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IR35 Q - Just Cant Seem To Get Answered

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    #11
    Also I dont think being caught by IR35 is such a big deal. last time I calculated the difference in take home it worked out to be about £8k difference per year, cant rememeber what rate I based that on, probbaly around the £400 mark. Possibly not worth giving a contract up for, just treat is as inside IR35.

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      #12
      I worked as a contractor for a while for several years "outside IR35" actually in Germany but they have a similar rule. My view was I did this and "got away with it". Having worked for nearly half my career as a contractor and now back to being a permie I see very little difference indeed between the two. In Switzerland we were treated legally as temps, and I think this is what most contractors are.

      From that perspective very few contractors are clearly outside IR35 in particular the huge numbers of permatractors aren't, and so perhaps playing it safe inside IR35 is not a bad thing.

      You never know if HMRC is really going to clamp down on this, so it is a risk being outside. At the moment there are so few cases you can choose to ignore it. However if HMRC do decide to investigate on a large scale it would probably be a nightmare.
      I'm alright Jack

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        #13
        Originally posted by BlasterBates View Post
        I worked as a contractor for a while for several years "outside IR35" actually in Germany but they have a similar rule. My view was I did this and "got away with it". Having worked for nearly half my career as a contractor and now back to being a permie I see very little difference indeed between the two. In Switzerland we were treated legally as temps, and I think this is what most contractors are.

        From that perspective very few contractors are clearly outside IR35 in particular the huge numbers of permatractors aren't, and so perhaps playing it safe inside IR35 is not a bad thing.

        You never know if HMRC is really going to clamp down on this, so it is a risk being outside. At the moment there are so few cases you can choose to ignore it. However if HMRC do decide to investigate on a large scale it would probably be a nightmare.
        Are you saying that all contractors should be inside the IR35 but those that are not are getting away with it?

        I don't really see it that way. Contractors are not permies, that is the case on so many different levels, not just taxation-wise. I mean it depends on how you choose to approach it. But if you are going through a limited, you have to position yourself as an employee and owner of that limited which is offering services to another client, and you should continue to act this way.

        The problem is many times neither the clients nor contractors treat things like that and the temp thing that you mentioned becomes a reality. Contractors are not temps in my opinion, they have a unique skill set which only they can do in a set amount of time for their clients.

        For me, if you area a genuine contractor, then you should always position yourself as someone offering a set of skills, through a company (which you also just happen to own) on a time fixed basis. Your company agrees the fee and you take home a salary and whatever profits your company makes. But you should always realize that while on site you are representing both your company and yourself. Should things grow down the line, your company might eventually employ several people who will go on to contract for several clients. Contracting then becomes a window into a future business.

        In either case I think HMRC's rules are vague on this. Because it always feels they are out to get contractors acting like permies, and so they should, but they never clearly define what they believe to be a contractor (realistically) because a contractor does the same thing an established 50 man consultancy does (legally speaking). It just needs better definition, but what do I know, I've only been doing this for a short while and still learning.

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          #14
          Originally posted by TheCyclingProgrammer View Post
          Also worth bearing in mind a single contract can start outside IR35 (both contract and working practices) but can become caught mid-contract if you stay long enough and your working practices start to change to that of a normal employee.
          After what time period do people believe this to be the case? It's inevitable that after so long in any gig that you become 'part of the furniture' and your working practices change to that of a normal employee.

          Personally I try to avoid anything over a year, 1) because of the above but more importantly, 2) because I'm bored tulipless by then.

          There are people in my current gig just starting their 5th year and they organise company nights out, hang out the xmas decorations, order stationery etc etc. They operate outside IR35 but there's no way that can be genuine.

          Comment


            #15
            Originally posted by KayMan View Post
            Are you saying that all contractors should be inside the IR35 but those that are not are getting away with it?

            I don't really see it that way. Contractors are not permies, that is the case on so many different levels, not just taxation-wise. I mean it depends on how you choose to approach it. But if you are going through a limited, you have to position yourself as an employee and owner of that limited which is offering services to another client, and you should continue to act this way.

