Where now?

[WotNxt]

When I started contracting I was advised by my accountant to use a limited company so I did and for a while things were good.

Following the stress of an excruciatingly drawn out IR35 investigation which was eventually dropped by HMRC I decided that I had had enough, closed the company and started to work through an umbrella company instead.

I am on my third umbrella company and have had problems with all three but at least I know that I will never be hounded by HMRC (apart from the time my umbrella left me on emergency tax for waaaaay too long leaving me with an unexpected huge tax deficit to make up).

I just want an easy, legal and stress free administration service for my contracts and tax and I am happy to forego the potential additional monetary rewards of using a limited company. I don't want to have to jump through hoops or pretend to be who I am not, but just keep everything transparent so my conscience is clear.

Now my latest umbrella is yet again trying to force a change of employment contract without giving any explanations of what the changes are or what the reasons are apart from "to comply with (unspecified) legislation" and "because we have spent alot of money on legal advice". What a shame that expensive legal advice did not come with an explanation!!!

So, now I realise, after about the 3rd time this has happened in about the same number of years, that instead of being on my side and keeping me abreast of the latest developments in employment legislation they would rather I just agree whatever they put in front of me. They are not a valued business partner adding value but simply are out to use me.

Only inertia and knowing that the grass is probably not greener stops me from leaving.

But now I have started to investigate what this new legislation is I find that it is the new Agency Workers Regulations ... what a pile of crap! Now I have to pick my umbrella based upon their approach to this new legislation or find a different solution. Even if I went back to using a limited company I would still have to comply with it!

So, what ARE the options now?

1. Limited company - hassles of IR35, responsibilities, VAT returns, annual returns, insurances, general administration, tax investigations, self assessment again (groan), probably no additional take home as IR35 caught and would be sole shareholder anyway AND still affected by the Agency Workers Regulations!!!

2. Umbrella company - less hassles, responsibilities and administration. Concerns over compliance with the new Agency Workers Regulations and possibly being dragged into misrepresentation of the business practices and the penalties that could be associated with that. Various constant niggles about business practices of the umbrella, the online portal, regular unexplained changes to contracts that they have no wish to explain.

3. Self-employed - impossible to contract via agencies due to some law or other I cannot remember the name of.

What else is there?

I just want to be able to go to work, do a good job and pay a company to do a good job managing the tax and legal matters in an honest, straightforward, legal, transparent and mutually beneficial way.

Is that REALLY too much to ask?

Help! My current contract expires in August so I need to decide by then what to do after that ... possibly sooner if I am offered an extension.

</despairing rant>

[TykeMerc]

I can understand why you've given up running a MyCo Ltd, after a long and nasty IR35 investigation the easy and less painful life makes perfect sense.

Realistically you know and have experience of the two of the three only options.

1. MyCo Ltd - Rejected after such a hard time
2. Umbrella Companies - You've tried 3 and had hassle from all 3
3. Limited Liability Partnership - I don't know the specifics of this type of arrangement, but I do know someone who uses one and every time he signs up a new contract he has a protracted debate with the Agency over it being a viable approach. To be honest superficially it looks similar to Ltd Co. With research you might find facts to get an informed view.

To be honest the only option that leaps to my mind is to try one of the numerous other Umbrella companies and reduce the risk of disappointment by asking their reps a lot of very searching questions.

[WotNxt]

Thanks TykeMerc,

Yes, also when I did have a Myco Ltd I was in a long term relationship with the other shareholder and I realise now that tying my income to a relationship is a bad idea. That relationship has been finished for around two years now and was difficult enough to deal with even without the MyCo Ltd which was closed down a few years before that. If the MyCo Ltd had still been around it would have been a complete nightmare. I mean ... unhappy and unstable ex-partner with access to the business bank account that would most likely think nothing of doing something really serious like withdrawing the corporation tax funds and leaving me to deal with the shortfall!!! Consequently I would be VERY loathe to ever put myself in that position ever again.

So, presumably LLPs require several "partners"? If so then I doubt that would suit me either for similar reasons.

I guess I will probably have to shop around for a new umbrella like you say but I suspect the kind I am looking for just doesn't exist. As for asking searching questions of the reps, they are sales people and sales people are incentivised to lie :-(

[Clippy]

4. Permie

This isn't meant to be a flippant reply but that is the only other option that comes to mind.

Obviously there is the trade off against the freedom you have when contracting re: corporate bullsh!t but you need to weigh that up against all the cons you listed in you OP.

[SueEllen]

Thanks TykeMerc,

Yes, also when I did have a Myco Ltd I was in a long term relationship with the other shareholder and I realise now that tying my income to a relationship is a bad idea. That relationship has been finished for around two years now and was difficult enough to deal with even without the MyCo Ltd which was closed down a few years before that. If the MyCo Ltd had still been around it would have been a complete nightmare. I mean ... unhappy and unstable ex-partner with access to the business bank account that would most likely think nothing of doing something really serious like withdrawing the corporation tax funds and leaving me to deal with the shortfall!!! Consequently I would be VERY loathe to ever put myself in that position ever again.


So, presumably LLPs require several "partners"? If so then I doubt that would suit me either for similar reasons.

Yes you would need to work with at least another person for an LLP as profits get shared amongst you.

In regards to a limited company there is nothing stopping you from having one where you own all the shares but the company has more than one director. It's not 100% tax efficient if you have a non-working spouse/partner but it prevents them from having control of the money.

I guess as you don't want one either of these structures you have to find a new umbrella or go permie.

[LisaContractorUmbrella]

The changes to your contract are probably in light of the new AWR legislation which was introduced to ensure that temporary workers are not treated less favourably than permanent workers. Agencies, umbrella companies and end clients will all have new obligations under the terms of the legislation and it will be necessary for all of us to change working practises in order to be compliant.

[Taxless]

If you are in a permanent position, you are under PAYE, nice and easy and safe, until they make you redundant.

Any other structure and you are in the real business world and that does not come without some pain. As things stand with the legislation and the normal need for a certain trading structure to gain work through an agency, you have pretty much set out your options.

Ltd v IR35 - It is all down to working arrangements/contracts. You should be getting full and aggressive support from your accountant for these. On the positive side you did beat HMRC the last time, so you must have been doing something right, but I fully appreciate the reluctance to go back.

Umbrellas - You have to accept that they are also in business to make money and are trying to deliver a solution. That said, as with all types of business, you will get good and bad.

HMRC change the legislation fairly regularly and the umbrellas change theirs to protect themselves, but if I am paying you for a service then I expect it to be fully explained.

If you do go down the umbrella route why not ask to be provided with the contact details for a number of satisfied customers to talk to. If their product is so great, they should have a number of satisfied customers who will be only to delighted to share their experience.

I have to say that looking through a number of posts on this site there do not appear to be too many who are over the moon with the service they receive.

You need to find the best fit for you and that often takes some time to achieve. If you don't have a proactive accountant to help you through the process, then it is your business we are talking about and it is really down to you to find a solution.

I am going to a meeting next week to be told about a "new alternative". It sounds like some form of umbrella with a potential tax twist to increase the net cash in your pocket.

Whether this is something that I would consider exploring further will depend on what information is provided and what additional detail I can extract and I will then make a decision based on MY attitude to risk.