As already discussed, contractors going from outside to inside with the same client are risking an HMRC investigation.
However if the contractor has done the due diligence (even when going from outside to inside with the same client), i.e. had relevant insurances, had contract assessments etc, what stops them from drawing down the company funds upon the switch from outside to inside? Yes there is the obvious dividend tax that would need paying (32 or 38 depending on the money stash) but still beats searching for a new contract when you are happy where you are. Even if the investigation is not in their favour - there would be nothing to collect from the company.
However if the contractor has done the due diligence (even when going from outside to inside with the same client), i.e. had relevant insurances, had contract assessments etc, what stops them from drawing down the company funds upon the switch from outside to inside? Yes there is the obvious dividend tax that would need paying (32 or 38 depending on the money stash) but still beats searching for a new contract when you are happy where you are. Even if the investigation is not in their favour - there would be nothing to collect from the company.
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