Discussion
Then it would be caught within the new rules.
So, on that basis, if the contract would have been caught under IR35, you are as well off not using your company and just being treated like a "normal" employee (which is what HMRC wants).
The main problem is that many government agencies just rammed many of their "intermediary" type arrangements into IR35 - even when it may not have been appropriate.
Many intermediaries were therefore taxed inappropriately or may have opted for an employment situation when they should have stuck to their guns and insisted on being paid gross through ther companies- or walked away (which is what many did).
So, on that basis, if the contract would have been caught under IR35, you are as well off not using your company and just being treated like a "normal" employee (which is what HMRC wants).
The main problem is that many government agencies just rammed many of their "intermediary" type arrangements into IR35 - even when it may not have been appropriate.
Many intermediaries were therefore taxed inappropriately or may have opted for an employment situation when they should have stuck to their guns and insisted on being paid gross through ther companies- or walked away (which is what many did).
Eric Mc said:
Then it would be caught within the new rules.
So, on that basis, if the contract would have been caught under IR35, you are as well off not using your company and just being treated like a "normal" employee (which is what HMRC wants).
Yes, thats what my accountant had advised. There seemed to have been an intimation earlier by someone that what i was doing was "wrong" or that i was misappropriating limited company funds, however what i'm doing seems cleanest in terms of paying tax and allowing the LTD co to be effectively dormantSo, on that basis, if the contract would have been caught under IR35, you are as well off not using your company and just being treated like a "normal" employee (which is what HMRC wants).
Eric Mc said:
The main problem is that many government agencies just rammed many of their "intermediary" type arrangements into IR35 - even when it may not have been appropriate.
Many intermediaries were therefore taxed inappropriately or may have opted for an employment situation when they should have stuck to their guns and insisted on being paid gross through ther companies- or walked away (which is what many did).
OR negotiated a much higher day rate to compensate. Many intermediaries were therefore taxed inappropriately or may have opted for an employment situation when they should have stuck to their guns and insisted on being paid gross through ther companies- or walked away (which is what many did).
Its not ideal being inside IR35 however the gig itself is handy, its relatively long term, the client has paid for formal training, i'm gaining new marketable skills at their expense and i also negotiated working from home for part of the week.
Eric Mc said:
It was a short sighted move by the government - and sadly, it looks like there is more to come as they want to extend the same tactics to non-government related work.
We'll see how all this pans out but it seems the biggest losers are the government themselves.
Wholly agree. They're robbing Peter to pay Paul.We'll see how all this pans out but it seems the biggest losers are the government themselves.
Local Government is having to either pay people +£££ to get them to take inside IR35 contracts, OR allow them to come through third parties who then take a +£££ margin OR projects are getting canned.
daemon said:
Eric Mc said:
It was a short sighted move by the government - and sadly, it looks like there is more to come as they want to extend the same tactics to non-government related work.
We'll see how all this pans out but it seems the biggest losers are the government themselves.
Wholly agree. They're robbing Peter to pay Paul.We'll see how all this pans out but it seems the biggest losers are the government themselves.
Local Government is having to either pay people +£££ to get them to take inside IR35 contracts, OR allow them to come through third parties who then take a +£££ margin OR projects are getting canned.
Eric Mc said:
daemon said:
If you're inside IR35, the company ISNT the rightful recipient of the income, the individual is.
Outside IR35 = you're an employee of your own limited company (or umbrella co). You get your day rate paid to the LTD Co, the LTD Co pays you.
Inside IR35 = you're effectively an agency worker (for want of a better description), the agency pays you (usually through their umbrella company) via PAYE and directly in to your personal account. No requirement to go through limited company
You are confusing TAX treatment with the legality of the actual contract.Outside IR35 = you're an employee of your own limited company (or umbrella co). You get your day rate paid to the LTD Co, the LTD Co pays you.
