April 5th 2020 and Contract Extension/Renewal

[CompoundOverload]

Out of interest, say the original contract ends on the 31st October and the OP does extend until mid March. What would be the difference with them leaving and not taking the extension in October (which I've seen a few people advise on here) vs extending and staying until March (but leaving before payment in April).

Presumably if an investigation was to happen, they would still be caught in the same financial year - so would that 5 months of lost revenue make a difference in terms of being caught up in an investigation with the client Or am I missing something here?

[northernladuk]

Yes you are. There isn't a determination on the table yet. Leaving now means his role had nothing to be compared against leaving in March he'd be leaving a gig the client has already admitted is inside.

[CompoundOverload]

Yes you are. There isn't a determination on the table yet. Leaving now means his role had nothing to be compared against leaving in March he'd be leaving a gig the client has already admitted is inside.

Gotcha. I know clients have to be ready pre-April. I'm guessing most clients will be making this decision in Q1 2020.

[CompoundOverload]

Gotcha. I know clients have to be ready pre-April. I'm guessing most clients will be making this decision in Q1 2020.

Isn't it also risky taking a new contract in 2020 if a determination post April hasn't been conducted? I can see a lot of people sitting it out for the best part of Q1 until they know what clients are doing post April?

[BlueSharp]

Isn't it also risky taking a new contract in 2020 if a determination post April hasn't been conducted? I can see a lot of people sitting it out for the best part of Q1 until they know what clients are doing post April?

The liability would be limited to only a few months if you suddenly found your self inside starting a new contract in 2020. No need to sit out just draw a line on pre 2020 liability if the client throws you under the bus.

[northernladuk]

Gotcha. I know clients have to be ready pre-April. I'm guessing most clients will be making this decision in Q1 2020.

Which could be a bit of a nightmare for people deemed inside on 30 days in arrears. They should really be doing it December or earlier.

[CompoundOverload]

If post April I'm on the bench and have a war chest, presumably I am still able to draw dividends as normal as this is earnings based on previous years. I guess if any inside roles are taken later in the year the tax situation could get more trickier....

[BlueSharp]

If post April I'm on the bench and have a war chest, presumably I am still able to draw dividends as normal as this is earnings based on previous years. I guess if any inside roles are taken later in the year the tax situation could get more trickier....

Yes you're right you can still draw div's if you have the cash in the company from an outside ir35 source. However, if you take a roll that pays permie tax that will use up your allowance and basic rate tax so when you come to do your self-assessment for 2019 you will be paying 40% tax AND a payment on account for the following year. If the contractor market is decimated next year an MVL might be a tax efficient option than div's. However an account should be spoke to about that as I'm just some random guy of the internet.

[SeededLoaf]

Which would open the door wide open for an investigation in to your old contract if the new one is inside.

Exactly. New client and new contract.

[Blert596]

Hi, asking for a friend

In a hypothetical world, my friend who's been contracting for a long time, took a contract 2 months ago through an agency and considered himself outside IR35. He has since had it looked at and been told it will fall inside. He's now been offered an extension to that contract, for a further 3 months (Dec 31st finish). The current project with the client would be a long one (3 years +).

With regards to the April witch hunt what's peoples views on the best way forward.


1. Ideally get a new contract rewritten to pass IR35 - not going to happen.

2. Instead of the extension ask for a new contract and deem himself inside IR35 from when the new contract starts?

3. Deem himself inside from the start of the original contract and pay a deemed payment for the 2 months worked and then carry on as inside for as long as the work lasts?

The main thing would to be avoid the retrospective scrutiny from HMRC that changing in April 2020 would bring when the client is pretty much likely to declare everyone inside. Would changing now alleviate the likelihood of that, or would this just be a red flag to HMRC now?


Any advice appreciated