ish March, ensuring payment before cut off dates. If nothing else at this stage, it might afford some peace of mind.

This will allow you time to consider;

1. An FTE job
2. A further contracting job, by when things become better known to the world.
3. Things being better known to the world.

[BoredBloke]

I think you meant a 5 month contract. But anyway, you need to be paid by 5th April.

and by payment, that's when the money clears into the account, not when the client decides to pay you.