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 VS4b 19 Jun 2014
I'm in discussion about a new role and two options are being waved at me one a 2 yr FTC with some benefits being described around sick pay and bonus the other a std contracting arrangement. Not sure how it fits with ir35 yet as the contract would be for a 2year programme in one client, but with a defined end point, which sounds like it could be engineered outside ir35 from my v basic googling.

I think FTC is paye so I'm trying to work out how much premium I should look for over a perm role for the FTC option as it's only for 2 years and what kind of contract rate that would compare to. No idea how much tax contractors actually pay!

Anyone got any informed experience in this kind of thing?
In reply to VS4b:

If you're "engineering" a contract to be outside IR35, then it's probably not outside IR35. It's currently open season on anyone who doesn't get their full salary PAYE in a traditional employee context and the situation will only get worse. There are probably lots of people thinking they're getting away with it at present, but when the IR catch up with them it'll costs them big-time.
 mullermn 20 Jun 2014
In reply to VS4b:
Be careful with this as the risk is mainly on you if HMRC decide the contract is within IR35.

There is lots of material online about what makes a contract inside or outside IR35. There is no one acid test, it's a composite of lots of things that show whether on balance you behave like a business providing services or like an employee.

Incidentally the 2 year limit is nothing to do with IR35, it's to do with the point at which your 'regular place of work' automatically transfers to the client site (and you therefore can't claim 'working away from home' expenses from your company). Note that that rule takes effect from the point at which you know you will be at a single site for 2 years, not from the point where you have actually been there 2 years - if you sign a contract for 2 years straight off you will not be able to claim those expenses. Sign one for 1 year 11 months and then renew it when the time comes.

Look in to umbrella companies - they basically act as an intermediary and prevent you from having to do a lot of the hassle that comes with being a limited company in your own right. If you get a good one I would assume they can also provide guidance on IR35 compliance.
Post edited at 09:17
Andy Gamisou 20 Jun 2014
In reply to mullermn:


> Look in to umbrella companies ... I would assume they can also provide guidance on IR35 compliance.

My understanding of umbrella companies is that, after valid expenses, you pay NI and PAYE the same as a normal employee, so IR35 is not relevant in this case.

http://www.contracteye.co.uk/ir35-umbrella-company-contractors.shtml
OP VS4b 20 Jun 2014
In reply to AndrewW:

Interesting So a FTC on a big whack to make up for paying PAYE might be a safer if slightly less lucrative approach to day rating and the risk of future ir35 changes... It's sorrying about stuff like this that has kept me as a permy in the past

Andy Gamisou 20 Jun 2014
In reply to VS4b:
You probably need to take professional advice on how likely it is that your contract will be 'caught' by IR35. I personally wouldn't base any decision on any opinion expressed on UKC. You potentially stand to gain/lose many thousands if you make the wrong decision.
Post edited at 14:44
 whenry 20 Jun 2014
In reply to VS4b: I work in recruitment and manage all our contractors and contracts - our contracts have passed every independent assessment they've been through re IR35. IR35 can be a bit of a headache, but equally is rarely a problem in practice - it depends how the contract is set out, and whether it is going to be a problem or not really depends on the contract.

Generally speaking, you should be better off with a proper contract (as opposed to an FTC), but only if you have your own limited company instead of an umbrella company - you pay far less in fees, and your accountant may be a bit more creative. My concern would be why they are looking at the two options: FTCs are generally cheaper for the company than a 'proper contractor', and so they might be trying to get you on the cheap (certainly an FTC doesn't look as good on your CV), but conversely if they are trying to make it a contract role and thus to your financial advantage, that would be concerning re IR35.

Ideally, you want the contract to have milestones in terms of work - so that it isn't purely done on dates; you should avoid having a notice period (though if it's going to be a 2 year contract you'd probably want to avoid that!), and make sure it's business contract (so you have professional indemnity insurance requirements etc), and a lack of control, and an unrestricted right to substitution. Ultimately though, it's the whole of the contract and the circumstances around it that will let it pass IR35 or not.

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