Permanent to contract help required

[theeagle1972]

Looking into the possibility of moving from permanent to contract. The problem being I would be looking to do it at my current company.

Done a fair bit of research but I am still not sure where I stand.

I am intending to set up a limited company and would have to go through the agency that my current company uses. The agency have sent me a copy of their standard contract that they have said would comply with the IR35 issue. It covers everything apart from the 'Is your current client your last permanent employer?' which they will be. The agencies stance is, I will essentially be working for them so I am clear.

Having read numerous posts on here, I still think I am caught within IR35.

Subsequently, I have explored the possibility of moving to contract but working within IR35. Whilst not as rewarding, it would be an increase in my permanent staff salary.

So, could someone confirm if I am likely to be caught within IR35 and what is the general consensus about working within IR35?

Any advice would be gratefully received.

[eek]

Looking into the possibility of moving from permanent to contract. The problem being I would be looking to do it at my current company.

Done a fair bit of research but I am still not sure where I stand.

I am intending to set up a limited company and would have to go through the agency that my current company uses. The agency have sent me a copy of their standard contract that they have said would comply with the IR35 issue. It covers everything apart from the 'Is your current client your last permanent employer?' which they will be. The agencies stance is, I will essentially be working for them so I am clear.

Having read numerous posts on here, I still think I am caught within IR35.

Subsequently, I have explored the possibility of moving to contract but working within IR35. Whilst not as rewarding, it would be an increase in my permanent staff salary.

So, could someone confirm if I am likely to be caught within IR35 and what is the general consensus about working within IR35?

Any advice would be gratefully received.

Yes you will be caught by IR35 and while you may be making more money will you be doing so once you factor in the following:-

• Employers NI
• Employees NI
• loss of sick pay
• loss of holiday pay
• loss of redundancy pay
• lack of security (they can get rid of you tomorrow at no cost)
• accountants and other fees..

Remember that 95% of your income will need to be salary, expenses or pension. You can only retain 5% to cover other costs.

If your employer is the one suggesting it to you, he really isn't thinking about you but about themselves...

[northernladuk]

So you are not really moving form permie to contract. You are just changing the way you are remunerated.

IMO if you are going to jump just leave them and do it properly. You are gonna have to let go at some point so just swallow hard and jump in. You've got years ahead of you so a couple of months in that mess won't make difference in the long term. Cut and go and do it properly. Starting off under a cloud of investigation is a pretty poor start.

[TheFaQQer]

The agencies stance is, I will essentially be working for them so I am clear.

It's almost as if the agency thinks that they have something to gain by telling you what they think you want to hear

Having read numerous posts on here, I still think I am caught within IR35.

It depends on what you are going to be doing and what you are doing now. If you are doing the same job in the same way, then this is exactly what IR35 was created to prevent. If you are doing something completely different and could argue successfully that not all three indicators of employment are present, then you would be outside.

Subsequently, I have explored the possibility of moving to contract but working within IR35. Whilst not as rewarding, it would be an increase in my permanent staff salary.

So, could someone confirm if I am likely to be caught within IR35 and what is the general consensus about working within IR35?

Any advice would be gratefully received.

What is your employer getting out of this? They aren't going to be voluntarily paying you more money if there isn't a benefit to them. For example, it would be a lot easier for you to become a contractor to them tomorrow, wave all your employment rights goodbye, and then be terminated the next day - saves them a load of cash.

If you want to contract, then go contract properly - find a client and work with them rather than working for your employer.

[jmo21]

Looking into the possibility of moving from permanent to contract. The problem being I would be looking to do it at my current company.

Done a fair bit of research but I am still not sure where I stand.

I am intending to set up a limited company and would have to go through the agency that my current company uses. The agency have sent me a copy of their standard contract that they have said would comply with the IR35 issue. It covers everything apart from the 'Is your current client your last permanent employer?' which they will be. The agencies stance is, I will essentially be working for them so I am clear.

Having read numerous posts on here, I still think I am caught within IR35.

Subsequently, I have explored the possibility of moving to contract but working within IR35. Whilst not as rewarding, it would be an increase in my permanent staff salary.

So, could someone confirm if I am likely to be caught within IR35 and what is the general consensus about working within IR35?

Any advice would be gratefully received.

This is exactly the type of situation IR35 is aimed at.

As you say, you could just declare approach as inside (or use a brolly) and still earn more than your permie salary.

This also may well be an easy way to get your first contracting gig under your belt which can often be off putting for agencies.

