Outside IR35 Offer but no Ltd Co

[ChrisTruby]

I have been browsing the forum but if anyone knows of any threads that may help.

I have an Outside offer on the table for a role. I have 4 months left till I can open a Ltd Co. I really did not want to trigger it and start a Ltd co yet as had taken time out to rest and done some work under umbrellas that have improved my skills etc.

Is my only option Umbrella? Any pointers appreciated.

[PerfectStorm]

That's a good question. Presumably you liquidated a company which means you can't start a new one within 3 years?

Have a chat to the new client's agency - say that you can do it but it would take a change of LTD company (and so a new contract) after a few months time.

Might there be a concern though where you go from effectively Inside IR35 to Outside IR35 doing the same thing? That's the bit I wouldn't want to have hanging over me. Maybe make this particular arrangement wholly Umbrella or delay it until it can be Ltd.

[jamesbrown]

Assume you’re referring to the TAAR, which applies to capital distributions within two years of performing the same or a similar trade or activity post distribution. Your best bet is an umbrella for the duration of this contract.

[Protagoras]

Might there be a concern though where you go from effectively Inside IR35 to Outside IR35 doing the same thing? That's the bit I wouldn't want to have hanging over me. Maybe make this particular arrangement wholly Umbrella or delay it until it can be Ltd.

OP is not effectively going from Inside to Outside with this arrangement in my view. Umbrella != Inside.
OP should have an Outside SDS. That the OP elects to operate via a brolly for a period of time would surely not invalidate the SDS.

That said, I don’t disagree that it would be better not to transition between models on an assignment.

[ChrisTruby]

OP is not going from Inside to Outside with this arrangement in my view. Umbrella != Inside.
OP will have an Outside SDS. That the OP elects to operate via a brolly for a period of time would surely not invalidate the SDS.

That is what I was thinking if there is an SDS.

[jamesbrown]

That is what I was thinking if there is an SDS.

You could, in principle, but HMRC may take the view that moving from an umbrella to a Ltd or vice versa with the same client/contract is an indication, more generally, that you are worth a closer look. Naturally, it's up to you. In theory, you're perfectly correct and, indeed, the client is on the hook under Chapter 10, in principle, but probably not in practice. Overall, it's cleaner to make the switch when you switch contracts, but it's your call.

[ChrisTruby]

I think that is sound advice and probably the best route.

[northernladuk]

You could, in principle, but HMRC may take the view that moving from an umbrella to a Ltd or vice versa with the same client/contract is an indication, more generally, that you are worth a closer look. Naturally, it's up to you. In theory, you're perfectly correct and, indeed, the client is on the hook under Chapter 10, in principle, but probably not in practice. Overall, it's cleaner to make the switch when you switch contracts, but it's your call.

I'd agree HMRC might be interested but this one is very short and its clear so with the SDS is in place,even with my risk aversness, I'd probably go ahead without worrying about the umbrella to LTD. Just swap it at next renewal and get on it with it for me this time.

[gables]

Surely this can't be a worry presuming everything necessary for an outside determination is in place as otherwise going straight to a LTD would also be a risk, no? As already said Umbrella != Inside there could be a number of reasons for starting using an umbrella and then switching, which I agree would be best at renewal.

[jamesbrown]

I don't disagree with the above arguments, it's a personal call.