Please help us with contracting!

[5plusMeAndHim]

DS is 22 and left uni about a years ago and has been working for an employer for £27k.
He has been offered a job through an agency, in an organisation which is part public and part private sector funded, and hasan agreement with his existing employer that they will not poach one another's staff.For this reason he has been offered a 12 month contractor role on £200 per day.Although it looks better on paper , I am not sure that it really is. He has to decide whether to go through an umbrella or Limited company
The agency are making it sound as though he has to use their recommended services- does he have to do this? They said the contract will be outside IR35 but I am not sure how they can know this as DS hasn't even seen the contract

I used to be a qualified accountant but have longlong since moved into a different feld, but i am sure i could pick up again well enough to deal with his tax etc.I am also thinking if he could put DD1 (16 yr old school girl) on the books as his 'accounts clerk' so we could utilise some of her personal allowance and then she could of course slip it back to him

so what do you think woul be the best solution for him.Or is he better sitting tight and waiting for a permanent job - he has an interview for a job on £30-4o k next week

Well firstly I’m quite surprised that as a qualified accountant you are advocating what is clearly a tax avoidance scheme, of course his 16 year old sister shouldn’t be on the books and slip the money back to him - that’s bloody outrageous
Me and DH are experienced Contractors who do everything above board but it’s people like you who give us a bad name. If you take that route I hope you get investigated and fined

£200 per day is pretty low and I don't really think it's worth going down the limited route. There is the risk of IR35 and the previous "benefits" of limited company, i.e. tax free dividends, flat rate VAT surplus, etc have been eroded. Unless he's planning to keep contracting for the long term and build up his experience/qualifications to get better paid work, I don't think it's worthwhile. If he came to see me for a consultation, I'd be telling him to go down the umbrella route instead for the time being until he started to earn more and was sure he'll be contracting long term.

As said above, putting someone else on the payroll, someone who isn't actually doing the work, is tax fraud and as a qualified accountant, you shouldn't be advocating that. Of course, she can be paid the going rate for whatever hours she really works but she must keep that money for herself and not give it back. As a school age child doing basic admin work, all she could be paid is minimum wage, so the figures will be very small anyway.

£200 per day is pretty low and I don't really think it's worth going down the limited route
He is only 22 with less than a years experience and currently in the north of England, so presumably he is expecting earnings to increase, if he relocates or gets more experience. on the other hand once the employment restriction has expired he will probably want to go on their payroll and they have alluded to this being their intention

Cannot. Believe. I’m. Reading. This