IR35 - Even for short term contracts?

[uaesthetics]

Hello, if I am offered a contract for 3 months and they are saying it's "inside IR-35" - at a day rate of 400/Day - Does this still effect me? As in is there any way out of this as of course I would prefer to get the 400 direct to me and then my own accountant handling it

If they say it's inside IR35 then can I counter or does it effect me on a 3 month contract?

For example I've been offered another contract which is "outside of IR35" for 3 months also but at 350/Day

 

[Newchodge]

It is for the employer to decide whether you are inside IR35. What are your arguments that it should not be?

 

[uaesthetics]

I don't have an argument, I think the Employer has made that decision

Then there's an agency in the middle handling it

Then I'm the contractor

 

[Newchodge]

An employer wants to employ someone for a 3 months fixed term contract. That is what they are doing with various other organisations taking their cut as well.

 

[uaesthetics]

I don't get it.

If it's 400/Day - but within IR35 - even if it's short term, they can still enforce that on me?

Of course I guess I will receive less a day if it's in IR35 right?

 

[Mr D]

I don't get it.

If it's 400/Day - but within IR35 - even if it's short term, they can still enforce that on me?

Of course I guess I will receive less a day if it's in IR35 right?

Could you persuade them you don't fall within IR35?
You know what you are doing long term, they do not.

 

[Newchodge]

If it's 400/Day - but within IR35 - even if it's short term, they can still enforce that on me?

What has the rate of pay got to do with anything?

IR35 requires an employer to deduct tax and national insurance from the worker because they are, probably, an employee and not self employed in that particular post.

You will get £400 per day, less appropriate tax and NI deductions. When you do your tax return you will show what you earned and that you have already paid tax and NI on it.

EDIT: You may not get £400 per day if the agency wants its cut from you. That depends on your relationship with the agency

 

[Newchodge]

Could you persuade them you don't fall within IR35?
You know what you are doing long term, they do not.

The Op has already stated that they don't have any arguments to claim it is not within IR35

 

[Mr D]

The Op has already stated that they don't have any arguments to claim it is not within IR35

And seems to have an issue with the employer using IR35 on a short term contract despite that. I think we don't have the full story either way.

 

[Newchodge]

And seems to have an issue with the employer using IR35 on a short term contract despite that. I think we don't have the full story either way.

The length of the contract is an irrelevance. A 1 week contract could fall within IR35.

 

[uaesthetics]

I'm really confused, everyones taking their own spin on this.

I just got offered a contract at 400/day and I've been told it falls within IR35. It is for 3 months.

That's all.

Is there anything I can do to make it NOT fall within IR35, so that I can just do the accounts myself with my accountant like i do with all other contracts?

 

[NicoJ]

I agree the length of the contract is irrelevant.

Is this a public sector contract? If it is then I'm afraid you cant do anything about it.

 

[uaesthetics]

Yes, it is University Institution

Damn...so the only other way is just ask for more money, higher day rate as my normal rate is 400/Day

If I get 400 and within IR35, by the same I get money in hand it's prob more like 330/day...

 

[Mr D]

The length of the contract is an irrelevance. A 1 week contract could fall within IR35.

Never claimed otherwise.

 

[TheCyclingProgrammer]

Public sector or not, any gig can be inside or outside IR35 depending on a combination of the contract terms and actual working practices.

Unfortunately as it is public sector it is for the engager to determine the contract status and if they have determined it is inside IR35 then that means either it actually is (ie they really just want a short term employee) or they’ve decided to make a blanket assessment to cover their own backs.

Your choices are accept the gig, accept it but charge more to account for the extra taxes and risk losing the gig or walk away entirely.

 

[Alan]

Just a question for the CyclingProgrammer, if it is a university contract and inside IR35 who is paying the employers NI, the employer ( University ) or the contractor?

What I don't get right now is the material difference of inside or outside IR35 is today with only£2k tax free dividend allowance.

Obviously years ago it made a major difference as you could use dividends in a limited company to avoid paying employer NI, but now substantially less so.

IR 35 back then would cost you approx 11%, but what is the difference now?

 

[ffox]

IR35 applies to the contract and not to the contractor. A contractor can work simultaneous contracts both inside and outside IR35.

If a contractor's customer (or potential customer) has defines a role to be subject to IR35, then there is little the contractor can do about it. If the role is taken on the customer will pay tax and NI for the contactor according to PAYE rules.

Even if the customer has listed the role as outside IR35, it doesn't mean that the contractor is free to take the gross and account for taxation as a supplier. HMRC can deem that the role is subject to IR35 and require that the contractor pay tax and NI as though they were an employee of the customer.

In order to avoid this the contactor first has to have a role where the customer has deemed it to be outside of IR35 and also to consider -

• the worker’s responsibilities
• who decides what work needs doing
• who decides when, where and how the work’s done
• how the worker will be paid
• if the engagement includes any benefits or reimbursement for expenses

If the above do not fit with the HMRC view of the role in any subsequent test of the situation, the contractor will be subject to investigation and possible correction of taxation, plus penalties.

I have known many contractors suffer hell and eventual bankruptcy because they ignored this simple set of rules.

Play by the book and survive - mess with the rules and risk disaster.

A good contractor can demand a rate that fits what they do without bending any rules.

 

[TheoNe]

You should seek some expert advice on this before moving forward.

This looks like a good place to start: https://www.gov.uk/guidance/ir35-find-out-if-it-applies

 

[Energise Accounting]

You are either inside or outside of IR35. It all depends on a number of factors. If HMRC decide to investigate they don't just look at the contract, they also look at the actual working relationship.