Offer to go perm, IR35 issues

[theonewho]

Hi

I have done some searching and research and can't find a clear answer on this.

I have been working under my ltd co for the last 9 months for an organisation outside IR35. This is the first contract I have done under my ltd co and the first time I have had any dealings with this organisation.

It's a good place to work and lots of opportunities, they have offered me a perm role and a chance to write my own pay practically. The contract role has been a project management one, the perm role a programme management one.

So I thought I wouldnt encounter any IR35 issues as it covers the perm to contract scenario but my accountant suspects I will have issues. He hasn't given any specifics yet so am left scratching my head a little.

I understand the knock on effects of a dormant/closing thenltd co and paying taxes due etc, but am completely lost on how IR35 comes into play.

An help or advice please?

[Sockpuppet]

It won't.

If your outside now you'll stay outside. If your inside now you'll still be inside. Never take IR35 advice from an accountant.

Your Co can't be held responsible for things your employees might do in the future, like leave and work somewhere else. Your co can for things that happened in the past (i.e. leave somewhere and return as a contractor).

[LisaContractorUmbrella]

Hi

I have done some searching and research and can't find a clear answer on this.

I have been working under my ltd co for the last 9 months for an organisation outside IR35. This is the first contract I have done under my ltd co and the first time I have had any dealings with this organisation.

It's a good place to work and lots of opportunities, they have offered me a perm role and a chance to write my own pay practically. The contract role has been a project management one, the perm role a programme management one.

So I thought I wouldnt encounter any IR35 issues as it covers the perm to contract scenario but my accountant suspects I will have issues. He hasn't given any specifics yet so am left scratching my head a little.

I understand the knock on effects of a dormant/closing thenltd co and paying taxes due etc, but am completely lost on how IR35 comes into play.

An help or advice please?

What did you base your IR35 status on in the first place?

[Greg@CapitalCity]

So I thought I wouldnt encounter any IR35 issues as it covers the perm to contract scenario but my accountant suspects I will have issues. He hasn't given any specifics yet so am left scratching my head a little.

Sounds like an odd thing for your accountant to say. I too am left scratching my head.

[BlasterBates]

I can see where he´s coming from. Some contracts have the intention of the contractor switching to permie, in this case your contractor role switches into a permie role without much change of the job. This would be a strong pointer. If the permie role is significantly different then obviously this shouldn´t be a problem. The fact that you will be dissolving your Ltd company means in any case you´ll be moving off the radar screen.

[northernladuk]

I can see where he´s coming from. Some contracts have the intention of the contractor switching to permie, in this case your contractor role switches into a permie role without much change of the job. This would be a strong pointer. If the permie role is significantly different then obviously this shouldn´t be a problem. The fact that you will be dissolving your Ltd company means in any case you´ll be moving off the radar screen.

Is this true though? I thought it would reduce chances of being investigated, which will be very slim anyway due to the short timescale any but not take you right off the radar?

[Wanderer]

I understand the knock on effects of a dormant/closing thenltd co and paying taxes due etc, but am completely lost on how IR35 comes into play.

I don't think IR35 is an issue here.

Ask your accountant about doing a capital distribution if you are closing your company down and you are a higher rate tax payer.

Also be aware that by going permie you may be clobbered for a big tax bill in this financial year due to your previous contracting income so make sure you have some cash put aside to pay that.

[theonewho]

Thanks for the advice.

Just to add, I had my contract independently reviewed to ensure I was outside IR35 and backed it up with usual work work practices.

There was no suggestion of temp to perm at the beginning of the engagement, the job is open competition but I have been encouraged to apply.

[theonewho]

So a new development...

The IR35 lady at the accountancy thinks that HMRC perceive the contract period prior to substantive employment as inside IR35.

This is because the organisation is looking to retain me as a person and its not about the service. So they always had the intention of appointing to a permanent role and used it to test out the people.

I could argue that the contract was setup to run for the life of the project only, even though the project has now been delayed, but the organisation is willing to pay off the agency so it gets around any clauses.

I suppose options are:

Proceed and say nothing, if it comes, have the argument with hmrc and possibly have to pay out

Pay up now!

[rootsnall]

Defo do not pay up now. Take the permie job if you want it. Tell ( don't ask ! ) your accountant to wrap up the Co as though it is outside IR35. I would think it's highly unlikely you'll ever hear anything about it ever again. You rarely get 'clear' answers.