Employee A works as an employee in admin for Company A.
Employee A set up a ltd company to offer his services, company is 6 months old and to date has received 1k from clients. The ltd company offers consultancy and managing services in IT.
Company A wants a new IT system which it has had a quote from Employee A under his ltd company.
This will be done outside of work hours and include weekends and will be paid to the ltd company. Employee A has also asked Company A to pay for parts required to build the systems (but not equipment to do the job)
This will be on going for 3-6 months with quarterly support. Estimated to be a total of £3000.
Based on Employee A's modified business plan this will be 80% of his income in the ltd company for 1 year.
Is this subject to IR35 (in your opinion of course - I understand the specialist review).
Replies (2)
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On the facts you present
I wouldn't be too frightened of IR35. Can we call employee A just A, his own company A Ltd and the company he works for B Ltd? Personally I find it less confusing.
The proposed contract sounds like IT project management, whereas you say A's current position with B Ltd is in admin. I assume that IT PM is outside his job description, so not part of his existing employment. It sounds as though A Ltd (his company) has other clients and was not just set up as a vehicle for trading with B Ltd.It also sounds as though A would have control over when, where and how the work is performed.It further sounds as though A Ltd (his company) will be meeting the cost of its own overheads. I don't see any problem with recharging the cost of materials to B Ltd as I believe this would be standard practice for an outside contractor.Presumably B Ltd does not give a stuff whether A Ltd provides its services exclusively through A himself or whether he subcontracts the work. If he's working outside B Ltd's normal hours and at least partly from home, they wouldn't even know if he did so. I assume that so long as they end up with the system they want, they will be content to sign off the contract performed by A Ltd.
If any of my assumptions above strike the wrong note please elaborate, but on the face of it I'd say you're on terra firma.