Inside IR35?

[CHC]

I'm very new to this and wanted to ask advice regarding whether I will need to operate inside IR35. I started a limited company recently and have a 12-month contract. My accountant is with SJD but I've heard they can be too conservative. So I wanted to check independently whether her decision that I have to be Inside IR35 is definitive. Because my client could not meet my annual rate and because the job sounded interesting, we negotiated that they would provide paid sick leave and holiday, as well as offer a bonus based on the quality of my services. They will also pay my expenses, including my home office expenses. With these factors, can I operate outside IR35 to minimise the tax I would need to pay on the income I pay myself and on the dividend I pay myself? If not, please would you offer some potential solutions? I'm very willing to err on the side of caution but would prefer that it not cost most of the gains I'd hoped to achieve by setting up the company! All advice and comments are much appreciated. Thanks!

 

[Jon Neale]

I am also with SJD and operate outside of IR35.

From your description you have been given similar entitlements to employees therefore it would seem you could be deemed inside IR35. Doesnt make much sense they wont pay your rate but offer additional paid entitlements. I think 95% of your income is taxed if you are inside IR35, 5% allowance for expenses and also any pension contributions are exempt.

Renegotiate would be the best way forward. Any reason they cannot meet the rate? What sector are you in?

 

[GLAbusiness]

I'm no expert, but it sounds like IR35 to me.

Have you done the math to decide if it would be financially better to structure the contract outside IR35 with less gross income but less tax. As Jon says, can you re-negotiate the rate. It sounds to me that the client is trying to treat you as staff, not a service company.

 

[UK Contractor Accountant]

Don't SJD provide a IR35 contract review?

 

[UK Contractor Accountant]

They say they are one of only 3 firms that provide IR35 advice to IPSE- so they should know what they are doing on contract reviews!

 

[UK Contractor Accountant]

There are ways to structure the engagement so that it does not fail the SDC test inherent in IR35.

As always take specialist advice before making any decisions.

 

[TimCaprica]

The holiday and sick pay definitely make it sound a lot like employment but more broadly IR35 status comes down to the level of control that the client has over the way you work.

If you are cautious - a better option (assuming there are some good arguments for being outside IR35) might be to get IR35 insurance from a company like QDOS Consulting. As part of the process they will make an assessment of your status and if they see it as low enough risk insure you against HMRC finding you inside IR35.

 

[UK Contractor Accountant]

Given that there were only 256 IR35 investigations during the 2012/13 year and 59 cases the year before the risk is still very low of being investigated.

IR35 is to be tinkered with very shortly so I would suspect HMRC will hold fire on new investigation until the new & improved IR35 is in place.

 

[David Griffiths]

IR35 is to be tinkered with very shortly so I would suspect HMRC will hold fire on new investigation until the new & improved IR35 is in place.

Optimist!

 

[UK Contractor Accountant]

HMRC lost more than they won on IR35 cases taken through the Courts.

In the words of Dell Boy 'It stands to reasons' not take on a case unless you are confident of winning it!

 

[Jon Neale]

It would be difficult to argue you are not being controlled if you have to book holiday, report sick and run through their expenses process.

I am with SJD and they will review the contract for you. Speak to them in the first instance.

 

[David Griffiths]

I get the impression that the OP has asked SJD, and doesn't like the answer that was given. Hence the apparent tactic of asking around the web until someone is found to give the "right" answer