Contractors: IR35 & general discussion

[theboss]

Zero Fuchs said:

Is contracting in a different country automatically deemed outside? I didn't think so but apologies if I've misinterpreted.

I decided against a contract in Belgium as QDOS deemed it inside and the rate wasn't good enough. The agent was shocked and said that loads of UK subbies were contracting for the same company without issue. But his word wasn't worth much to me as the contractual clauses were defintely inside (no substitution etc.).

Maybe someone can clarify if QDOS are mistaken but I gave it a wide berth.

No it's not automatically deemed outside but if the client falls outside the reach of HMRC's off payroll working rules, responsibility for determination reverts to the PSC as per the old system. Just as it would if they fell within the scope of the small companies definition, etc.

There might be some gotcha if the hiring client has a corporate presence in the UK as if HMRC wanted to investigate your status they could presumably make enquiries there, but in the case of my engagements its not relevant.

[Zero Fuchs]

theboss said:

Zero Fuchs said:

Is contracting in a different country automatically deemed outside? I didn't think so but apologies if I've misinterpreted.

I decided against a contract in Belgium as QDOS deemed it inside and the rate wasn't good enough. The agent was shocked and said that loads of UK subbies were contracting for the same company without issue. But his word wasn't worth much to me as the contractual clauses were defintely inside (no substitution etc.).

Maybe someone can clarify if QDOS are mistaken but I gave it a wide berth.

No it's not automatically deemed outside but if the client falls outside the reach of HMRC's off payroll working rules, responsibility for determination reverts to the PSC as per the old system. Just as it would if they fell within the scope of the small companies definition, etc.

There might be some gotcha if the hiring client has a corporate presence in the UK as if HMRC wanted to investigate your status they could presumably make enquiries there, but in the case of my engagements its not relevant.

Thanks.

Some useful info here:

https://www.kingsbridge.co.uk/blog/contractors/con...

Rings a bell but was a few years ago when I looked into it. Either way, I'm happy I did the right thing and walked away. It was also worth not listening to the agent as he clearly had no idea.

Edited by Zero Fuchs on Wednesday 14th February 14:11

[Blown2CV]

CloudStuff said:

Blown2CV said:

sigh... here we go again.

Yes taxes exist. In an outside contract, you don't get to keep all the revenue either...

income tax, employers' NI, apprenticeships levy and employees' NI exist in both inside and outside contracts.

I know. I was Outside for years.

I explained to the poster directly before that they should proceed with their eyes open.

If you choose to be triggered by that, then that’s on you.

it doesn't surprise me that you were outside for years, as you were clear in stating that you felt inside roles are inherently more expensive. Of course they aren't - unless you've been managing your tax down in an outside role.

[Terry Winks]

Ok, hypothetically,

£120k as a permie with all the usual benefits that entails, and bobbins of being an employee

vs

£900 a day inside IR35 with an initial 12 month contract, not that it really means anything.

Discuss

[Zero Fuchs]

Terry Winks said:

Ok, hypothetically,

£120k as a permie with all the usual benefits that entails, and bobbins of being an employee

vs

£900 a day inside IR35 with an initial 12 month contract, not that it really means anything.

Discuss

Interesting.

£120k is about £75k take home.
£900/day is about £90k take home.

Personally I'd take the permie role but only because I wouldn't work an inside contract out of principle. I think the benefits may add up to more than the take home difference but depends on the industry I guess.

[EmilA]

Zero Fuchs said:

Is contracting in a different country automatically deemed outside? I didn't think so but apologies if I've misinterpreted.

I decided against a contract in Belgium as QDOS deemed it inside and the rate wasn't good enough. The agent was shocked and said that loads of UK subbies were contracting for the same company without issue. But his word wasn't worth much to me as the contractual clauses were defintely inside (no substitution etc.).

Maybe someone can clarify if QDOS are mistaken but I gave it a wide berth.

There are a few large organisations with HQ's near the Airport. Generally speaking from my experience and the information given to me, IR35 rules didn't apply as the work was being performed outside of the UK and the contract reflected that aswell. My last role in Brussels was outside of IR35, if I had to go through the gov questions it would have fallen outside aswell as I recall doing that when the legislation was confirmed.

Nowadays the issue with working in the EU is the lack of a work visa for contractor positions. Though UK folks can apply that's a stumbling block, hence my applications don't get processed for a role even though I'm a perfect fit (and know the hiring manager and the entire team!).

[Guvernator]

Zero Fuchs said:

Interesting.

£120k is about £75k take home.
£900/day is about £90k take home.

Personally I'd take the permie role but only because I wouldn't work an inside contract out of principle. I think the benefits may add up to more than the take home difference but depends on the industry I guess.

£120k will be just over £6k a month net, £900 a day will net you over £9k, there is an easy £3k difference in take home per month which is not insignificant.

Whether you think, holiday pay, health insurance and a discounted gym membership is worth £3k a month is up to you, personally I chose the money every time. I never felt comfortable when I was a permie, despite the fact I was on a decent salary. As a contractor I'm not rich by any means but I feel a hell of a lot flusher.

[Zero Fuchs]

Guvernator said:

Zero Fuchs said:

Interesting.

£120k is about £75k take home.
£900/day is about £90k take home.

Personally I'd take the permie role but only because I wouldn't work an inside contract out of principle. I think the benefits may add up to more than the take home difference but depends on the industry I guess.

