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How long should someone wait before freelancing

Potential new client

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We have a potential new client who has been made redundant. His previous employer wants him back freelancing. Previously they said wait 1 month but now they are saying 3 months to avoid HMRC asking awkward questions. What is the recomended period?

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By Jdopus
16th Jan 2020 10:51

Technically there's no recommended period, it comes down the employment status tests. If you want to advise your client you need to look at the nature of the freelancing appointment and judge against the rules and case law whether it is genuine freelancing or just disguised employment.

If he begins freelancing within a month or three it won't be the sole factor that determines whether it's disguised employment.

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By SXGuy
16th Jan 2020 10:53

If hes been made redundant and the only future income is that of the company he worked for, id say he has more to worry about than a waiting period.

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Replying to SXGuy:
By 0098087
16th Jan 2020 11:01

It won't be his only source of income

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By Accountant A
16th Jan 2020 10:58

I doubt time is the critical deciding factor. I'd be looking at the specific circumstances. If the client is returning as a "freelancer" on an open-ended contract to do what he/she was doing before as an employee then you have to question whether the redundancy was genuine. If he/she is going back for a month to help resolve some issues then I'd be less concerned.

The reference to HMRC "asking awkward questions" arguably points to some skullduggery.

Is the "employer" affected by the "IR35" extension to the private sector from April?

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Replying to Accountant A:
By 0098087
16th Jan 2020 11:03

From what he's told me I don't think IR35 will be an issue

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Replying to 0098087:
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By Accountant A
16th Jan 2020 11:09

0098087 wrote:

From what he's told me I don't think IR35 will be an issue

And what about the other issues? Is he going back indefinitely to do exactly what he was doing before? Will he be looking for other work? Does his new contract prevent him working elsewhere?

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Replying to Accountant A:
By 0098087
16th Jan 2020 11:13

He will be looking for other work and he can go elsewhere

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By Duggimon
16th Jan 2020 11:35

If he's genuinely freelancing then there's no need to wait at all.

The former employer's reticence is what's leading me and the other respondents here to doubt that it is genuinely freelancing, though maybe they're just over-cautious or don't understand the rules themselves.

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By Matrix
16th Jan 2020 12:40

As self-employed or through a company and, if the latter, is the employer a small company or subject to the off-payroll rules?

Has he received a tax free lump sum on redundancy?

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Replying to Matrix:
By 0098087
16th Jan 2020 12:57

He will be self employed and he has received a lump sum tax free

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Replying to 0098087:
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By Matrix
16th Jan 2020 13:04

My view is that it is the previous employer’s risk on both and not your client’s. (So it doesn’t matter whether it is 1 month or 3, the employer takes their own advice and offers the work accordingly.)

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By 0098087
16th Jan 2020 13:22

Studio relocated to Spain

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By atleastisoundknowledgable...
16th Jan 2020 18:20

“ What is the recomended period?”

I’ve had 2 NHS nurses who were retired, then their PSCs engaged to start the following day.

Obvs off-payroll etc changed things, but the NHS obviously thought there was no period.

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