Ideas and thoguhts on this

[BlackCountryContractor]

At my usual roundtable of contractor meet-ups which I go to I ran into a very strange idea that got floated around the table (And the madcap arguments that went with it) and I’ll use a somewhat generic name so we can at least try to make sense of this:

Mike made a suggestion to pick up a long term inside-IR35 contract via LTD before client-led determinations ahead of April 2020 forced anyone operating via LTD into agency brolly schemes and could safely bypass this (as he would in theory have control to run his LTD but be prepared for the agency to make the necessary tax deductions to the HMRC) and also avoid issues with the IR35 private sector reforms as any inside IR35 rulings would be voided over the fact that as he has agreed before-hand that the contract was inside IR35 and any client determinations would be in effect rendered moot.

The main underlying point of all this was that mike argued this could be used a vehicle to safely ride out the private sector storm and pre-empt any idiocy from over misjudged & hasty & blanket determinations and then once the private sector properly adjusted to the reforms then properly start to work outside of IR35 again.

I pointed out that it is the worst idea tax wise to do this unless he was on such a margin of pay where it could also deal with corporate tax etc (also including accountants fees) & that this idea would get binned to due to the fact that most agencies would refuse flat LTDs inside of IR35 due to having to deal with themselves the whole tax issue which could be made simpler by passing it to a umbrella company.

Question: Am I wrong with my commentary on this?

[GhostofTarbera]

You and mike had way to many beers


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[ladymuck]

Running an inside gig via a Ltd company is pointless. It doesn't get around anything, it's an administrative nightmare.

There's the issue of expenses, other overheads - insurances, accountant, employers NI, pension, training and other running costs (technically all expenses, granted, but I separate out because I see expenses as the cost of delivering the gig, and overheads as the cost of doing business) - CT and VAT. You're going to be running at a loss so there's a CT credit to roll over and at some point your company will literally not have enough cash to run (depending on the size of your warchest).

TL;DR - it's a crap idea. Stop drinking meths

[rogerfederer]

Running an inside gig via a Ltd company is pointless. It doesn't get around anything, it's an administrative nightmare.

There's the issue of expenses, other overheads - insurances, accountant, employers NI, pension, training and other running costs (technically all expenses, granted, but I separate out because I see expenses as the cost of delivering the gig, and overheads as the cost of doing business) - CT and VAT. You're going to be running at a loss so there's a CT credit to roll over and at some point your company will literally not have enough cash to run (depending on the size of your warchest).

TL;DR - it's a crap idea. Stop drinking meths

It does sound difficult. For those choosing to stay to work in the UK: are you simply going to go via an umbrella instead?

My own figures for a friend show tax and fees to account for 50-55% of earnings. Even at £650/day inside IR35 this is a huge sum to lose out, even if maxing out your pension.