Permanent To Contracting with Same company but different client - Urgent help needed

[nocrap14]

Hi

I joined a company who worldwide is a software and management consultancy but in UK they are only sourcing candidates from market and placing them directly on Client sides. I was hired by them in October 2013 on permanent roles and directly worked on their client office. They used to bill the client on daily basis while paying me a permanent salary of 70K.

The client project finished Feb 24 and I had no project for 3 weeks but was paid to be on BENCH as normal consultant firms do.

I start a new project Tuesday and now I have been offered a Contract offer by my consultancy at 450/day. I am being asked to resign on Monday and join on Tuesday as a contractor on the new client site.

My concerns :
1. I have heard about the IR35 friday to Monday rule. Most probably I am under it due to the way my status is changing however - reading the rules closely , I needed some clarification that because I am with a firm who doesn't have its own work i mean I don't work on project work within my company but always on client site, and given the fact the date I am being converted as a contractor, I am starting at a new client, does that help me having a strong case to be considered outside IR35. As its not the parent company I work at every day so the environment is not same (which is one statement in IR35 ruling), does that help?

2. Is there any measures I can take to stay outside IR35.

3. There are insurances in the market etc but what do they cover you for (Sorry I am a new bie to contracting). Do they cover you for cases like above?

4. Will involving an umbrella company in between make any difference? As of now I was thinking to have my own limited company.

5. Can I ask my employer to make me join as a contractor after 15 days and would that help avoid the Friday - monday rule?

I would really appreciate if you can reply to this ASAP as Monday I have to sign contracts.

Thanks

[northernladuk]

day and now I have been offered a Contract offer by my consultancy at 450/day. I am being asked to resign on Monday and join on Tuesday as a contractor on the new client site.

My concerns :
1. I have heard about the IR35 friday to Monday rule. Most probably I am under it due to the way my status is changing however - reading the rules closely , I needed some clarification that because I am with a firm who doesn't have its own work i mean I don't work on project work within my company but always on client site, and given the fact the date I am being converted as a contractor, I am starting at a new client, does that help me having a strong case to be considered outside IR35. As its not the parent company I work at every day so the environment is not same (which is one statement in IR35 ruling), does that help?

Most probably? You mean absolutely. Hard to argue when the title of the rule matches your situation exactly. It doesn't help at all. It's how you are taxed, as a contractor or a disguised perm. Doesn't really matter about the work.

2. Is there any measures I can take to stay outside IR35.

In this case I would say none.

3. There are insurances in the market etc but what do they cover you for (Sorry I am a new bie to contracting). Do they cover you for cases like above?

Won't be too hard to find the website and read up on them. QDOS does TLC35. Go to their website and have a look.

4. Will involving an umbrella company in between make any difference? As of now I was thinking to have my own limited company.

It will make all the difference. IR35 doesn't apply to umbrellas as you are employed by them.

5. Can I ask my employer to make me join as a contractor after 15 days and would that help avoid the Friday - monday rule?

Jesus..

I would really appreciate if you can reply to this ASAP as Monday I have to sign contracts.

Thanks

You don't have a scooby what is going on here so do not sign anything until you fully understand it. This can get extremely expensive for you if it goes wrong so isn't something to be taken lightly at all. If they want you they will wait until you get sorted properly. Don't let them strong arm you in to signing anything until you are read.

I would say your best bet here is to go Umbrella for awhile until you get an idea of how it all works.

[Old Greg]

Most probably? You mean absolutely. Hard to argue when the title of the rule matches your situation exactly. It doesn't help at all. It's how you are taxed, as a contractor or a disguised perm. Doesn't really matter about the work.



In this case I would say none.



Won't be too hard to find the website and read up on them. QDOS does TLC35. Go to their website and have a look.



It will make all the difference. IR35 doesn't apply to umbrellas as you are employed by them.



Jesus..



You don't have a scooby what is going on here so do not sign anything until you fully understand it. This can get extremely expensive for you if it goes wrong so isn't something to be taken lightly at all. If they want you they will wait until you get sorted properly. Don't let them strong arm you in to signing anything until you are read.

I would say your best bet here is to go Umbrella for awhile until you get an idea of how it all works.

