IR35 and LTD Co v Umbrella

IR35 and LTD Co v Umbrella

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Apologies if this is going over old ground but I have read many posts on IR35 and LTD v Umbrella but I am not sure if they are relevant!

Consultant A is being paid a retainer (not much) for 80 hours per month by Company B for working at home. A is not allowed to work for anyone else. The contract is for 4 months after which it will be reviewed and may or may not be renewed.

A is based at home and will be paid a daily rate to attend the office and another daily rate to attend customer site as and when asked (although early in the contact I doubt this will be often) by company B.

Does this fall into IR35 as there is only one customer? If it does because of the restrictions in claiming expenses would a LTD co still be better than Umbrella?

Looking for the cheapest and most beneficial way of doing this in case it does not work out.

Many thanks to anyone who can help.

T Miller

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By AnonymousUser
04th Mar 2009 17:16

Thanks Mark
So to clarify if Consultant A sets up a Ltd company and bills Company B via that company it will be IR35? If so what are the other options the umbrella company?

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By Mark Lee
04th Mar 2009 14:34

IR35 is only an issue if Consultant A operates through a company
On the limited facts presented there are indicators both of self employment and of employment.

However, if Consultant A provides his services direct to Company B then IR35 is not relevant. It's ONLY relevant if Consultant A bills his work through a company (or a partnership) rather than directly AND he would be treated as an employee but for the existence of an intermediary company.

If A bills B directly and HMRC later determine that he is really an employee of Company B it is the company (B) who will be pursued for failing to apply PAYE etc.

Mark Lee
Tax Advice Network

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