£120k will be just over £6k a month net, £900 a day will net you over £9k, there is an easy £3k difference in take home per month which is not insignificant.

Whether you think, holiday pay, health insurance and a discounted gym membership is worth £3k a month is up to you, personally I chose the money every time. I never felt comfortable when I was a permie, despite the fact I was on a decent salary. As a contractor I'm not rich by any means but I feel a hell of a lot flusher.

Ah ok. I just used the 45% that was quoted before. I've never contracted through an umbrella so took it at face value.

Those figures are much better so would tend to agree that the cash is significant. At the £15k I loosely calculated (£1.25k/month) I'd take permanent, even though I cringe at the thought. It's been a long time since I worked that way and not sure how I'd cope with the appraisals, team stuff and politics, not to mention HR.

[UpTheIron]

Depends on the overall package... £120k basic could be £130k or £230k with pension, bonus, shares, training, 30+8 days leave etc etc. so it could end up being a better financial move.

If you see it as a long term or career opportunity then I'd be tempted by perm.

If you see it as a 1-2 year thing (or less) I'd take the "contract".

Is it £900 to the umbrella, or a payrolled £900/day? My only ever inside contract was payrolled by the agency and the quoted rate was after ErNI, ApLevy, minimum pension and 36 days leave, none of which I'd expected so was a nice bonus!

[Guvernator]

UpTheIron said:

Is it £900 to the umbrella, or a payrolled £900/day? My only ever inside contract was payrolled by the agency and the quoted rate was after ErNI, ApLevy, minimum pension and 36 days leave, none of which I'd expected so was a nice bonus!

If it's umbrella, a similar thing applies. They are usually called employment costs these days and you need to find out if the advertised day rate includes those or not.

[CorradoTDI]

Zero Fuchs said:

Guvernator said:

Zero Fuchs said:

Interesting.

£120k is about £75k take home.
£900/day is about £90k take home.

Personally I'd take the permie role but only because I wouldn't work an inside contract out of principle. I think the benefits may add up to more than the take home difference but depends on the industry I guess.

£120k will be just over £6k a month net, £900 a day will net you over £9k, there is an easy £3k difference in take home per month which is not insignificant.

Whether you think, holiday pay, health insurance and a discounted gym membership is worth £3k a month is up to you, personally I chose the money every time. I never felt comfortable when I was a permie, despite the fact I was on a decent salary. As a contractor I'm not rich by any means but I feel a hell of a lot flusher.

Ah ok. I just used the 45% that was quoted before. I've never contracted through an umbrella so took it at face value.

Those figures are much better so would tend to agree that the cash is significant. At the £15k I loosely calculated (£1.25k/month) I'd take permanent, even though I cringe at the thought. It's been a long time since I worked that way and not sure how I'd cope with the appraisals, team stuff and politics, not to mention HR.

£900 a day gives an equivalent gross salary of around £170k

[WhiskyDisco]

EmilA said:

WhiskyDisco said:

I've just signed a contract with an agency. I'll be flying out to Stockholm and working out there for a few days a week. I'm paying the flights and accomodation. Am I able to claim these as costs against my turnover? I've only ever operated outside of IR35, and I gather that as this is for a Swedish client then this would also be outside.

Edited by WhiskyDisco on Tuesday 13th February 18:37

Scale rates may apply to you;
https://www.gov.uk/guidance/expenses-rates-for-emp...

Thank you for this.

I assume that this will all help bring down the profitability of the contract. Would it be worthwhile running this inside?

[EmilA]

WhiskyDisco said:

Thank you for this.

I assume that this will all help bring down the profitability of the contract. Would it be worthwhile running this inside?

Best to speak with an accountant or advisor on your best course of action.
I was able to claim scale rates during some of my time contracting abroad and as its claimed as an expense, its effectively tax free. The issue is say you come to apply for a mortgage, your pay (from LTd co to personal account) would be much less and it affect your affordability as they don't count expenses as part of your income for obvious reasons.

[WhiskyDisco]

The problem for me is that I will be incurring expenses, which I want to minimise. I'll speak to my accountant about it.

[Blown2CV]

is your base stockholm? If not, you will be able to claim expenses over and above your rate, as a perm would be able to. It's really not that complex.

[NicheMonkey]

Any thoughts on implications going from a 2 year outside IR35 to a perm role with the same client. For example, contract finishes end of March and I leave. After a month or so I'm back but permanent, could my former status be questioned? Good offer on the table but I don't feel comfortable doing it with the same client.

[Gazzab]

NicheMonkey said:

Any thoughts on implications going from a 2 year outside IR35 to a perm role with the same client. For example, contract finishes end of March and I leave. After a month or so I'm back but permanent, could my former status be questioned? Good offer on the table but I don't feel comfortable doing it with the same client.

The status was your clients determination. Surely any issues are on them.

[Terry Winks]

Well the hypothetical guy went for the perm role, he managed to push them a bit more on salary and in the end the benefits 15% Pension contribution, 28 days holiday and the rest just ran the contract too close.

He'll leave this thread be now.

[Zero Fuchs]

Terry Winks said:

Well the hypothetical guy went for the perm role, he managed to push them a bit more on salary and in the end the benefits 15% Pension contribution, 28 days holiday and the rest just ran the contract too close.

He'll leave this thread be now.

Best wishes for the hypothetical guy. Sounds good so hope it all works out.

[eps]

I'm still outside, but there could be a tempting permanent position on offer, just need to see the details...!!