Another perspective:

1 Get some advice from QDOS. Inside or outside IR35 is worth a lot of money.
2 I would consider the terms if engagement with your old employer. Look at getting a call off contract for eg up to 100 days work over 6 months. Get solid contracts for RoS, MoO, D&C and reflect these in working practices. Ensure your working practices change. Can you provide your own laptop, phone and email address. Do not attend any normal corporate meetings. You are a project resource, plot part of the company.
3 Do all this and with advice from QDOS and maybe you are outside IR35. However, HMRC will probably disagree. They score Friday to Monday heavily as a pointer towards IR35 on the BET but that has no status in law.

having said all that... can you find another client? It would be easier.

[Old Greg]

Quote below from BET. Conclusion: make major changes to your working practices. And to repeat: get advice from QDOS.

The Previous PAYE test
Test
Has 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?
If you are doing the same work, the answer to this question is Yes.
Working at a different location does not count as a major change.
If you were working for a company that is connected to the current end client, that counts as working for the current end client. For example, if the two companies are part of the same group.
Evidence
We will be able to check your employment history on our systems.
Score
Score Minus 15 points if your answer is Yes.

[jmo21]

Forgetting IR35 and all the ins and outs of contracting for a minute.......

How do you know that after a week/month/whatever, they won't just terminate your contract?

For us 'normal' contractors that's just part of every day contracting, but in your case are you prepared for that?

And have you not wondered why they want you to move from perm to contract?

Maybe they want rid of you without paying redundancy.

[Old Greg]

Forgetting IR35 and all the ins and outs of contracting for a minute.......

How do you know that after a week/month/whatever, they won't just terminate your contract?

For us 'normal' contractors that's just part of every day contracting, but in your case are you prepared for that?

And have you not wondered why they want you to move from perm to contract?

Maybe they want rid of you without paying redundancy.

Also £450 pd from 70k looks low to me.

[Taita]

Most probably? You mean absolutely. Hard to argue when the title of the rule matches your situation exactly. It doesn't help at all. It's how you are taxed, as a contractor or a disguised perm. Doesn't really matter about the work.



In this case I would say none.



Won't be too hard to find the website and read up on them. QDOS does TLC35. Go to their website and have a look.



It will make all the difference. IR35 doesn't apply to umbrellas as you are employed by them.



Jesus..



You don't have a scooby what is going on here so do not sign anything until you fully understand it. This can get extremely expensive for you if it goes wrong so isn't something to be taken lightly at all. If they want you they will wait until you get sorted properly. Don't let them strong arm you in to signing anything until you are read.

I would say your best bet here is to go Umbrella for awhile until you get an idea of how it all works.

The last line is your best option if you are in a hurry. More expensive month to month but I think you then can switch to your own company later (subject to professional advice) once you are confident in your tenure.

[TheCyclingProgrammer]

I'm generally of the opinion that most scenarios can be taken outside IR35 with the right contract and working practices, regardless of the history, but from what you describe it sounds like you'd be caught unless you could really nail the contract and working practices.

The former is easy enough if the consultancy is flexible and you can get it reviewed but the working practices will always be key. It sounds like the consultancy want the same resource (you) but without the expense of you being a permanent employee. They are likely to continue treating as a permanent employee so getting your working practices outside of IR35 is going to prove hard.

Forget the end client...your "role" is as a resource for the consultancy. They choose which client you go and work for and they likely have a degree of control over how and when you perform the work.

Think about why they would ask you to do this. They no longer need to pay you a fixed £70k salary, they no longer need to pay you when your benched. You're taking on all the risk and they are taking on none. They get a cheaper resource to flog to their clients, you lose all of your security.

I would politely decline their offer however if there is no option, then you need to look at working through an umbrella IMO.

[stek]

This was posted on immigrationboards too

[TykeMerc]

1. No debate IR35 catches this, it's Fri-Mon classic. IR35 is poorly worded legislation, but it was set up for exactly this scenario.

2. Nope.

3. IR35 insurances do exist, but no way you can get it and have a hope in hell of claiming, unless you lie of course and that's fraud.

4. IR35 is meaningless in Umbrella terms as you're paid purely by salary as an Umbrella employee which is what IR35 makes you do anyway.

5. Nope same thing

It's pretty obvious that your employer wants to have their cake and eat it, if you agree to resign and contract back they get rid of an employee from their books, get the skill back for a lot less cost, no liabilities and they can dump you with 0 effort when this project ends, they win, you lose.

You would be foolish to resign as you lose any employee benefits and it costs them nothing to get shot of you.