Inside IR35 = you're effectively an agency worker (for want of a better description), the agency pays you (usually through their umbrella company) via PAYE and directly in to your personal account. No requirement to go through limited company
A Local Authority want to recruit a contract Project Manager for 6 months. They discuss the role they will be recruiting for and decide that due to the complicated role of the job, they don't want the PM to just get on with it how they see best fit. They want to tell the person in the role how to do their job, when to do their job and where to do their job from, there's no flexibility, they are essentially will be treated like other permanent members of staff. Due to this role being heavily supervised and under control, the CONTRACT will be deemed inside IR35. It has nothing to do with the person, they haven't even been recruited yet.
As the CONTRACT is deemed to fall within IR35, the Govt Authority send their requirement to a Recruiter who place an ad. The ad does of course clearly state that it's within IR35 and would be a fairly safe assumption that the agency pay the 'employee', through their umbrella scheme.
To add further clarity to what Eric Mc has said.......the person who takes on the imaginary role above talks to their hiring manager and says that it's not really a full time role and could fit what they want from him in to three days a week so agrees to work Monday to Wednesday. The person then see's another role they are interested in for a part-time PM at a Government site and due to the fact they just want them to provide an outcome (eg - Deliver a project), and don't care how it's done, this Contract is deemed to be outside of IR35.
The person now has two Government Contracts on the go at the same time, one inside or IR35 and one out. The role outside of IR35 can invoice through their Ltd Company....or if they wanted to, through an umbrella company and pay tax at source, it's up to them. The point is that IR35 status is determined by the Contract, not by the invoicing mechanism.
I'd happily use Eric Mc's services!!
I've seen many a thread online with disgruntled contractors stating that they are annoyed to be deemed within IR35. It's usually backed up with 'even my boss says so'.
While us contractors require professional advice and guidance on lots of things, I'm never ceased to be amazed at the amount of ignorance there is where some contractors know literally nothing.
Don't start me off on the 24 month rule
While us contractors require professional advice and guidance on lots of things, I'm never ceased to be amazed at the amount of ignorance there is where some contractors know literally nothing.
Don't start me off on the 24 month rule
Somebody said (here on PH) a few years ago that in many ways., IR35 was almost a frame of mind - and they had a point. For instance, if a person posts an IR35 question in the "Jobs and Employment" forum of PH, they've already admitted subliminally that they are caught by IR35.
Whereas, if they posted the same query in the "Business" forum, they are approaching the issue from the correct starting point.
Whereas, if they posted the same query in the "Business" forum, they are approaching the issue from the correct starting point.
bigandclever said:
Eric Mc said:
For instance, if a person posts an IR35 question in the "Jobs and Employment" forum of PH, they've already admitted subliminally that they are caught by IR35.
You make a lot of very useful posts, Eric, and I for one am grateful for that, but that one is nonsense.Because it's not really nonsense. I often talk to clients who have just set up a limited company and are entering the world of contracting for the first time. Because they come from background of being an employee, their mind set is still looking at an employer-employee relationship and because of that, they can agree to practices that might put them in a high risk situation regarding IR35.
I speak from experience, not theory..
If you're unsure about your IR35 status, then you can use this anonymous status checker on the government website.
https://www.gov.uk/guidance/check-employment-statu...
https://www.gov.uk/guidance/check-employment-statu...
sinbaddio said:
If you're unsure about your IR35 status, then you can use this anonymous status checker on the government website.
https://www.gov.uk/guidance/check-employment-statu...
Th Check Employment Status for Tax tool (CEST) is not fit for purpose.https://www.gov.uk/guidance/check-employment-statu...
CEST doesn’t align with case law.
CEST won't stand up in court and will have no bearing in a tax tribunal.
sinbaddio said:
If you're unsure about your IR35 status, then you can use this anonymous status checker on the government website.
https://www.gov.uk/guidance/check-employment-statu...
Thats then your interpretation of your status. Its not definitive because it depends on the input being correct.https://www.gov.uk/guidance/check-employment-statu...
sinbaddio said:
If you're unsure about your IR35 status, then you can use this anonymous status checker on the government website.
https://www.gov.uk/guidance/check-employment-statu...
Which is generally lambasted by professionals who advise in this area.https://www.gov.uk/guidance/check-employment-statu...
Gassing Station | Jobs & Employment Matters | Top of Page | What's New | My Stuff