Redundancy then going back as a contractor?

[upsydaisy45]

My company in currently getting towards the end of a three month staff consultation process after which we will know what roles are "at risk". I have a fairly technical and specialised job that will almost certainly go in this round of redundancies. Fine, the payout will be useful and I'm already seeing opportunities elsewhere. However... The ideal situation for me (and for the company perhaps) would be to have my role as a part time role or to have me available as required as a contractor. Now, I probably wouldn't consider part-time as the redundancy pay is quite generous and there are likely to be further cuts so I wouldn't want to risk my full-time payout by then going part-time iyswim. I know that there are tax implications of taking a redundancy and then going back as a contractor and it's not normally done but can anyone explain what the consequences are?

I think there are issues about returning as a contractor after redundancy and others on here can give you good advice (some companies have their own policies about it too).

If you are working as a contractor, the key thing to watch out for is a regulation IR35 which is used to assess whether you are employed or self-employed. There is a lot of information on the HMRC website.

If your previous employer is the only company you will work for, and if you do a role similar to parts of your current job, then I think you might be at particular risk of falling foul of IR35.

I know our Company prevents you from being employed as a contractor either directly or indirectly via an agency for 6 months after any redundancy payout.

Have they actually offered you either of those things?

It's likely to be very hard to demonstrate a genuine 'self-employed' status if you are working for the same employer doing the same or a similar job and the only thing changing is the amount or regularity of the hours tbh. It is more likely for the same reason not to be a genuine redundancy, meaning if you go ahead on that basis you shouldn't have received a tax-free pay-out.

notsoclever - you are right and IR35 is crucial here.

It sounds like the OP may fall foul of it to me without having all the details.

My advice to the OP is stay properly employed even if it is part time while things pick up again.

Thanks everyone. No, flowery, I haven't been offered anything yet as we are still in consultation. I fully expect my role to be identified as one for redundancy once the consultation is finished - we are an international organisation and my peers in other countries with less rigorous processes have already been made redundant. I guess I am just sizing up my options before discussing anything with my bosses.

tbh you have all confirmed what I thought. Betadad, I agree, my advice to everyone at the moment is to keep hold of whatever job they've got as the outlook is pretty grim at the moment - imho.

What Flowery said.