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IR35 Comapny

Hi.

I have just set up my own consultancy company. I only have one client at the moment so I presume I fall foul of the IR35 rules, especially as I have worked for this client for 3 years on a self-employed basis. I am now actively advertising for more clients.

Does the IR35 situation effect my ability to take out a loan from the company that could be repaid by dividend when I have more clients and am not captured by the IR35 rules.

Thanks in advance for your thoughts.

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It all depends on the detail.

Merely because you only have one client and have worked for them before doesn't automatically create a IR5 fail.  In fact if you ave been self employed there, it points the other way but not so much that you can rely on the position.

 

Yes you could take out a loan, but the IR35 deemed salary rules would override the loan, if you are IR35 caught, and create a horrible unrelieved double taxation muddle. Don't do it...

Nothing in what you say is complicated, you just need to talk to someone who understands IR35 and expect to pay for the advice.  IR35 isn't that complicated, but a lot of people do run scared of it.

Feel free to make contact at www.whitefieldtax.com to follow up if you wish.

jess

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Check your IR35 status first + substitute if you can

Hi,

girlofwight is spot on with their advice. If you are caught by IR35 then unwinding a directors loan would be a major pain.

There is nothing in employment case law or IR35 case law that says duration has any bearing on IR35 status. The main tests are control, substitution, and mutuality of obligation.

Start by taking our free online IR35 test on ContractorCalculator to understand your current position.

The best way to get yourself outside IR35 is to actually substitute yourself, even if it is just for a day. Then if HMRC come knocking you can play your "I have substituted" card and HMRC will back away. Then, according to the new processes, they won't consider investigating you for another 3 years.

Dave Chaplin

ContractorCalculator

 

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Incorporation

Hi Dave, Thank-you for your previous advice. I wonder if you could help me understand one more issue? As I worked for the company as a self employed person for 3 years but then incorporated, does the fact that I have incorporated mean that I have taken on the possible IR35 liabilities from the sole trade? I thought that if I was caught under the rules that the HMRC would chase deemed employer for the sole trade period and me for the incorporated period, however I read something the other day to make me think otherwise. Cheers.

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