Here is a brief description of my circumstances. If anyone can shed any light on this for me, please do!I was taken on to work as a contractor at a large organisation (LA), by a preferred supplier recruitment consultancy (RC). RC bills LA for my services on a weekly basis.When I first started with LA I stayed with the umbrella company I had used in my previous contractor role. So the umbrella billed RC, who in turn bill LA.Now, instead of using an umbrella company I have set up my own limited company. So now Gugster Ltd bills RC, who in turn bills LA.Many of the IR35 questions point me in the direction of being a quasi-employee of LA, e.g. I go to their building, use the resources they provide, and go home at the end of the day like the official employees. However, if there was no limited company and no RC, I would still be on a contractor basis and not a full time employee, as the role is not a permanent one (although it is rolling 3 months and could be so for as long as a year).I'm have no intention of trying to wriggle out of paying tax and NI, I just don't want to do the wrong things and be faced with fines I could otherwise avoid. The fact that it's a temp role and the additional intermediary of the RC just muddies the waters for me a bit. Can anyone offer guidance here?
IR 35 was a very hot topic at one point but I gather it has gone somewhat out of fashion for the Revenue (others may comment differently)There are several tests that the Revenue use around IR35; all are directed at determining whether you are, in fact, an employee.They consider all of them and judge on the weight of evidence.One is length of contract - at a year I would expect you to be safe (but there are no guarantees).You would be even safer though if your Ltd Company could undertake work and bill other clients.I assume you are working to a Service Contract; this would ideally specify that Gugster Limited can provide whichever personnel it determines to undertake the work (even if the client has a right of veto), it should not in any circumstances specify that Mr Gugster is undertaking the work.Some other precautions would be NOT having your own office; NOT appearing in the Internal Phone Book; NOT using a mobile that they provide: NOT having a designated Parking Space; NOT using their equipment; I'm sure you get the picture.I expect you'll receive some more advice shortlyHTH
Another couple of things which may affect my status are that I don't receive holiday pay from the organisation, or any other non cash benefits e.g medical insurance, pension etc.. I charge a daily rate and I receive this for the days that I work, no more and no less.On the down side, I am named in the contract as being the person who will provide the services.
It's probably impossible to give any concrete help one way or another as this is such a grey area.Perhaps using the inland revenue employment status indicator is a good place to start and also ensuring contracts are as IR35 friendly as possible would seem a sensible option.Also have a look at the PCG website for further advise if you have not done so already.http://www.pcg.org.uk/cms/index.php?option=com_content&v...Unfortunately if you are caught by IR35 the penalties imposed will be huge in comparison to the amount of tax you save by trading as a limited company - so proceed with caution.I would not proceed on the basis that just because a contract is for shortish duration IR35 will likely not apply.There are alot of circumstances where employees are also taken on for short periods.Finally as Glorious points out so clearly whatever you do don't give the false impression that you are an employees when you are not !!!
Can anyone offer guidance here?Employment status is a duck test.If it looks like one and quacks like one, then it probably is one.It doesn't really matter what the paperwork says. It matters how people treat you.For me the acid test is this. If you'd worked up in a morning and faced an afternoon of twiddling your thumbs because the next bit of work is blocked waiting for something or other, could you decide not to bill for the afternoon and go golfing instead?NeilW
Gugster,I think you are getting some good advice here.Just to be clear I think being named on the Contract/Services Agreement is not ideal, but would not trigger a problem (in isolation)I assume you have signed their Agreement? I normally have my Clients sign mine; but it's not the end of the world.If you have a good workable relationship with the Client and it won't cause waves, would they reissue in the name of Gugster Limited? If not, don't sweat it.I still think, from experience, that the duration of the Contract would also matter.Again from experience, 12 months won't be a problem, 7 years could well be but I've known someone defend even that successfully. Again though I emphasise that the Revenue would look at all tests as they make their judgement and not anyone in isolation.Billing other clients, during, before or after your assignment will help greatly.
So the test would be for the IR inspector to take a look at you and see if you look like a duck or just a contractor with a large bill...I'll get my coat!John
Ultimately there is only one person who decides whether you fall foul of IR35 and that is the tax man. If you ask him up front, there's a fair chance he will lazily say you're caught with barely a glance at your contract - so that's not a good idea! :-) So all you can reasonably do is get someone qualified to assess your status - fortunately there are a range of options here, from former tax inspectors to tax lawyers. Charges vary and some also offer insurance against their decision such that they will cover your legal costs and even potential tax bills. If you don't have a documented assessment of your status for each contract, you have not justified avoiding the IR35 legislation and I understand the revenue can (have?) add fines to the backdated taxes and interest penalties they recover.As for the comments in the thread so far I'm not sure I agree with all of them in terms of what is most relevant. The length of contract, in my opinion, is almost irrelevant. The time spent at one client is also now considered pretty irrelevant. The things you want in your contract are business-like terms rather than employment-like terms - so whilst it's acceptable that you might be named as the initial person providing the services, your contract should have provisions for allowing your company to substitute you with anyone else of a similar experience. There should be no mutuality of obligation - if the work isn't there, or you don't like it, could you and would you go home? Using client equipment is usually mandatory at larger clients due to security - something that can be documented.As NeilW says, the duck test is really how you behave - although the precursor to this is getting a contract that reflects your intentions! Having a 3 month rolling contract suggests you and the client are both viewing this as an ongoing "do what work turns up" arrangement, which is not very IR35-friendly. It is generally preferable to have a project-based contract where you are contracted to do a given project with an estimated completion date. Otherwise, how exactly have you defined the services your company is providing to the client?Ultimately you should get your contract reviewed and consider taking out insurance. You can also look at defensive practices such as closing down your Ltd Co after a period of time.Hope that helps - FYI there is a lot of discussion on the IT Contactors board so you might want to look through some old threads there.Cheers-luckyjonah.
Visit the Professional Contractors Group website - all the guidance you could possibly need is there.
Recs all round. Many thanks for all your answers. THe work I do is not in IT though for these purposes I don't this this will matter, so I shall have a peek over at the other suggested boards.
Best Of |
Favorites & Replies |
Start a New Board |
My Fool |