Probably inside IR35 - best way to proceed

**LisaContractorUmbrella** · 10 February 2015, 10:19

Setting up a Ltd Co wouldn't make any difference in terms of the 24 month rule as your actual position won't have changed - you will still be working at the same location. If you are inside IR35 - and based on what you have said I think you would be there won't be much change in your take home pay if you move to Ltd so, if you decide to change then perhaps you should base your decision on how important the control issue is to you

HTH

**jamesbrown** · 10 February 2015, 10:43

Originally posted by Mug27 View Post

It's looking highly likely that I'm going to be offered an extension on my contract which will take me past 24 months with the same company at the same location. I'm currently working via an umbrella and claiming my travel expenses. As I understand it as soon as I am offered this extension I'll no longer be able to claim expenses.
I was thinking of setting up my own limited company to coincide with the new tax year and give me more control and improve my take home. However, on studying some of the articles on this and other sites I'm now not sure that this would be much of an improvement as I think I'm inside IR35. Key points are:
I work at the same location; I use the company's equipment; I am allocated work by a team manager; I have a personnel number; I'm paid a set daily rate.
Given these circumstances is it worth me setting up a ltd company? Some guidance would be much appreciated.

First, you shouldn't decide about starting a company on the basis of a single contract, although this may affect the timing. If you plan to contract long-term, working through a Ltd. generally makes sense.

Second, you should have your contract and working practices reviewed, as you mention several factors that are likely to be neutral from an IR35 perspective (being paid a daily rate is irrelevant and using the company's equipment is neutral if it's a required of everyone). Being assigned work (especially on a daily basis) that isn't specified in a schedule of work is potentially a pointer towards D&C. Anyway, based on the points you cite, you don't know enough about IR35 to make a sensible judgment on this, so seek professional advice on your working practices.

Third, in terms of the 24-month rule, this applies once you know that an extension beyond 24 months is likely.

**GlenW** · 10 February 2015, 12:58

Originally posted by jamesbrown View Post

Third, in terms of the 24-month rule, this applies once you know that an extension beyond 24 months is likely.

Are you sure? I thought that it was from when you knew that your contract was being extended not that the extension was likely. Subtle difference I know but it could be important.

**jamesbrown** · 10 February 2015, 14:07

Originally posted by GlenW View Post

Are you sure? I thought that it was from when you knew that your contract was being extended not that the extension was likely. Subtle difference I know but it could be important.

It's based on expectation. I think you could reasonably argue that the expectation of extending beyond 24m applies when the extension is granted (and there would be no relief from that point onwards).

**TheCyclingProgrammer** · 10 February 2015, 14:46

Originally posted by GlenW View Post

Are you sure? I thought that it was from when you knew that your contract was being extended not that the extension was likely. Subtle difference I know but it could be important.

Its based on when you know, or expect, the contract to go beyond 24 months.

Of course, its a lot harder for HMRC to prove that you *expected* it to go beyond 24 months versus having an actual signed extension.

Probably inside IR35 - best way to proceed