A question of timing - short term contractor needs when / if to leave

[Mrlossy]

Firstly I'm so glad I found this forum...

I started my first Contract role on 1st Nov 2019 for a large pharma company. The contract is through Alexmann and was 'sold' as being outside IR35. I had an assessment on the contract wording done through QDOS who also indicated the same. The contract is for 6 months ending March 31st 2020.

I've been contacted by Alexmann stating the company deem the role is inside IR35 thus I will need to change the way I operate in future. I currently operate through a ltd company. My role incurs about 70 miles travelling 1hr+ each way and if this had been a staff role it wouldn't really be worth my while (even though its a good day rate).

My Question:

There is a possibility my contract could be extended, however there's also a possibility it won't be. If it isn't extended, when would be the time I should leave my role in order to avoid IR35 for this assignment? If it's not extended could it be worth me leaving early to avoid any back dated HMRC claim or should I be fine to work to the end of the contract?

I've read so much on the forum and it appears there's still many unanswered questions around IR35 which nobody knows the answer. My own thoughts are now leaving this very short passage into contracting and going back to FTE. As an IT contractor it seems almost impossible to work outside of IR35.

Regards and I really appreciate any advice..

[ladymuck]

What are your payment terms? 31 March end date is cutting it fine

[BrilloPad]

I think you meant a 5 month contract. But anyway, you need to be paid by 5th April.

[BoredBloke]

I think you meant a 5 month contract. But anyway, you need to be paid by 5th April.

and by payment, that's when the money clears into the account, not when the client decides to pay you.

[simes]

If you do wish to leave, and once you're aware of payment terms, then you could also become aware of the terms of notice and leave just before end-ish March, ensuring payment before cut off dates. If nothing else at this stage, it might afford some peace of mind.

This will allow you time to consider;

1. An FTE job
2. A further contracting job, by when things become better known to the world.
3. Things being better known to the world.

[Mrlossy]

If you do wish to leave, and once you're aware of payment terms, then you could also become aware of the terms of notice and leave just before end-ish March, ensuring payment before cut off dates. If nothing else at this stage, it might afford some peace of mind.

This will allow you time to consider;

1. An FTE job
2. A further contracting job, by when things become better known to the world.
3. Things being better known to the world.

Thanks for the responses.

I actually started Oct 1st so it was a 6 month contract.

My payment terms are 4 weeks after submitting timesheet.

I do possibly have the opportunity to extend my contract, however if I don't am I best leave early to ensure payment has been made by a certain date?

I take it if I stay to March 31st I risk having to pay backdated tax and Nics on the previous 6 months? This is the bit I'm confused about.

Again, really appreciate the replies.

[Mrlossy]

My contract started 1st October (sorry) so is for 6 months - ends 31st March 2020

My current payment terms are 4 weeks

So based on the advise, this would mean leaving first week of March?

If my contract was extended and I accept it, my previous employment could be liable as being deemed inside IR35?

What a complete and utter sh*t!

Thanks for all the advice!

[Snooky]

If my contract was extended and I accept it, my previous employment could be liable as being deemed inside IR35?

In theory, yes. But I think it's highly unlikely HMRC would come after you for 6 months of that tax differential, there are far bigger targets out there. But to play it safe you could work out what you might owe and put it aside in some investment, or even buy a Certificate of Tax Deposit, and hold on to that until HMRC can no longer issue a status query on your tax return (6 years after this coming 5 April, I believe, but others will probably correct me).

[GhostofTarbera]

My contract started 1st October (sorry) so is for 6 months - ends 31st March 2020

My current payment terms are 4 weeks

So based on the advise, this would mean leaving first week of March?

If my contract was extended and I accept it, my previous employment could be liable as being deemed inside IR35?

What a complete and utter sh*t!

Thanks for all the advice!

Are you mad?

Has client said after that it’s within IR35 or not?




Sent from my iPhone using Contractor UK Forum

[Paralytic]

if I were the OP, I'd be calculating what the potential backdated PAYE would be if HMRC came calling for the first 5 months of the contract (1)

And then work out what the 6th month will bring in (assuming it is inside IR35). (2)

If (1) is greater than (2), hand in notice so as to stop working at the end of February, with the last invoice being settled at the end of March. This will reduce the risk of/if HMRC come calling.

But if (2) is greater than (1), and you can't find another contract, it might actually be worthwhile sticking around and setting some funds aside just in case HMRC do come calling. You'd need to keep it there for a number of years though.