Am I within IR35?

[treelover]

For the last 16 months I’ve been working through an umbrella company. After the recent changes to expenses I’m thinking of going down the ltd route.

However after consulting Professor Google I’m concerned that I’m effectively an employee of the ultimate company I work for. I’ve spoken to the recruitment agency and they say not to worry about being inside IR35, they also say not to bother looking online as it would confuse me….

Some key information is:

1. I work a fairly constant 40 hour week.
2. Job title is Assistant Project Manager (I’m a civil engineer).
3. I’m paid by the hour.
4. My email signature says I work for the client company (ie not the umbrella company).
5. I ask my line manager if I can have time off etc.

My questions are:

1. Am I within IR35? (I suspect I know the answer)
2. If I trade through a ltd company while being within IR35 how likely is the tax man to pull me up?
I’d obviously like an extra £200 a week in my pocket, however I don’t want to get a royal bumming by the hmrc for tax evasion.

Thanks for any help you can offer me and I apologise if this question has been asked a million times.

[northernladuk]

I don't want to be rude but you say you've consulted google on this. Which site told you any of your 5 points had absolutely anything to do with IR35? I mean... Paid by the hour?

If you are going to to go LTD and deal with IR35 you really need to read up a little better than that.

[Fred Bloggs]

OP, nothing you posted has a significant effect regarding IR35. The holy trinity of SDC, substitution and MOO is all that really counts. If you can say "NO" to any one of those, you're not in IR35.

[jamesbrown]

OP, nothing you posted has a significant effect regarding IR35. The holy trinity of SDC, substitution and MOO is all that really counts. If you can say "NO" to any one of those, you're not in IR35.

I think you mean control but, yes, I mostly agree, with some caveats to the OP. A "line manager" implies, to me, someone that has significant control over what you do. Generally speaking, having a job title implies that you're a temporary resource (although I appreciate that a "PM" is rather generic in this case), and having an e-mail signature that doesn't reflect your status as an external consultant isn't good practice IMO, but they're somewhat superficial pointers (i.e. they suggest to me that you may view yourself, and your client may view you, as another temporary employee, but you haven't provided enough detail).

As for getting caught, if you knowingly claim a status that is wrong (e.g. you ignore a negative contract/working practice review), that would be evasion and, yes, you could be in for a bumming; whether you actually get caught is another question, but it would be a very stupid thing to do, and you'd have it hanging over you.

[dx4100]

For the last 16 months I’ve been 5. I ask my line manager if I can have time off etc.

This sounds like you are an employee....

Join the IPSE and get your contract and working practices reviewed by Abbey Tax and insured if you are outside.

or get a similar service from QDOS.

[eazy]

Maybe

What the OP has described above have elements of Control and part & parcel of the organisation. As others have pointed out, need to concentrate on the three key issues :

1. Personal Service (RoS) : Do you have a genuine right of Substitution?
2. Control - Can the client tell you how, what, when and where to do the work. How is the most important factor.
3. Mutuality Of Obligation (MOO) - Can you decline work / Is the client obliged to offer work even within the current assignment / offer further work on completion of current assignment.

Other factors (in business on your own account) can help when the above factors are not clear cut. The more factors in your favour, the easier it is to be cleared if investigated by HMRC.

[Fred Bloggs]

What the OP has described above have elements of Control and part & parcel of the organisation. As others have pointed out, need to concentrate on the three key issues :

1. Personal Service (RoS) : Do you have a genuine right of Substitution?
2. Control - Can the client tell you how, what, when and where to do the work. How is the most important factor.
3. Mutuality Of Obligation (MOO) - Can you decline work / Is the client obliged to offer work even within the current assignment / offer further work on completion of current assignment.

Other factors (in business on your own account) can help when the above factors are not clear cut. The more factors in your favour, the easier it is to be cleared if investigated by HMRC.

Just to clarify - You need to prove 1 OR 2 OR 3 don't apply. Then you are outside IR35. HMRC have a hard time proving otherwise as long as you have good representation from the start and have carried out due diligence.

[northernladuk]

OP, nothing you posted has a significant effect regarding IR35. The holy trinity of SDC, substitution and MOO is all that really counts. If you can say "NO" to any one of those, you're not in IR35.

How can saying 'No RoS' puts outside. Completely the opposite surely?

[northernladuk]

Just to clarify - You need to prove 1 OR 2 OR 3 don't apply. Then you are outside IR35. HMRC have a hard time proving otherwise as long as you have good representation from the start and have carried out due diligence.

And just to clarify this is the absolute minimum and would have to make sure your evidence of that one pillar is watertight which is going to be very difficult to achieve. Where this might be true I do think it's a very very basic test and assuming you're outside because you think youve got one covered isn't going to avoid a massive headache when you get investigated.

I'm on the fence as to whether this is even good advice TBH.

[mudskipper]

Folks, if you're based in London, get yourselves along to

https://www.ipse.co.uk/events/tue-05...ir35-made-easy on 10 May.

Even if you think you know about IR35, Paul will tell you stuff you didn't know, and answer any questions.
Bruce also gives food for thought on your financial planning in an entertaining and useful way.

There is no hard sell, and the event is open to both IPSE members and non-members (although most attendees are members, there are usually a few non-members present).

Very well worth an evening of anyone's time, IMO.