Ok...I have been with the same "public sector" client since 2014. (By the way I have been a contractor since 2002)
When the IR35 regulations came about last year, I got hit with a sudden curve-ball because I was oblivious to the fact that my client fell under the description of "public sector". They are not public sector, but fall under the freedom of information act which (as I now know) makes them the same thing.
I went through a short period of denial, whereby I agreed I was outside, my clients on the project agreed I was outside, but the HR office claimed I was under their "control" and therefore inside. So, I put my rate up by 30% to cover the additional taxation, and thought all was good. We renewed my contract, under suitable terms and I was happy for the next 12 months. My agency failed to send me through payslips, but I didn't worry about it because I knew my tax was being deducted. There had been a mess up with them taxing my VAT but I had that corrected.
Last month my accountant asked for my P60 and payslips. I am still using an accountant as I operate through a limited company, and intend to continue to do so (hopefully outside IR35) following this gig. I received the documentation from the agencies accountant, which was when I found out that I have been having too little tax deducted for the past 12 months; the tax code was wrong. It would appear I will owe an additional £14,000 in tax come January. Not a problem; I put that to one side and carry on.
Then, HMRC issues a new ('K') tax code; that gets passed to my agency, their accountants, who issued this months payslip, this morning. My tax and NI bill has exceeded 40% of my net invoice, and my take home pay has dropped considerably. wow!
My client has asked me to extend (again) on this project, this time well into 2019.
I have just run my situation through the current version of the CEST tool, and under my current working practices am inside IR35, clearly; as I am office based and have not questioned that since I was inside and put my rate up accordingly. But , if I change a few things about my working practices, which where apparent prior to IR35, such as choosing when and where I conduct the work, the CEST tool puts me outside IR35.
Assuming my client would be in agreement to make this concession (which I believe they would be), is it feasible to terminate my current IR35 accepting contract, change my working practices and generate a new outside IR35 contract for the remaining term of the contract and into the new extended period?
Anyone know the legalities?
Thanks. (what a mess IR35 is)
When the IR35 regulations came about last year, I got hit with a sudden curve-ball because I was oblivious to the fact that my client fell under the description of "public sector". They are not public sector, but fall under the freedom of information act which (as I now know) makes them the same thing.
I went through a short period of denial, whereby I agreed I was outside, my clients on the project agreed I was outside, but the HR office claimed I was under their "control" and therefore inside. So, I put my rate up by 30% to cover the additional taxation, and thought all was good. We renewed my contract, under suitable terms and I was happy for the next 12 months. My agency failed to send me through payslips, but I didn't worry about it because I knew my tax was being deducted. There had been a mess up with them taxing my VAT but I had that corrected.
Last month my accountant asked for my P60 and payslips. I am still using an accountant as I operate through a limited company, and intend to continue to do so (hopefully outside IR35) following this gig. I received the documentation from the agencies accountant, which was when I found out that I have been having too little tax deducted for the past 12 months; the tax code was wrong. It would appear I will owe an additional £14,000 in tax come January. Not a problem; I put that to one side and carry on.
Then, HMRC issues a new ('K') tax code; that gets passed to my agency, their accountants, who issued this months payslip, this morning. My tax and NI bill has exceeded 40% of my net invoice, and my take home pay has dropped considerably. wow!
My client has asked me to extend (again) on this project, this time well into 2019.
I have just run my situation through the current version of the CEST tool, and under my current working practices am inside IR35, clearly; as I am office based and have not questioned that since I was inside and put my rate up accordingly. But , if I change a few things about my working practices, which where apparent prior to IR35, such as choosing when and where I conduct the work, the CEST tool puts me outside IR35.
Assuming my client would be in agreement to make this concession (which I believe they would be), is it feasible to terminate my current IR35 accepting contract, change my working practices and generate a new outside IR35 contract for the remaining term of the contract and into the new extended period?
Anyone know the legalities?
Thanks. (what a mess IR35 is)
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