Contract to perm

[ContractorBanking]

Mulling over a perm offer from my current contract client (direct, no agency).

Any gotcha's or red flags I should be mindful of, if accepting the offer?

thanks

[northernladuk]

Mulling over a perm offer from my current contract client (direct, no agency).

Any gotcha's or red flags I should be mindful of, if accepting the offer?

thanks

If it's the same role and all you are changing is your engagement method it could be argued you should have been inside all along so a big risk if you get investigated.

Whatever the situation keep your tax investigation insurance going for a full calendar year after accepting.

Be prepared to spend two weeks writing yourself a performance evaluation and agreeing criteria with your manager which you can spend weeks updating after you've had your yearly 360 review. Enjoy the feeling of being told you are great and then getting no pay rise.

Don't forget to hand in your CUK account on the first morning of your employment.

HTH

[taxevo]

NLUK is right, if HMRC looked at you for IR35 then moving to a perm role would indicate you should have been inside when working through your PSC.

I suppose it comes down to whether you want to continue as a contractor or make the switch to permanent employment.

[Maslins]

I don't necessarily agree with the above two posters. If it was the other way around (ie you were a permie, then quit and went back as a contractor straight after) it would be a concern.

I don't think there are any particular concerns from a tax perspective. We tend to recommend you don't do anything tricky to reverse (eg VAT de-registration) until you're through any probationery period and confident you'll be sticking with the permie role. However if you've been contracting for them for some time presumably you/they know what you're getting into so shouldn't be any nasty surprises.

[Dom at Fox Bartfield]

Perm

Would agree with @Maslins, going the other way would be a concern for the same place.......although would be interesting to compare before/after roles to see how similar they are.

[malvolio]

Would agree with @Maslins, going the other way would be a concern for the same place.......although would be interesting to compare before/after roles to see how similar they are.

I would also take a close look at the remuneration package on offer...

[ChimpMaster]

I would think it was a red flag for HMRC, if the role is much the same.

Look at what happened in the Public Sector with the enforced IR35 debacle. Anyone in a running contract who was deemed inside IR35 was then a target for HMRC investigation on past contracts at that client.

[Alchemy Accountancy]

If it's the same role and all you are changing is your engagement method it could be argued you should have been inside all along so a big risk if you get investigated.

NLUK is right, if HMRC looked at you for IR35 then moving to a perm role would indicate you should have been inside when working through your PSC.

I agree, in theory, with this - irrespective of whether starting to use or ceasing to use a limited company, then if a role is classed as employed in the absence of the limited company, and there is no change to the working practices when moving from one to the other then HMRC would have grounds to apply IR35.

Moving from limited to perm is certainly less obvious than the other way, and I don't think IR35 has ever been tested in the way described, but that is not to say that HMRC couldn't or wouldn't try.

[northernladuk]

I don't necessarily agree with the above two posters. If it was the other way around (ie you were a permie, then quit and went back as a contractor straight after) it would be a concern..

The details are the key, of which we have absolutely none but if he walked out the door as a contractor PM on x project on Friday and walked back in doing exactly the same but as a permie there has to be a question around his status. Nothing has change but his remuneration method. You'd think if it's an issue one way it surely must the other.

Whether or not HMRC has ever gone after anyone this way round would really dictate the amount of concern.

It can't be risk free as the standard advice is to keep tax insurance going. If he was home free that advice wouldn't be needed.

All that said a pretty minor change in his circumstances could put him safe, but until he puts anything but the very basic info in his post I'm happy to raise it as something he needs to consider.

[Lance]

The details are the key, of which we have absolutely none but if he walked out the door as a contractor PM on x project on Friday and walked back in doing exactly the same but as a permie there has to be a question around his status. Nothing has change but his remuneration method. You'd think if it's an issue one way it surely must the other.

I have to agree with NLUK on this one.

IR35 is to catch those who 'if engaged as an employee, would be taxed as an employee'. That applies here too IMO. Switching from contract to permanent makes no odds.
Unless of course ... either..
1) the working practises are different, or
2) the working practises are the same but as an employee there is still no SDC (quite plausible), a RoS (not a chance) and no MoO (employment contracts make that not really plausible). So down to SDC, but as that has yet to be tested for an employee I'd not bet the house on it.

Risk of investigation is low, as with all IR35 cases, but this is an additional complication.
As with all these things the devil's in the detail, and the evidence.