Best way forward.....

[nbizi]

I have recently finished my first contract which was only ever an Interim role and this was known at the outset. I took this having been out of work for most of 2002.

On advice of my accountant I paid myself a reasonable wage and a dividend during last year after April 5th.

I have also used my company to import some goods to sell on to another separate company owned by someone I know.

Subsequently I have taken another dividend in order to release money to buy shares in the company whom I had been selling goods onto.

Anticipating that I might be out of work again during this year I have left money in the company and can continue to pay myself for a period (not that long!!!).

Any advice where I stand now re IR35 and should I have done this in a smarter way? I am discussing possibilities of EIS for my share purchase and subsequent directorship.

Thanks.

[Vetran]

Any money you made out of buying and selling is IR35 free.

Your IR35 risk is dependent on your working practices and contract, if they were OK then you should be free of IR35, probably it would have been best to sort it out while you were working however if the contract isn't too bad there is quite a lot that can be done retrospectively.

Get your contract reviewed professionally and see how bad it is, then start damage limitation.

[AtW]

> Any money you made out of buying and selling is IR35 free.

Vetran, am I correct thinknig that any money I make from (say) selling software to various companies will be IR35 free? What if I do 2-3 days of consulting here and there - would it be subject to IR35, or the whole lot will be subject to IR35 or nothing?

[Vetran]

IR35 is targetted at people who would otherwise be employees in the eyes of the IR. Buying / Selling software for personal profit is not a normal employee situation.

Consulting 2 - 3 days is unlikely to be caught by IR35 because you are an expert who is not being controlled by the customer therefore you pass the 'control test'.

If it may not be you doing the consulting i.e. you occasionally get a friend to do it because you are busy then you pass the 'personal service test'.

These two are the strongest ways to avoid being affected by IR35 no control & no personal service.

Plenty of different ways of doing business outside IR35, just avoid being 'employee like'. Best to supply your own Terms & conditions which are tuned to reflect your business. Plenty of good references on this site & the pcg covering IR35.

[AtW]

thanks Vetran. I am going to have a deep read at various resources, wonder what will IR591 introduce - they will surely cover my wee owner controlled company :rolleyes

[Vetran]

Oh Yes Gordy is getting really desperate, don't worry unless you are a staunch labour voter then you are in for a shafting!

591 will be 10% of everything combined with s660 and IR35 will wait in the wings for the rest. Hector has a full toolkit now.

[AtW]

well 10% extra does not sound too bad - my uneducated calculations seem to indicate that this is still preferable to paying salary at high tax rate, or am I wrong here?

[nbizi]

Thanks for the adivce I was under the impression that as long as I was not using my company for the sole purpose of employment on a fixed contract that could be deemed employed then I would be better off in terms of IR35. My aim would be to build up my import business (unrelated to IT) and use my IT skills to bring in cash if required.

Where can I get my contract professionally reviewed?

[Vetran]

No you misunderstand AtW I reckon Gordy will keep IR35 & 660 but add a blanket 10% on top.

He is DESPERATE!!!

As to contract reviews - some advisers advertise on here, I believe SJD & Lawspeed do it, some also over at www.pcg.org.uk. Don't ask me which is the best however, I used QDOS and they were OK however they aren't the cheapest. The one who seem to win the most troublesome cases are Accountax.