Redundancy/secondment and contracting/IR35 afterwards

[TallTree]

Hi all,

I was hoping to get some advise or maybe some pointers as to where I could get some. I'll try and sum up my situation quickly.

Last year I was made redundant from my position project managing software and some other application based projects due to a major outsource. I did not apply for any new roles that would be available post restructure.
Before my end date I was taken aside asked to stay on for a special project, seconded in to another project team for 9 months, but still at risk of redundancy at the end of this (my old role no longer existing). I only agreed to this as the project was a major piece of work, very interesting, great on my CV and I'd keep my redundancy payout at the end.

I was just called in to a meeting to discuss my future as the 9 months is up at the end of this month and the project will be continuing for some time to come. I seem to have made an impression and they want make me a permanent job offer in my seconded team.

While I will look in to extending my secondment as I won't accept their permie offer (for about 5 substantial reasons), I might take the opportunity to finally jump to contracting and forgo my redundancy (money now is better than money later).
Given I will be in the same office doing the same role I have done since January is it easier for me to go down the umbrella route? It seems unlikely I'll be able to avoid IR35 etc

Has anyone else been in this position? Should I talk to an accountant?

[Clare@InTouch]

Talk to an accountant to discuss the situation in more detail before you decide. You may find that you can argue being outside, or that there's enough doubt that you're happy to hedge your bets by taking a higher salary than normal, but not quite the maximum.

Even if you are within IR35 you can still be better off by being limited - an umbrella will tax 100% of your earnings as salary, whereas a limited (under IR35) will only be 95%. You can also benefit from the flat rate VAT scheme in most cases.

[TallTree]

Thanks for the response. You're right, it isn't a huge amount.

A couple of my colleagues are on schemes such as Choice Premier and have also recommended me some accountants from their limited company days so I'll go there first.

Discussion with my manager about contracting is tomorrow, see how it goes

[adubya]

So as far as Hector's concerned you'd be moving straight from permie-> contractor at the same place of work, in the same role == red flag.

If you do decide to go for it can't you take the redundancy and THEN come back as a contractor rather than forego it

[northernladuk]

You also need to make sure your boss speaks to HR first before he offers you anything. Many large companies have a non-return clause in their contract which doesn't allow you to come back for x months.. Ok maybe I have that the wrong way around, but they should not take you on for x months in any other capacity. I don't know what the wording is but at my second client a guy that got made redundant came back as a contractor and as soon as HR got winded he got released. Their policy is not to allow people back after redundancy for 6 months. The managers didn't know, took him on and HR pulled it.

You never know, the HR might even pull the handcuff clause if you come back as well

[Wanderer]

a guy that got made redundant came back as a contractor and as soon as HR got winded he got released. Their policy is not to allow people back after redundancy for 6 months. The managers didn't know, took him on and HR pulled it.

They have to tread carefully on this one. A company can't pay someone a redundancy package (£30k of which is tax free) and then re-hire them as a contractor the next day. I have seen it done where a department was outsourced and one of the guys took redundancy and came back working for the outsourcing company as a contractor the next day, sat at the same desk and all. Apparently this is allowable because it's a different company hiring him, I have no idea what his IR35 status was.

Of course, if you are not being made redundant then that doesn't apply so you can resign today then come back tomorrow as a contractor. Of course this is a red rag to an IR35 investigation but as Clare says, don't presume that you are automatically caught. It is possible that with careful drafting of your contract, a clear understanding of the situation by your client and careful management of your working conditions, you may be able to avoid IR35. There is a lot of money at stake so get professional advice on this.