Contracting with ex-employee - IR35

**TheCyclingProgrammer** · 19 December 2014, 00:01

Working for an ex employee doesn't make you inside IR35 by default. But it might increase the risk of investigation. You need to make sure your contract is reviewed and make sure you are engaged to deliver a very specific set of deliverables.

The biggest challenge will be making sure your working practices are that of an independent contractor and not an employee. IMO, this is he riskiest part of working for an ex employee - there's a much higher chance of you being treated like an employee as you used to be one.

If it's a good gig and good rate I wouldn't turn it down just because I was a former employee but you have to be on the ball.

**mudskipper** · 19 December 2014, 07:54

If you decide to take the gig and declare yourself inside IR35, you can still do this via your ltd - you don't need to go brolly. You can also mitigate tax burden by sticking lots into pension etc, if you can afford to do so.

**Contreras** · 19 December 2014, 08:19

Originally posted by redbridge View Post

My question is If I want to execute this contract from my company is insurance and contract review the best way forward?

Yes.

Originally posted by redbridge View Post

Another suggestion was to make my company dormant and work through an umbrella company for the period of this contract.

That would be silly. Remember - IR35 isn't a crime.

You can still operate via Ltd and pay the tax. Although if it's a different role to what you were doing before, is project specific, and with defined deliverables, then it's probably outside IR35. If you (and QDOS) can reasonably argue that it's not IR35 caught then it's reasonable to operate as outside IR35. If you worry that there's still a chance that HMRC might challenge successfully against you then mitigate that by keeping the warchest topped up with the tax you would have paid.

**sal** · 19 December 2014, 08:29

Originally posted by redbridge View Post

I spoke to a very helpful lady in QDOS who mentioned that as I was made redundant and then I took up a contract with another client it would help but still there is a chance for investigation and suggested that I go for an insurance cover and proper review of my contract before I start the role.

Listen to the lady at QDOS, if the contract review passes and you get the insurance, i don't believe you will have grounds to worry. If you still think this insufficient then This VV

Originally posted by mudskipper View Post

If you decide to take the gig and declare yourself inside IR35, you can still do this via your ltd - you don't need to go brolly. You can also mitigate tax burden by sticking lots into pension etc, if you can afford to do so.

**redbridge** · 19 December 2014, 15:56

Thanks all for your time and reply, I emailed my ex employer that that I am concerned that I will have to declare myself inside IR35 to provide the service he is requesting from me, so he replied back stating that we could do the following in addition to the job specification which would be a lead position and not developer which I was doing as a perm employee.

1. Might be helpful to have a simple website & email address for my company
2. You need you own professional indemnity insurance.
3. You would need to quote a 'fixed price' for the projects rather than the day -rate. We would then issue you with Purchase Orders for you to invoice accordingly.
4. The issue with being your last permanent employer!
- in addition to you not being on the payroll there are other changes which would mean that you would not be re-joining the company on the previous terms & conditions;
1. Now that we have offices we no longer have permanent staff working from home but contractors can work from their home office when it is appropriate to do so.
2. Non -contractor staff are required to complete a timesheet and can work flexi hours.
3. We would issue you with a security pass that clearly stated that you were a xxxxx contractor
4. You would not be entitled to holiday pay, sick pay, or to join the company pension scheme
5. The contract needs to state that you would be entitled to supply an alternative, suitably qualified person to do the work or to assist you with the project.

I think the above should help in case of an investigation.

In addition I have decided to go with QDOS and also get the contract reviewed for IR35 and suggested make sure working practices are that of an independent contractor and not an employee.

Once again Thank you all very much.

Regards

**TheCyclingProgrammer** · 19 December 2014, 16:16

Much of the above seems fine although a fixed price quote is not necessary. It does show an element of financial risk not present in charging a day rate but charging a day rate isn't really a pointer to being inside IR35.

If they are happy to accept a reasonably unfettered right of substitution clause and would genuinely allow you to substitute if necessary, then that will likely be enough to keep you well outside of IR35. All of the other things are good pointers to being outside too.

You should still:

* Make sure the scope of the project is as well defined as it could be
* Avoid working on anything else unless you draw up a new schedule
* Take steps to ensure you are treated like a contractor and not like an (ex-)employee.
* If you can retain control over your working hours and where you do the work this will help too

You should certainly have your own PI insurance but I wouldn't worry too much about your own company website for now.

**Contreras** · 19 December 2014, 17:32

Originally posted by redbridge View Post

Thanks all for your time and reply, I emailed my ex employer that that I am concerned that I will have to declare myself inside IR35 to provide the service he is requesting from me, so he replied back stating that we could do the following in addition to the job specification which would be a lead position and not developer which I was doing as a perm employee.

1. Might be helpful to have a simple website & email address for my company
2. You need you own professional indemnity insurance.
3. You would need to quote a 'fixed price' for the projects rather than the day -rate. We would then issue you with Purchase Orders for you to invoice accordingly.
4. The issue with being your last permanent employer!
- in addition to you not being on the payroll there are other changes which would mean that you would not be re-joining the company on the previous terms & conditions;
1. Now that we have offices we no longer have permanent staff working from home but contractors can work from their home office when it is appropriate to do so.
2. Non -contractor staff are required to complete a timesheet and can work flexi hours.
3. We would issue you with a security pass that clearly stated that you were a xxxxx contractor
4. You would not be entitled to holiday pay, sick pay, or to join the company pension scheme
5. The contract needs to state that you would be entitled to supply an alternative, suitably qualified person to do the work or to assist you with the project.

I think the above should help in case of an investigation.

If all of that is reflected in reality then you are in a good position. As your ~~ex-employer~~prospective client appears to be understanding of your concerns, and very much on the ball, you could reply with a "Confirmation of Working Arrangements" questionnaire. Speak to your reviewer about this as they should be able to supply a template, you can get it reviewed the same time as the contract.

**BlasterBates** · 20 December 2014, 13:33

The offer from your employer sounds good. Doing fixed price contracts is almost a guarantee it is outside IR35.

**redbridge** · 20 December 2014, 17:09

Thank you

Thank you all very much.

Regards

Contracting with ex-employee - IR35