Contracting for Current Employer - Checklist

[NetSleeper]

Hi All,

I have been reading this forum on and off for a year now, and have read a lot of the threads relating to my questions, however, I just want to confirm my conclusions are correct.

I have handed in my resignation at my current (permanent) position and thought I would give contracting a go. However, my company had a bit of a panic when I resigned and requested I stay on as a contractor for a couple months with a two week rolling contract. I have accepted this (verbally) and am waiting for the contract. Before I get flamed for staying with current company, I am only staying on for a max of 2 months while they settle down and I will be looking for a "proper" contact afterwards. Lets call it a small stepping stone into contacting with a company I trust (and no agents)

Now, the part I need this forums advice on is what are the steps I need to do.

Reading through the forums I understand that I am caught by IR35 because I am going from perm to contract with same company with nothing changing in my day to day. I take it is does not matter how long the contact is for, you are automatically caught. Is this correct?

Are there any benefits to a ltd considering my IR35 status. I am thinking an umbrella takes a lot of the pain out of it.
Do I still need insurance? My thinking is Yes, since I am still a contractor and there are still risks.
Should I still have the contact reviewed? Are there benefits to having a contract reviewed apart from IR35 status?

Is there anything else I am missing?

[Wanderer]

requested I stay on as a contractor for a couple months with a two week rolling contract.

That's fine, I would go ahead and either engage with an umbrella company or set up a limited company. If you go limited then I suggest that you join the PCG - they can get you setup with the company, accountant, insurance etc in one easy package. Even if you don't go with them, you can check out what their package includes so you know what you need to get.

It's not a great time to go contracting at the moment, the market is quiet though...

Reading through the forums I understand that I am caught by IR35

Almost certainly correct. Use this calculator to understand how much take home you will get from your daily rate.

Don't undersell yourself as a contractor - your hourly rate should be roughly annual salary / 1000. So if you were on £50k/year then you want ~ £50/hour or £350/day.

Are there any benefits to a ltd considering my IR35 status. I am thinking an umbrella takes a lot of the pain out of it.

You should look beyond this first contract though. You may be IR35 caught but will you be outside IR35 for your next contract in a couple of months time?

Umbrella is great if you are only contracting for a short time or earn less than about £30k contracting or if you just want a quiet life. They will deal with insurance etc for you and if you go back to being permie then you can just resign from the umbrella and that's it.

A limited company is more flexible in the long run but there is a bit of admin and a lot of stuff that you have to learn which isn't obvious - worse still, some of it is counter intuitive. Having an accountant is absolutely essential or you will get fined by HMRC for messing it up.

Do I still need insurance? My thinking is Yes, since I am still a contractor and there are still risks.

Legally, you don't need any insurance. However, most contractors have it because the client requires them to. The client will tell you what level it has to be and which cover you need.

Should I still have the contact reviewed? Are there benefits to having a contract reviewed apart from IR35 status?

Yes, because you are entering into a business to business contract and it's worth checking to make sure that there aren't any nasties in there that you should be aware of.

Is there anything else I am missing?

Yes, there are probably lots of things. Did you read all the stuff in the first timer's guide which is linked to on the right side of this page?

[TheFaQQer]

Are there any benefits to a ltd considering my IR35 status. I am thinking an umbrella takes a lot of the pain out of it.

To add to Wanderer's answer above - if you are thinking long term, then there are benefits to being Ltd rather than umbrella, even if you are always inside IR35:

• You control the money - no extra link to disappear with it
• You get 5% for expenses automatically, so there can be a saving there
• If you are on flat rate scheme VAT, then you can make a little there

Do I still need insurance? My thinking is Yes, since I am still a contractor and there are still risks.

I would if it were me.

Should I still have the contact reviewed? Are there benefits to having a contract reviewed apart from IR35 status?

Some places will just review for IR35 - if the contract is worded correctly, they may even give you a pass. Remember that IR35 is based on the working practices (which the contract helps to define), not just the paperwork. If you are paying for a full review, then the reviewer should also check for bad contract terms which are not part of an IR35 assessment - eg. they may flag that you are signing up to being paid on 60 day terms etc.

Is there anything else I am missing?

Plenty Read the first-timers guide here, read the guides on the PCG website.

Some people will say that there is no such thing as a stupid question. They don't come to CUK, though - you'll find that to get good advice, make sure you

• Do a search first
• Have read the guides
• Include the phrase "I've already asked my accountant and I'm waiting for him to get back to me"

Doing that should avoid the typical responses you get round here