IR35 - Considering your options
January 12, 2020
What we know so far…
As April 2020 approaches, we know many of you will be looking to secure a new contract outside of IR35 and we have found it very encouraging that some of you have already been able to do so which takes you well into the new tax year. From this, we are very hopeful that outside IR35 contracts will still be available, if potentially harder to source initially.
It does certainly appear that some of the larger companies, and particularly banks who do tend draw more attention from HMRC during times of policy change, will be taking a blanketing approach. Whilst this isn’t what we had hoped for, there is reassurance to be found in the Public Sector who, having suffered the same blanketing enforcement back in 2017, have now come full circle and are offering outside IR35 contracts. This is possibly how the Private sector market will progress also.
Ultimately our opinion is the requirement for a highly skilled temporary workforce will always exist, and the logistics of offering permanent PAYE positions for short term projects or paying more for temporary Umbrella or Inside IR35 roles is surely not sustainable.
However, during this time of uncertainty it’s vital that you are able to find security in your work and confidence in when your income will be coming in so whilst we certainly don’t view contracting as a thing of the past, its important to understand what you can do with your Limited company in the meantime.
Understanding your options…
If you find yourself struggling to achieve a new position outside of IR35 in the coming months, our initial advice would be see what else may be available to you as a temporary alternative.
There are several options to consider:
- Permanent employment
- Accepting an Inside IR35 role
- Contracting under an Umbrella company
During this time, your company can remain open and simply tick along as normal. You Accountant would continue to do complete your Accounts, VAT returns etc but, as there would be no sales, there would be no tax accrued.
To help you with this we will be able to offer a reduced accountancy fee.
This can then give you more time to assess your situation and your potential of returning to an outside IR35 contract in the future in which case you can simply resume operating through your Ltd company.
What can you do…
As the responsibility of assessment moves from you to your client or agency, you may feel like you’re losing control over your contracts. Be proactive and make sure you have already assessed your position as a genuine business owner and not an employee ahead of any determinations by your client or even HMRC, and compile the evidence to support it.
Consider gathering records that demonstrate this such as:
- business insurance certificates
- company branded stationery
- proof of office address
In addition to this, you can go even further by:
- getting your current contract reviewed (we can arrange this for you)
- completing HMRC’s online IR35 tool
- considering additional IR35 insurance cover
Should you need to convince anyone of your status, having everything at hand will put you in a great position.
A word of caution…
We have been advised recently that there have been a large number of faux Umbrella companies being set up to target the contractor market offering alternative solutions to Umbrella and PAYE models.
Always remember the golden rule - if it sounds too good to be true then it probably is!
If you have any questions about how IR35 may impact you, get in touch with your Accountant who will be happy to talk this through with you.
Share
You might also like
What is a P60, and Why Do You Need It?
If you're an employee in the UK, you’ve probably heard of a P60. But what exactly is it, and why is it important? In this blog, we'll explain everything you need to know about a P60, including what it is, when you might need it, and how to access it.
Section 455 applies to unpaid loans directors take from their companies. It’s designed to stop directors from avoiding taxes like those on salaries or dividends.
The Rule: Repay any director’s loan within 9 months and 1 day after your company’s financial year-end to avoid S455 tax.
The startup journey is an exhilarating rollercoaster ride. You've poured your heart and soul into your innovative idea, but to turn it into a reality, you'll likely need funding. Fear not, there's a wealth of funding options available, each with its own advantages and considerations. Let's navigate the exciting, yet sometimes bewildering, landscape of startup funding.