Also, this:

What is your employer getting out of this? They aren't going to be voluntarily paying you more money if there isn't a benefit to them. For example, it would be a lot easier for you to become a contractor to them tomorrow, wave all your employment rights goodbye, and then be terminated the next day - saves them a load of cash.

Who's idea was it?

[theeagle1972]

Thanks for the info.

Predominantly, it is my idea. We have a couple of contracting staff already here and they coin an awful lot more than I do for doing exactly the same job.

In terms of my career, I am really happy in the job that I do and the company is a good one to work for. My sole reason for jumping ship is to earn more money.

I approached my Director and although not happy that I want to go down this route, they agreed that they would take me on instead of me walking away, so long as I took the risk.

I'm still in the first steps really and mulling it all over but what does seem clear from the replies is that I need to move from my current company if I am to pursue a contracting career.

[WordIsBond]

It's very hard to escape IR35, but it can be done. The same tests (such as MOO and D&C) still apply. Substitution probably won't fly for a former permie.

Will you work on-site, or at home, or some of both, and is that a change? If you always worked on site before and won't most of the time as a contractor, you can try to argue there is no D&C. Can you contract for someone else concurrently -- one contract two days a week, the other three days a week? That would help A LOT, but that's hard to pull off. Are you using their hardware, or yours? Do you have stationery and a website? Do you have PII? You can do all the things that build a case, but you have to build a lot stronger case.

Do you have industry contacts that you can contact direct looking for other contracts while you work on this one? That also would support the argument that you are now a contractor. Etc, etc, etc. Read everything you can on IR35. But you will probably be caught. Few people are ever investigated. You could risk it by building the best case you can, getting a contract review, do everything you can, and hope they don't ever investigate. Join IPSE. And figure out what the tax would be if you are inside IR35, and save it for six years after the tax year in which the contract ends. If you get away with it, you get a nice holiday. If you don't, you have the money to pay.

If you are inside IR35, or concerned you might be, put as much from this contract into your pension as you can possibly afford. That puts it outside the IR35 taxes. Get your next contract outside IR35, and live off of that rather than the funds from the contract which was inside.

Unlike some others, I do see a benefit in taking the first contract with your former employer inside IR35. If you really want to be a contractor, and they are willing to take you on those terms, and you are working through an agency, you build a reputation with the agency. If the next gig comes down to you and another guy, and they know the client was happy with you and they don't know the other guy, they'll recommend you.

You also need to look at all the benefits you got as an employee and assess how much they are worth to you. They are going away, and in their place you get more income. But their value isn't how much they were costing your employer, their value is how much they were worth to you. If they gave you life insurance, but you don't have a family, maybe that life insurance wasn't really that important to you. Etc, etc. If you got a gym membership but rarely used it and really don't care, then that benefit wasn't important. Security, employment rights, try to put a value >to you< on everything you are giving up.

Figure out everything you got, what it is really worth to you, and what you have inside IR35. That's probably the first place to start. If you come out ahead as a contractor inside IR35, then go for it, and look for future roles that get you outside IR35, when you'll really do well.

[TheFaQQer]

Predominantly, it is my idea. We have a couple of contracting staff already here and they coin an awful lot more than I do for doing exactly the same job.

In terms of my career, I am really happy in the job that I do and the company is a good one to work for. My sole reason for jumping ship is to earn more money.

Will you still earn more money when the client has canned you and you don't find another one for six months?

Have a read of this thread - http://forums.contractoruk.com/gener...sing-gown.html - and consider the "I'll coin an awful lot more by contracting" argument.

[BrilloPad]

Sounds like they were about to make you redundant - and are now relieved you can just terminate your contract.

[northernladuk]

Thanks for the info.

Predominantly, it is my idea. We have a couple of contracting staff already here and they coin an awful lot more than I do for doing exactly the same job.

In terms of my career, I am really happy in the job that I do and the company is a good one to work for. My sole reason for jumping ship is to earn more money.

I approached my Director and although not happy that I want to go down this route, they agreed that they would take me on instead of me walking away, so long as I took the risk.

I'm still in the first steps really and mulling it all over but what does seem clear from the replies is that I need to move from my current company if I am to pursue a contracting career.

Most definitely and inarguably caught by IR35. Same job with a different pay structure is exactly what the legislation is there for. Leave Friday as an employee return Monday as a contractor. Same work and everything.

If you are bothered about what they earn then go do it. Deal with finding new clients and all the other aspects of contracting and earn the coin they do. Don't sit happy in a little cotton wool job and expect the same for nothing.

All you have achieved here is a ton of paperwork to get paid the same and give your boss the perfect opportunity to can you with no notice when he fancies it.

Talk about shooting yourself point blank in both feet lol....