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IR35?

IR35?

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A client of mine currently is employed in HR working for one of the major banks.

She has put to me the suggestion that she set up her own company and then, via an agency or managed supplier, contract herself out in engagements typically of six to twelve months duration, one company at a time. As she said to me "we do this all the time in recruitment....it's quite standard."

I must admit that with my limited knowledge of IR35 the alarm bells started ringing immediately but she is quite adamant that it is okay. Would anyone care to share their undoubtedly greater knowledge as to whether this is, indeed, acceptable?

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By SteveHa
07th Feb 2017 11:43

Because they do it regularly doesn't make it right.

She is talking about replacing an employment with a PSC conducting exactly the same services in exactly the same manner for exactly the same people. Almost 100% guarantee to be caught.

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By uncle_adolph
07th Feb 2017 12:19

Thanks for the response, SteLacca, which is what I thought! I am assuming the fact that the engagement would not be directly by the company concerned but through an agency makes no difference whatsoever; HMRC would simply look through the arrangement....

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By memyself-eye
07th Feb 2017 12:29

Not 100%... 110%
HMRC will go straight to the Bank in question to see how the engagement works in practice. Of all the departments a bank is likely to have, HR is the one most staffed with employees (as opposed to 'contractors').

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By Accountant A
07th Feb 2017 16:00

uncle_adolph wrote:

A client of mine currently is employed in HR working for one of the major banks.

She has put to me the suggestion that she set up her own company and then, via an agency or managed supplier, contract herself out in engagements typically of six to twelve months duration, one company at a time. As she said to me "we do this all the time in recruitment....it's quite standard."

I must admit that with my limited knowledge of IR35 the alarm bells started ringing immediately but she is quite adamant that it is okay. Would anyone care to share their undoubtedly greater knowledge as to whether this is, indeed, acceptable?

I'm staggered that this goes on (and I have similar reliable second hand knowledge). There are "self-employed" contractors (some acting through companies and other personally) who are quite clearly acting as employees. Apparently some even appear in structure charts and are given management responsibility for ('genuine') staff.

As an accountant, I have never understood why quoted companies focus so much on headcount rather than cost. I've lost count of the people I have spoken to who have been made redundant on the Friday and returned to their job and their desk as a temp/contractor on the Monday (at a multiple of their previous salary).

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By EmmaJee
07th Feb 2017 22:20

Because they do it to get rid of their responsibilities as an employer to their employees.
On the other hand they pay you premium as if you should become your own employee and also pay the employer insurance your self too. You may loose a bit on sick and holiday pay but to keep your job you may not have other option but to form a PSC.

PSC inside IR35 is easy then you think.
Accept the fact that you are inside IR35, you must pay all the tax, employee insurance and employer insurance too.

Setup RTI scheme, pay yourself as employee and pay all the paye quarterly as any employer does and you are allowed 5% of the gross income as expense that should cover your accountancy. That way the company has no taxable profits for corporation tax, left at the end of the year or you can calculate deemed employment income and pay any dues.

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