Outside IR35

[Blankiefan]

I'm trying to understand what I need to do to optimise my position on a contract that is outside IR35. (I've never done contract work before)

Everything I've read is about determining if you're in or out. The role is definitely outside.

Do I need an accountant or is it something I can set up myself? Is there an easy "what to do to get started" info resource somewhere?

It is not up to you to determine. It is the company that will be paying you that have to do the assessment.

But the new rules do not come in until next April - delayed due to Covid.

That depends if the client is private or public sector: public sector been in for ages.

As pp said, if it’s private then it’s up to you to determine up until April next year (unless exempt due to the company being small), public sector then they’ll have to determine.

Can I ask how you know it’s definitely outside? If it’s private and you’re self determining then you’d need legal help to determine this, a recruitment agent, client, etc might claim it is but they won’t have the necessary skills or experience to make that decision. Bare in mind that the working practices will also trump the contract if they differ (e.g. client refuses substitutes even if it’s in the contract, etc). Also, if you don’t do your due diligence on this then the tax penalties can be much higher.

For maximising your situation you’d want to be working through a ltd company, paying dividends and a small salary. You’ll need an accountant to set up the payroll, vat, etc.

You can form your company yourself as it’s quite easy and doesn’t cost much, or get your accountant to do it (will cost more).

I use SJD accountants who specialise in accountancy for contractors. If you give them a call they'll take you through everything from start to finish. I've found them to be pretty good.

Its public sector and is advertised as Outside IR35. My understanding is that the public sector have been all over this for some time. So - all of the advice I read is about determining if its in or out. Given that its definitely outside, do I definitely need an accountant or is there a good online advice resource that explains how to I do it myself?

For those that have used accountants, roughly how much does it cost?

Thanks loads

I have some experience of these contracts, what do you mean by optimise your position?

I'm a contractor for public sector working outside of ir35. I have an accountant as I don't want the hassle of doing my accounts but you don't need to have one. It's up to you.

We are public sector contractors outside of IR35 and had the honour (?) of being selected as a national IR35 test case for a large government department.

What exactly are you asking?
Is this a contract you already hold or one that you are seeking to tender for?

If they say it is outside IR35 they will have composed the role to ensure that it is outside IR35.

There is an HMRC checklist that you can work through and it indicates for those issuing contracts if they are likely to be within IR35
www.gov.uk/guidance/check-employment-status-for-tax

I'm applying for a role that is advertised as outside ir35. My questions are

1. If I go to an accountant, how much is it likely to cost?

(As per PP I've looked at SJD. This suggests £200 pcm. Does that sound right?)

1. Is there an online resource/ website that explains how to manage it without an accountant? (I assume id set up a limited company so how to do that; then what happens? Do Iiteraly create invoices each month, what level of accounts do I keep, what can I offset against my tax liability ,how do I interact with HMRC? ETC. I'm looking for a reliable website that explains all of this as I don't know where to start)

Thanks

We use an Accountant and contract via a VAT registered Ltd co. The Accountant does all the company and tax stuff for around £1500 per year, they save us at least this as they advice us on what we can offset against tax etc. They should also be able to help you ensure the role stays outside IR35 as the criteria is set and unfortunately a lot of companies just say “outside IR35” and don’t really understand how/why that is. A good accountant should pay for themselves
You May need Public and company liability insurance as well.
Look at IPSE, they provide some good resources

Can I ask if a role is advertised as inside ir35 does that mean that you are paid net by the agency ...that the agency deducts tax/ni and pays you the net figure. Whereas if it is outside you get paid gross and sort out your own tax/ni. Can you still work through a limited company if the role is inside ir35? Thanks in advance

I have done a contract inside IR35 and I invoiced through my ltd co but tax was deducted before I was paid. It was direct not via an agency so that might be different

@ilovebrie8

Can I ask if a role is advertised as inside ir35 does that mean that you are paid net by the agency ...that the agency deducts tax/ni and pays you the net figure. Whereas if it is outside you get paid gross and sort out your own tax/ni. Can you still work through a limited company if the role is inside ir35? Thanks in advance

You can but it isn't tax efficient You would pay VAT and corporation tax on money on which income tax and NI has already been paid.

My Accountant said the invoices that had been paid with the tax taken off would not be subject to CT