Becoming self employed/ a contractor for one company
Discussion
Hi,
I got made redundant this week and have agreed to go and work for another company in the same line of work.
The owner was very clear that if this is to happen, it needs to be on a contractor basis and not PAYE.
Having never done this before, I was just looking for some advice into going about this.
Some points to note:
I will be working solely for this company.
There will be a contract in place highlighting that this I will be a contractor as a business and operations 'director' (as such).
I will be working from home 3 days a week and 2 travelling into the office (On an average week)
All expenses, I pay for and then claim back.
I will be receiving a set fee every month and also a percentage of the monthly revenue.
At the 12 month mark, I receive a 2% share in the company (A further 1% at 2 years)
I did the test on the gov site (shocked they have such a thing) and from my answers, it has said that I will be self employed but what i'm not sure on is whether I can be truly self employed and being a contractor is just a phrase the company have decided to use or whether I need to set up a ltd co and work under that?
I need to find an accountant, I know that much but with everything going on, I still have a month to arrange everything and PH is always full of knowledge.
Apologies if i've missed anything glaringly obvious out.
I got made redundant this week and have agreed to go and work for another company in the same line of work.
The owner was very clear that if this is to happen, it needs to be on a contractor basis and not PAYE.
Having never done this before, I was just looking for some advice into going about this.
Some points to note:
I will be working solely for this company.
There will be a contract in place highlighting that this I will be a contractor as a business and operations 'director' (as such).
I will be working from home 3 days a week and 2 travelling into the office (On an average week)
All expenses, I pay for and then claim back.
I will be receiving a set fee every month and also a percentage of the monthly revenue.
At the 12 month mark, I receive a 2% share in the company (A further 1% at 2 years)
I did the test on the gov site (shocked they have such a thing) and from my answers, it has said that I will be self employed but what i'm not sure on is whether I can be truly self employed and being a contractor is just a phrase the company have decided to use or whether I need to set up a ltd co and work under that?
I need to find an accountant, I know that much but with everything going on, I still have a month to arrange everything and PH is always full of knowledge.
Apologies if i've missed anything glaringly obvious out.
Eric Mc said:
If the new "employer" insists you engage with him through a limited company, essentially, he is dictating matters i.e. exercising control over you - and therefore you will be a deemed employee and will fall under the IR35 rules.
Sorry, can't agree on this. The "control" element of IR35 relates to control within the the terms of the role being carried out, not the intiation of the business relationship.
ETA... I am of course assuming the basis would be LTD company relationship rather than Self Employed, although I can't see why the comment above is incorrect for either option.
Edited by Piersman2 on Thursday 26th March 17:08
Eric Mc said:
If the new "employer" insists you engage with him through a limited company, essentially, he is dictating matters i.e. exercising control over you - and therefore you will be a deemed employee and will fall under the IR35 rules.
Not sure if its relevant but setting up a Ltd Co was just what I've read up on when looking into becoming a contractor. Have a look at this page and the .PDF that is linked in it, it's a good summary of the IR35 rules and how the CEST tool works.
You can go work for him via a Ltd company , lots of us do, but it's not clear from your OP whether you'd be inside IR35 or not.
The role you're going for, is it a fixed 'task' or deliverable, or an ongoing type role, like support or BAU?
You can go work for him via a Ltd company , lots of us do, but it's not clear from your OP whether you'd be inside IR35 or not.
The role you're going for, is it a fixed 'task' or deliverable, or an ongoing type role, like support or BAU?
Piersman2 said:
Sorry, can't agree on this.
The "control" element of IR35 relates to control within the the terms of the role being carried out, not the intiation of the business relationship.
ETA... I am of course assuming the basis would be LTD company relationship rather than Self Employed, although I can't see why the comment above is incorrect for either option.
A moot point. I'd certainly say that the relationship shows "control" by a principal from the off.The "control" element of IR35 relates to control within the the terms of the role being carried out, not the intiation of the business relationship.
ETA... I am of course assuming the basis would be LTD company relationship rather than Self Employed, although I can't see why the comment above is incorrect for either option.
Edited by Piersman2 on Thursday 26th March 17:08
One fort the courts.
Eric Mc said:
If the new "employer" insists you engage with him through a limited company, essentially, he is dictating matters i.e. exercising control over you - and therefore you will be a deemed employee and will fall under the IR35 rules.
Come on, Eric, thats not control.Doesn’t mean he won’t be caught by ir35 for other reasons, but so what?
Piersman2 said:
Have a look at this page and the .PDF that is linked in it, it's a good summary of the IR35 rules and how the CEST tool works.
You can go work for him via a Ltd company , lots of us do, but it's not clear from your OP whether you'd be inside IR35 or not.
The role you're going for, is it a fixed 'task' or deliverable, or an ongoing type role, like support or BAU?
Please ask away if anything will help make it clearer. You can go work for him via a Ltd company , lots of us do, but it's not clear from your OP whether you'd be inside IR35 or not.
The role you're going for, is it a fixed 'task' or deliverable, or an ongoing type role, like support or BAU?