            The problem is many times neither the clients nor contractors treat things like that and the temp thing that you mentioned becomes a reality. Contractors are not temps in my opinion, they have a unique skill set which only they can do in a set amount of time for their clients.

            For me, if you area a genuine contractor, then you should always position yourself as someone offering a set of skills, through a company (which you also just happen to own) on a time fixed basis. Your company agrees the fee and you take home a salary and whatever profits your company makes. But you should always realize that while on site you are representing both your company and yourself. Should things grow down the line, your company might eventually employ several people who will go on to contract for several clients. Contracting then becomes a window into a future business.

            In either case I think HMRC's rules are vague on this. Because it always feels they are out to get contractors acting like permies, and so they should, but they never clearly define what they believe to be a contractor (realistically) because a contractor does the same thing an established 50 man consultancy does (legally speaking). It just needs better definition, but what do I know, I've only been doing this for a short while and still learning.
            Welcome to the last 14 years or so of IR35 argument and debate. If anyone is close to the legal definition of a contractor / employee / worker etc etc please let HMRC know.
            Last edited by pacontracting; 12 September 2014, 11:37.

            Comment


              #16
              Originally posted by Gaz_M View Post
              After what time period do people believe this to be the case? It's inevitable that after so long in any gig that you become 'part of the furniture' and your working practices change to that of a normal employee.

              Personally I try to avoid anything over a year, 1) because of the above but more importantly, 2) because I'm bored tulipless by then.

              There are people in my current gig just starting their 5th year and they organise company nights out, hang out the xmas decorations, order stationery etc etc. They operate outside IR35 but there's no way that can be genuine.
              I always use the guide that were I not to turn up - would it affect the day-to-day running of the client i.e. am I in a 'role' within the organisation or am I a resource for a project. If the project stops, my role should no longer exist.

              I do specialise in project work though but I can see that other contractors can be taken on for capacity reasons e.g. we need more UNIX SA's to meet demand. Is that a contractor or a temporary employee? Difficult to say but to me, this is where IR35 starts to become an issue.

              Comment


                #17
                Originally posted by Gaz_M View Post
                They operate outside IR35 but there's no way that can be genuine.
                Of course it can be genuine. (Doesn't mean it is of course).

                In my case I provided services pretty much constantly to my main clients for approximately 19 years.

                I was outside. About 3 years before I changed direction I did have a compliance review. 15 minute chat, quick check of a few contracts and "that's all fine".

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                  #18
                  Originally posted by ASB View Post
                  Of course it can be genuine. (Doesn't mean it is of course).

                  In my case I provided services pretty much constantly to my main clients for approximately 19 years.

                  I was outside. About 3 years before I changed direction I did have a compliance review. 15 minute chat, quick check of a few contracts and "that's all fine".
                  That's up to you I guess. The people who I'm referring to at my current place are more permenant than some of the permies.

                  Comment


                    #19
                    Originally posted by Gaz_M View Post
                    There are people in my current gig just starting their 5th year and they organise company nights out, hang out the xmas decorations, order stationery etc etc. They operate outside IR35 but there's no way that can be genuine.
                    If they have no right of substitution AND the client exercises direction and control AND there is continuing mutuality of obligation, then they are inside IR35. If they can show that one or more of those is absent, then they are outside IR35.
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                      #20
                      Originally posted by TheFaQQer View Post
                      If they have no right of substitution AND the client exercises direction and control AND there is continuing mutuality of obligation, then they are inside IR35. If they can show that one or more of those is absent, then they are outside IR35.
                      Obviously what is written in the contract is a good first step. Though HMIT will often try and argues it's not real unless it has happened.

                      Personally I find it somewhat odious that a client response of "Well in the event of them actually wanting to do that we would simply unilaterally breach the contract" should impact upon an individuals IR35 status.

                      The supplier has the right to insist, and the right to legal recourse in the event of a client breach.

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