IT contractors - Regulation 32 opt in or opt out??

[bing]

Folks

I am currently a permie in my role but have just accepted my first contract the agency say that they will only take me if I opt out of the Regulation 32??

I am new to this game can someone please explain to me what the Regulation 32 is and what I get to loose or gain by opting out, oh and will opting out either now or later have an effect of future contracts...I do not have a limited company so will be using an umbrella one.

thanks

bing....

[dern]

Never heard of it and I've been contracting for a few years. Looking on this site...

www.shout99.com/contractors/showarticle.pl?id=25151&n=

...I get the impression that the agency is saying that if you're given a 3 month contract then you have to work the 3 months and there'll be no provision for you to hand in your notice to opt out early.

It's up to you whether or not that's ok. I've worked on that basis at a couple of places although never heard of it termed as regulation 32.

Hope this helps and if I'm wrong hopefully someone will set us both right

Just a quick suggestion... why not ask the agency what they mean.

Regards,

Mark

[JonRB]

dern said:

Never heard of it and I've been contracting for a few years.

Yes, but that's the same as someone in 1999 saying "IR35? Never heard of it and I've been contracting for a few years".

It's new. We have the option of opting in or out, but nobody knows which is more beneficial at the moment, unfortunately.

ContractorUK and PCG had articles on it recently. Give me a moment and I'll see what I can dig up.

Edit:
ContractorUK article here (complete with now typical PCG-bashing)
PCG article here

And obviously the Shout99 article that Mark dug up is relevant too.

>> Edited by JonRB on Wednesday 23 June 22:06

[bing]

Guys thanks for yout replies.....

I am still confused but not as much as before....I think i'll opt out this time round as it my first every contract and see whap happens, just got to check if that is ok with my umbrella company now!!!

thanks guys??

[zumbruk]

IANAL, but my reading of the regs leads me to believe that the opt-out is only available to limited companies, not to sole traders.

[anonymous-user]

zumbruk said:

IANAL, but my reading of the regs leads me to believe that the opt-out is only available to limited companies, not to sole traders.

But AFAIK, contract law states that a Limited Company needs to be used to take up a contract. Hence the "Umbrella Company" statement.

[zumbruk]

LexSport said:

zumbruk said: IANAL, but my reading of the regs leads me to believe that the opt-out is only available to limited companies, not to sole traders. But AFAIK, contract law states that a Limited Company needs to be used to take up a contract.

Again, IANAL, but that sounds like tosh to me. Any legal entity can enter into a contract - haven't you ever bought a house, hired a car, got credit and so forth? You entered into a contract in each and every one of those cases.

[anonymous-user]

zumbruk said:

Again, IANAL, but that sounds like tosh to me. Any legal entity can enter into a contract - haven't you ever bought a house, hired a car, got credit and so forth? You entered into a contract in each and every one of those cases.

If you could enter into a contract with a company as a sole trader you'd avoid IR35. Do you think anyone would actually run their contracts through a Ltd Co if they didn't have to?

[zumbruk]

Quite so, but that doesn't stop what you said from being tosh.

[JonRB]

LexSport said:

If you could enter into a contract with a company as a sole trader you'd avoid IR35.

No you wouldn't. In fact, you'd be more likely to be caught as you would be less able to prove that you were "In Business On Your Own Account", on the basis that a disguised employee would not need to set up a company or take out company-specific insurances like Employers Liability.

LexSport said:

Do you think anyone would actually run their contracts through a Ltd Co if they didn't have to?

Possibly, but it's far more complicated than that. The main two reasons for contracting through a company is
a) Because few companies or agencies will deal with Sole Traders
b) Because there are tax advantages, although less so in this post-IR35 world.

It has nothing to do with contract law.

[anonymous-user]

I apologise for spouting "tosh".

Turns out my understanding was incorrect. According to the PCG:

PCG said:

You can work as a self-employed sole trader if your clients and agents are prepared to engage you on that basis. However, most are reluctant because if your tax status is challenged then it is the client that becomes liable for any additional tax and NIC due. Furthermore, the 1998 Income and Corporation Taxes Act (Section 134 ICTA 1988) effectively prevents individuals from being self-employed where an agency is involved, as it obliges the agency to treat the individual as if he or she were an employee by deducting PAYE and NI from the payments due. Important note: One cannot determine one’s own status nor do so by agreement with the client; status is determined by the nature of the engagement.