IR35 with more than one client

[GlennUK]

Hi,

Im retutning to the UK from New Zeland in a few months and intend to start contracting for the first time.

My situation will be that I (intend) to have a main paying contrcat with one client (which would probbaly fall within IR35) and develop other web design oppertunities I currently have. I have three other people who I'm developing web sites for at present, one being a family member. I also aim to grow this area by obtaining further clients.

If I set up as a LTD would the 'main' contract still be viewed by the Inland Revenue as IR35 even though I will be doing other paid work for other clients ?

Reading through this site, and others, It seems for my situation that an LTD would be the most tax efficient option.

Looking at the IR definition of IR35 I seem to fit the criteria of both employed/self employed.

What are your views on this ?

Is the IR35 element based on the percentage you spend on a particular contrcat in relation to others?

Any comments would be much appreciated.

Glenn

[oraclesmith]

It's basically a judgement call by the Revenue, which is why it has been controversial. It's focussed on the contract and the element of control the end-client has over your work and other factors pointing to employment like sick pay, holiday, notice periods etc. If you have some control over your main contract, then you could possibly put yourself outside IR35 for both areas of work. In my opinion.

Your web work will certainly assist in proving you are genuinely self employed. If you reduce the element of client control in your main contract you will improve your self-employed status - for example not having fixed hours of work, having a substitution clause, having defined products/outcomes to deliver and not a continuous service etc. You can consult a business lawyer on these issues. In my opinion.

I have heard mention of the "whole picture" when assessing IR35 - for example how you trade and market your services (ie. an employee would not bother, whereas a genuinely self-employed person would have to invest in say, a company website, marketing efforts, capital items, business stationery, etc etc). The HMRC assess it contract by contract, but if you have a diversity of simultaneous work, this generally points to self-employed. If you are borderline on the main contract then the existence of the ad-hoc work will probably put you outside IR35, in my humble opinion. Most contractors running limiteds should be outside IR35 if they have taken simple precautions. If you're doing junior work, you might have a few more difficulties.

Of course you should consult an accountant or business lawyer for advice. The PCG have a lot of resources available to help you. Get IR35 insurance.

A personal word of advice : don't take the p*ss with the Revenue - like taking £5k salary and £60k dividends. Others on this site will disagree, but a wise move would be to take a modest salary somewhat above the national minimum wage.

[swamp]

Is the IR35 element based on the percentage you spend on a particular contrcat (sic) in relation to others?

No, though having concurrent contracts can be a pointer that you are in business in your own account, which itself can be an IR35 defence strategy.

Read:

http://www.contractoruk.com/document...r35%20guide%22

Or better still, read the PCG guide to IR35 (membership required)

[malvolio]

Or better still, read the PCG guide to IR35 (membership required)

No it isn't, the First Timers Guide is open to all. There's a link on the main webpage at www.pcg.org.uk unde the "New to Freelancing" tag. But join anyway, you know it makes sense!

And as I keep tellling people, do not ever assume your contract is IR35 caught, because statistically it probably isn't. Get it checked by an expert before you start paying 20% more tax than you need to.

[GlennUK]

Many thanks

Many thanks for the replies, all very helpful.

I'll look at getting membership/IR35 Insurance when I set up.

I will be aiming to actively pursue other clients as per a 'normal' LTD, so it sounds like on the surface I'll be outside of IR35 overall.

Many thanks all.

[pickle]

don't take the p*ss with the Revenue - like taking £5k salary and £60k dividends.

horsetulipe. The size of your salary has nothing to do with IR35. Some people say it might mean you are more likely to have a tax investigation from the revenue. Big deal (you will eventually have one anyway). Get the PCG PAYE investigation insurance and run your company properly and you have nothing to fear. The poster here is just bitter that his accountant has him paying more tax than he needs to, just to lessen the chance of an investigation and therefore make the accountants life easy. You really think he advises you to do this for YOUR benefit?

Again, for the record, running a company in anything other than a legal and tax efficient manner is stupid.

[oraclesmith]

horsetulipe. The size of your salary has nothing to do with IR35. Some people say it might mean you are more likely to have a tax investigation from the revenue. Big deal (you will eventually have one anyway). Get the PCG PAYE investigation insurance and run your company properly and you have nothing to fear. The poster here is just bitter that his accountant has him paying more tax than he needs to, just to lessen the chance of an investigation and therefore make the accountants life easy. You really think he advises you to do this for YOUR benefit?

Again, for the record, running a company in anything other than a legal and tax efficient manner is stupid.

Actually old pickle, I decided this for myself, like a real company Director. You know - in charge of your own company and all that ? I took a judgement on it, did the sums and made a decision that I'm happy with. So there !