It's basically an ongoing role with the sole aim of developing the business and implementing structure, growth etc.
So I'll be helping run the business day to day.
It's not a big business but is on the right track to become a leader in its field.
Eric Mc said:
Piersman2 said:
Sorry, can't agree on this.
The "control" element of IR35 relates to control within the the terms of the role being carried out, not the intiation of the business relationship.
ETA... I am of course assuming the basis would be LTD company relationship rather than Self Employed, although I can't see why the comment above is incorrect for either option.
A moot point. I'd certainly say that the relationship shows "control" by a principal from the off.The "control" element of IR35 relates to control within the the terms of the role being carried out, not the intiation of the business relationship.
ETA... I am of course assuming the basis would be LTD company relationship rather than Self Employed, although I can't see why the comment above is incorrect for either option.
Edited by Piersman2 on Thursday 26th March 17:08
One fort the courts.
). I had jumped straight to limited as I'd assumed from the various things mentioned before the actual question all indicated a ltd company relationship.I've never looked closely at what the difference is between self employed vs Ltd as most clients will only deal with ltd, I assumed this would be the case here but maybe the OP needs to clarify if he even has the option to provide his services to the company other than as ltd?
rich12 said:
Piersman2 said:
Have a look at this page and the .PDF that is linked in it, it's a good summary of the IR35 rules and how the CEST tool works.
You can go work for him via a Ltd company , lots of us do, but it's not clear from your OP whether you'd be inside IR35 or not.
The role you're going for, is it a fixed 'task' or deliverable, or an ongoing type role, like support or BAU?
Please ask away if anything will help make it clearer. You can go work for him via a Ltd company , lots of us do, but it's not clear from your OP whether you'd be inside IR35 or not.
The role you're going for, is it a fixed 'task' or deliverable, or an ongoing type role, like support or BAU?
It's basically an ongoing role with the sole aim of developing the business and implementing structure, growth etc.
So I'll be helping run the business day to day.
It's not a big business but is on the right track to become a leader in its field.
rich12 said:
No mention of needing to have a Ltd Co but I'm not sure if that's because it's supposed to be 'a given'.
Just to clarify, I'm asking if I have the option of being self employed OR need to set up a Ltd Co to trade under given the points in my OP.
Sorry, I don't know what determines whether self employed is an option. Usually clients will only deal with ltd, But if this company is small enough and not so financially structured perhaps they'd let you. Maybe go back and them to clarify what relationship they're prepared to employ your services through.Just to clarify, I'm asking if I have the option of being self employed OR need to set up a Ltd Co to trade under given the points in my OP.
The same rules apply to an individual regarding determining whether the relationship is an employment one or a "self employed" one.
Although we bang on about CEST these days, the essentials were laid down decades ago using a technique known as "exhibiting the badges of trade". For a person to successfully show they are "self employed" i.e. operating as a sole trader, they need to demonstrate that everything they do is in the nature of running a business.
That basic principle is what lies behind CEST or any other form of "status" test. They are all trying to determine the same thing.
Although we bang on about CEST these days, the essentials were laid down decades ago using a technique known as "exhibiting the badges of trade". For a person to successfully show they are "self employed" i.e. operating as a sole trader, they need to demonstrate that everything they do is in the nature of running a business.
That basic principle is what lies behind CEST or any other form of "status" test. They are all trying to determine the same thing.
Would there be any issue in you, or your ltd co if you go that way, taking work from other companies?
IR35 is being talked about alot (well it was) for locum optometrists who only work for one company but on a s/e basis. An answer seems to be go and work elsewhere occasionally.
I won't pretend to know any of the nuances as it doesn't directly affect me but its always been a bit of an issue with HMRC.
IR35 is being talked about alot (well it was) for locum optometrists who only work for one company but on a s/e basis. An answer seems to be go and work elsewhere occasionally.
I won't pretend to know any of the nuances as it doesn't directly affect me but its always been a bit of an issue with HMRC.
rich12 said:
There is a clause in the contract that clearly states about only working for said company.
A Ltd company is expected to 'trade' that means more than one customer and a freedom to do business. When your future 'customer' is dictating that he will be you sole client that is a restraint of trade and breaks that basic principle..HMRC will treat you as being effectively employed by your client so the IR35 reg. apply.
You'll need to find other work/clients that you can invoice as another source of 'trade' revenue to avoid IR35.
How does this work ?
"I will be receiving a set fee every month and also a percentage of the monthly revenue.
At the 12 month mark, I receive a 2% share in the company (A further 1% at 2 years)"
All the limited company/ir35 control stuff i get ... but i have never seen a contractor with a revenue share agreement ... or who owns a shared of the company.
OP how is this being written into your/your companies contract ?
"I will be receiving a set fee every month and also a percentage of the monthly revenue.
At the 12 month mark, I receive a 2% share in the company (A further 1% at 2 years)"
All the limited company/ir35 control stuff i get ... but i have never seen a contractor with a revenue share agreement ... or who owns a shared of the company.
OP how is this being written into your/your companies contract ?
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