IR35 Flag: Switching from Contractor to Permanent with the same client and project

[JohntheBike]

I'm in exactly the same boat. I was taken on by client for an IT Transformation project as an IT architect and have been offered a permanent role.

The big difference is that, as a contractor, I'm only working on the Transformation project. This has a specific set of deliverables and is a once-in-a-decade migration, so the role is not a permanent one. They brought in a contractor because they had nobody in house with experience of doing this type of work. I have no SDS, MOO is active (I have emails from the client stating that my contract will terminate early due to project stalling / budget issues, but luckily they managed to get the budget to continue).

As discussed with the client, moving to a permanent role will mean that I continue to complete the project (only a couple of months left on it now - after a year of work) but will also be involved in the strategic direction of the organsiation, setting standards and policies and wil be assigned work on other projects within the orgisation. There is also the other aspects of being in a permanent role i.e. sitting on management boards, leading generic design authority meetings and so on, which doesn't happen now.

Not sure if your particular position is similar, but for me, moving from contract to permanent is, in essence, a completely different beast - however, as you know, with IR35, you can skew the rhetoric to get any outcome you want.

moving from contract to permanent is, in essence, a completely different beast

I would tend to agree. Being someone's employee at the very least could mean that they could ask you to undertake tasks which you were not required to undertake as a contractor. If I became an employee of the consultancy that I'm contracted to, they could quite legitimately ask me to help with a different client who was running a platform where I had experience. In fact they support a client where I was previously a permanent employee and there may just be some remnants of the applications that I wrote still being used at that client, although given the elapsed time, probably unlikely.

with IR35, you can skew the rhetoric to get any outcome you want.

exactly, and most of what is posted on CUK about IR35 is opinion and conjecture. We will have to wait and see how the situation develops.

[pacontracting]

Among some other factors I though of SDS as well. My current and previous contracts with this current client have been reviewed by Qdos with "Marginal pass" mark. In reality I am not a subject to SDS as work as IT Architect producing designs, guiding the implementation team and dealing with client`s stakeholders regarding to design matters/constraints. From that perspective I am not a subject to SDS (no one manages me, my time, my work, my availability, etc.). I also use my company`s laptop, wear contractor`s badge, etc. Having switched to permanent role I would continue doing the same job as this is the only professional skill (IT infrastructure architecture) my client is interested in as far as they are concerned.

But all that is so subjective and I feel like I am not ready to take a plunge to convert myself into Permie all things considered.

Probably I will need to turn down their permanent offer...

I'm in exactly the same boat. I was taken on by client for an IT Transformation project as an IT architect and have been offered a permanent role.

The big difference is that, as a contractor, I'm only working on the Transformation project. This has a specific set of deliverables and is a once-in-a-decade migration, so the role is not a permanent one. They brought in a contractor because they had nobody in house with experience of doing this type of work. I have no SDS, MOO is active (I have emails from the client stating that my contract will terminate early due to project stalling / budget issues, but luckily they managed to get the budget to continue).

As discussed with the client, moving to a permanent role will mean that I continue to complete the project (only a couple of months left on it now - after a year of work) but will also be involved in the strategic direction of the organsiation, setting standards and policies and wil be assigned work on other projects within the orgisation. There is also the other aspects of being in a permanent role i.e. sitting on management boards, leading generic design authority meetings and so on, which doesn't happen now.

Not sure if your particular position is similar, but for me, moving from contract to permanent is, in essence, a completely different beast - however, as you know, with IR35, you can skew the rhetoric to get any outcome you want.

[WordIsBond]

It depends on your risk appetite.

HMRC would ask, "What changed?" If nothing changed, you'll have a tough time. That said, I did one project as a permie back in the day that could have easily been done as an outside contractor -- no SDC. So if you are still working like a contractor but are now doing it as a permie for the convenience of all, you might have an argument.

Personally, I think it not too likely that they will connect the dots very quickly. They know you have been working through an agent, but probably not for whom. So if they start running stuff to try to connect people moving from outside to inside, they are going to be looking for people with the same agent but now inside. That won't be you.

So you could take the permie role, get your company closed as quickly as possible, and the risk is probably pretty low that they would start an investigation on you before your company is closed. Once it is closed, you should be in the clear.

I can't tell you there is no risk. No one knows how much risk there is. But in this scenario, IMO, the risk is pretty low if you get moving on getting your company closed. You might also go perm before April, rather than stretch it out to the last minute, that also might reduce the risk.

All of the above is inoperative if you really should have been inside all along. In that case, pay your taxes.

[rorybracker]

Doing different jobs though from what I remember from most of the threads. The devil is in the details. But put simply, job doesn't change but employment status does is big risk. Other factors then come in play to mitigate this risk but you've not mentioned any of them.

Among some other factors I though of SDS as well. My current and previous contracts with this current client have been reviewed by Qdos with "Marginal pass" mark. In reality I am not a subject to SDS as work as IT Architect producing designs, guiding the implementation team and dealing with client`s stakeholders regarding to design matters/constraints. From that perspective I am not a subject to SDS (no one manages me, my time, my work, my availability, etc.). I also use my company`s laptop, wear contractor`s badge, etc. Having switched to permanent role I would continue doing the same job as this is the only professional skill (IT infrastructure architecture) my client is interested in as far as they are concerned.

But all that is so subjective and I feel like I am not ready to take a plunge to convert myself into Permie all things considered.

Probably I will need to turn down their permanent offer...

[northernladuk]

I am reading recent posts on the forum and see there were lots of similar queries where contractors were switching to permanent employees. I wander whether they thought at all about these doomed consequences?

Doing different jobs though from what I remember from most of the threads. The devil is in the details. But put simply, job doesn't change but employment status does is big risk. Other factors then come in play to mitigate this risk but you've not mentioned any of them.

[rorybracker]

Affirmative.

How can you think it won't? Same job, different remuneration. Exactly what IR35 was designed for.

I am reading recent posts on the forum and see there were lots of similar queries where contractors were switching to permanent employees. I wander whether they thought at all about these doomed consequences?

[simes]

Probably.

Thereafter the question arises as to your taste for adventure. Some possible caveats to consider.

1. Was your contract successfully reviewed as Outside?
2. Were your working conditions mirroring the wording of the contract?
3. If yes to both, do you have insurance to cover investigations?
4. Thereafter, it is fair to say the HMRC will have the odd one or two things on their plate from April so, perhaps you will skate under the radar. Feeling lucky?

If your permanent and contract, working conditions and contracts evidently differ, you should be fine.

There's 'running scared of your own shadow', and then there's just getting on with life in a practical fashion.

Good luck.

[northernladuk]

Affirmative.

How can you think it won't? Same job, different remuneration. Exactly what IR35 was designed for.

[GhostofTarbera]

Absolutely


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[BR14]

yes

[rorybracker]

I have been working as a contractor (IT Architect) for the lat 1 year for my current client driving designs for their IT transformation project. I have now been offered a permanent role with the same client to continue working in my current capacity.
Question: How would the above described switch be seen in the HMRC eyes? Would that bring them to assumption that I previously operated as a permanent employee even though I was set up as a contractor?