Returning to former employer: inside IR35?

**northernladuk** · 25 September 2013, 19:55

Originally posted by aussie-fella View Post

Hi all,

Firstly, let me say this site is a great fountain of knowledge and has already been of extreme use. I'm hoping I might be able to pick your brains a bit more about my particular case, as this is my first time taking up a temp/contract position. Please do be gentle with me!

Are you taking up a temp or a contract position. Completely different and would be a good idea to understand that before you take a step further.

In May this year I left my old company (an international bank). I had been with the bank for 5.5 years as a full-time, permanent employee. I am now with another company, but am not enjoying the role and have been made an offer to return to the bank as a contractor (initially a six month contract, with a view for extension). The role I will be taking up includes some work I was previously responsible for (up until September 2012, after which I became a member of a general team), as well as another significant project which is new for me. I'm due to commence working at the Bank in one month.

Today I received a sample contract from the agency which I will be employed through. They confirmed that the contract will be between myself and the agency (not the bank), and the agency will be the one paying me (rather than the bank).

For tax reasons, if it is possible, I am keen to set up and work under a limited company, but I'm unsure about whether I will fall foul of IR35. I've received two differing opinions from professionals, so wanted to see what guidance you may be able to share.

Many thanks for taking the time to read this and I look forward to your response.

You can sort your contract and your working conditions meet all the criteria to be outside IR35 but taking up permie responsibilities is a bit of a double barrelled shot to the foot, particularly if those responsibilities are enduring rather than a piece of work with fixed duration.

If you were the only person that could keep something running in BAU and they need you but the only way to get you back is through a different pay mechanism it will look pretty black and white to HMRC.

To add to this if the extra piece of work is one you may have got when you were permie then where is the distinction? They are treating you like a permanent resource as if you weren't there so again, even more black and white.

The fact you consider yourself employed by the agency also shows pretty poor understanding of how you will be engaged so kinda shot yourself in the foot before even considering the actual contract. Your personal attitude as well as the working situation makes this look a bit open and closed.

On top of all this it is going to be difficult for the client management to differentiate you from what you previously were so they will just be paying lipservice to your contract anyway.

Umbrella or inside IR35 for you my son.

**aussie-fella** · 25 September 2013, 20:51

Thanks for your response, northernladuk. The role is a temporary position (filling in for maternity leave), and the work is ongoing (a deliverable required every four months, on an ongoing basis).

But based on your response, I guess it isn't worth pursuing the limited company route any further.

Appreciate your time.

**northernladuk** · 25 September 2013, 21:05

Originally posted by aussie-fella View Post

Thanks for your response, northernladuk. The role is a temporary position (filling in for maternity leave), and the work is ongoing (a deliverable required every four months, on an ongoing basis).

But based on your response, I guess it isn't worth pursuing the limited company route any further.

Appreciate your time.

All contracts are temporary positions. It doesn't make it a temp role. It would be wise to rethink it as a short term assignment to deliver a specific piece of work. That is what we do. We do not temp. That is a form of employment.

Filling in for maternity with what is effectively a BAU deliverable is an interesting one for discussion.

I wouldn't write off the LTD yet. Even if you are clearly inside IR35, which I am sure some of my fellow posters will no doubt argue shortly, it can be more beneficial to go through a LTD. It also means you have one set up and can start understanding it for future roles so not a complete waste of time. Also if you go brolly for this one with no intention of staying brolly you can't claim expenses which you could with your LTD. I would certainly do some research and speak to an accountant who understands this well. A couple of them post on here fairly regularly and would be a very good start. I think you will need a contractor specialist for this rather than a general one.

All the above about IR35 is my opinion based on a single post. Read up on IR35 and get your contract as quickly as possible over to the likes of Baur & Cottrell or QDOS and pay for a review. They are the experts and will give you their professional opinion. I have a bit of a beef about contractors going back to ex employers. It's a cheap way out and will probably leave you understanding even less than when you went in. Working for the same people under a different remuneration system is not being a contractor or business in your own right IMO... but that said, sometimes hard to turn a gift horse down to then sit on the bench. Let the experts guide you.

Whatever you do, take advice from these forums... never take it is absolute fact. It's a free forum for us with not much to do to play on. Always do your own research and speak to the pro's.

**TheFaQQer** · 25 September 2013, 21:14

Originally posted by northernladuk View Post

I wouldn't write off the LTD yet. Even if you are clearly inside IR35, which I am sure some of my fellow posters will no doubt argue shortly, it can be more beneficial to go through a LTD. It also means you have one set up and can start understanding it for future roles so not a complete waste of time. Also if you go brolly for this one with no intention of staying brolly you can't claim expenses which you could with your LTD. I would certainly do some research and speak to an accountant who understands this well. A couple of them post on here fairly regularly and would be a very good start. I think you will need a contractor specialist for this rather than a general one.

I'd be wary of claiming expenses if there was only going to be one gig, whether through an umbrella or through LTD, to be honest. Hard to argue that the workplace is temporary if there is only one workplace.

Originally posted by northernladuk View Post

It's a free forum for us with not much to do to play on. Always do your own research and speak to the pro's.

You trying to get more work for the Mrs?

**northernladuk** · 25 September 2013, 21:18

Originally posted by TheFaQQer View Post

I'd be wary of claiming expenses if there was only going to be one gig, whether through an umbrella or through LTD, to be honest. Hard to argue that the workplace is temporary if there is only one workplace.

Agreed but you have to assume when he says first time that there will be others. Up to the OP to decide that.

You trying to get more work for the Mrs?

We are in a double dip recession, gotta drum up all the work you can in hard times. She will clean out his bank faster than HMRC can.

**TheFaQQer** · 25 September 2013, 21:39

Originally posted by northernladuk View Post

We are in a double dip recession, gotta drum up all the work you can in hard times. She will clean out his bank faster than HMRC can.

I've seen the video of NLYUK and it wasn't a recession that was being double dipped...

**MPwannadecentincome** · 25 September 2013, 21:44

Originally posted by northernladuk View Post

She will clean out his bank faster than HMRC can.

Yup that is definitely true!

**Wanderer** · 25 September 2013, 22:31

Originally posted by aussie-fella View Post

Please do be gentle with me!

Sorry fella but as Northernladuk says, you are doomed to fail the IR35 Business Entity Tests, specifically this one:

The current end client engaged you:

on PAYE employment terms
within the 12 months which ended on the last 31 March
with no major changes to your working arrangements?

You can still trade as a LTD company but you will have to account for all of this contract's income as IR35 caught and pay a fair bit of tax on it. Alternatively, if you like having an easy life (without the admin of running a company) then you can use an Umbrella. Watch out for the dodgy calculators on umbrella sites, check out this one which is fairly reliable.

Don't be tempted by anything offering a high take home percentage (probably based off shore and/or using a tax avoidance scheme), you want a straight forward UK based PAYE umbrella.

**northernladuk** · 25 September 2013, 22:33

Originally posted by TheFaQQer View Post

I've seen the video of NLYUK and it wasn't a recession that was being double dipped...

but alas

You must spread some Reputation around before giving it to TheFaQQer again.

Returning to former employer: inside IR35?