Friday to Monday - umbrella gap?

[jolly fellopian]

Hi,

I'm switching from perm to contractor at my former employer with only two weeks gap. Despite the contract role being different to an extent, I think HMRC could construe me as disguised employee subject to IR35. I originally planned to use ltd company, but since this Fri to Mon thing became apparent, this is no longer possible.

Question: since IR35 is not an issue via umbrella, if I use umbrella for first period, say first three months, then switch to ltd, would this fly? Would any time period work?

Many thanks

[northernladuk]

Hi,

I'm switching from perm to contractor at my former employer with only two weeks gap. Despite the contract role being different to an extent, I think HMRC could construe me as disguised employee subject to IR35. I originally planned to use ltd company, but since this Fri to Mon thing became apparent, this is no longer possible.

Question: since IR35 is not an issue via umbrella, if I use umbrella for first period, say first three months, then switch to ltd, would this fly? Would any time period work?

Many thanks

Nope. You need to read up more on IR35. It's about what you do and what you look like to the tax man. Nothing to do with timescales at all. In fact, in my opinion, long timescales at a client make things worse for you but that's another debate.

Sack your ex employer off and go contracting properly. You are learning nothing doing it that way.. but that's my opinion.

EDIT : Your posting history indicates you are a seasoned contractor. How come you are struggling with this situation?

[malvolio]

EDIT : Your posting history indicates you are a seasoned contractor. How come you are struggling with this situation?

Because he is pulling your strings - again?

[LondonManc]

Hi,

I'm switching from perm to contractor at my former employer with only two weeks gap. Despite the contract role being different to an extent, I think HMRC could construe me as disguised employee subject to IR35. I originally planned to use ltd company, but since this Fri to Mon thing became apparent, this is no longer possible.

Question: since IR35 is not an issue via umbrella, if I use umbrella for first period, say first three months, then switch to ltd, would this fly? Would any time period work?

Many thanks

Have you asked yourself if you think it would work or are you hoping beyond hope that someone will tell you it will? Mainly because it won't. Accept that all remaining time on this spell at current client is inside IR35. Go and contract elsewhere outside IR35. QDOS and IPSE will be able to advise you with far more certainty than we can though.

[northernladuk]

Because he is pulling your strings - again?

That would make more sense to be fair.

[Old Greg]

Hi,

I'm switching from perm to contractor at my former employer with only two weeks gap. Despite the contract role being different to an extent, I think HMRC could construe me as disguised employee subject to IR35. I originally planned to use ltd company, but since this Fri to Mon thing became apparent, this is no longer possible.

Question: since IR35 is not an issue via umbrella, if I use umbrella for first period, say first three months, then switch to ltd, would this fly? Would any time period work?

Many thanks

HMRC can think what they like, and Friday to Monday may indicate a higher risk of investigation. However, Friday to Monday does not mean you are inside IR35. If this is project based work (not BAU), an approach to contracting outside IR35 is:

- Get IPSE+ membership or TLC insurance, according to preference
- Get an IPSE standard outside IR35 or similar contract
- Agree an SoW
- Make sure your working practices reflect the contract and SoW. This needs particular attention if you are moving from being a permie. You need to stop going to regular staff meetings, helping out on other projects / being a spare resource etc. etc.

It's perfectly doable if you and your current employer can change mindsets.

[Hobosapien]

What is the reason for the change of perm to contract for the same company? Is it being driven by the company, to pay less employment tax like companies do when encouraging their employees to go 'self employed'?

If it's your choice and the company values you enough to go along with it then simplest way is to ensure the contract rate is enough to allow you to work inside IR35 and still be significantly better off in monetary terms than when you was a permie.

Any other approach leaves you open to risk of investigation.

If the new rate doesn't equate to a big enough increase in income to offset IR35 then the company are agreeing to it to save money at your expense.

[cojak]

Because he is pulling your strings - again?

Noted.