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Forum - Tax / IR35 question: Working at home, Consulting away! New start up...need to get it right!
Tax / IR35 question: Working at home, Consulting away! New start up...need to get it right!
Tue, 16/03/2010 - 09:15 — Anonymous
Hi all,
New to Start Up Donut but as someone who incorporated my business and registered a website last week I must say the site is proving absolutely invaluable, and a great source of tips (Both big and small) and inspiration!
I wonder if I could pose a question which I hope is appropriate on these forums.....
I am setting up my own technical recruitment consultancy and will be home based. I've reached an agreement with my current business where I will consult / train staff for them at their offices on Monday and Tuesdays, and on Wednesday, Thursday, Friday I'll work for myself from home.
I'm guessing that I will invoice my day rate for Monday and Tuesday from my newly formed limited company, but I'm not absolutely sure about IR35 and how this comes into play. The accountant I've spoken with (though not yet engaged) have asked what my IR35 status will be, given that I'm consulting for two days as well as my own business running from home the rest of the week. I'm not 100% sure and thought I'd run the matter past the forum in case anyone can shed any light on this?
I'm not quite clear on whether there can be separate IR35 issues for the two days consulting, and the rest of the week on my own?
Any advice greatfully appreciated, even if it's just to say that it's not an appropriate question for this forum and should possibly go onto a tax forum!
Many thanks,
Darren
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You should contact with tax consultancy firm.
The taxman will take an overall view of how you work with the company on Mondays and Tuesdays - and yes your limited is your intermediary. It also depends how much control the client has over you and how integrated you are into that company plus also look up Mutuality of Obligation. You can start by taking what the HMRC call 'reasonable care' by having your IR35 status professionally reviewed.
One other thing I could do with getting clarity on is that the HMRC site describes how IR35 can apply when you provide services to a client via an intermediary. Does my limited company get classed as the intermediary in this instance?
"If you provide your services to a client (the end-user) via an intermediary, typically a service company or partnership, and the intermediary does not meet the definition of a Managed Service Company, then the IR35 legislation may apply to engagements with that client. "
Many thanks,
Darren
Thanks to both of you for the advice. My new role for two days a week will be very different from the role I currently conduct for the business, and my contract will probably be for training / mentoring. I'll set the workload, and I'll have the right to substitute myself too. I'll also lose all access to passwords, keys to the office etc so I'm hoping that I'll naturally fulfill the "outside IR35" criteria because of this.
I'm hoping it helps that I'll also be sending invoices to lots of companies as it shows I'm not a disguised employee of just one company.
Many thanks again,
Darren
IR35 can be a complex area and whether the work that you are undertaken in the first two days of each week is caught by the rules would be determined by the terms of your engagement. If you are doing the same work that you were doing before you left employment and on similar terms then it may be difficult to avoid IR35 on this engagement.
The work that you are undertaken later in the week, appears entirely separate and IR35 would not seem to be relevant to this work. In effect part of your income would be subjected to the IR35 rules but not all and yours and your companies tax liabilities would need to be calculated accordingly.
Any accountant familiar with the IR35 rules should be able to guide you.
Phil
Hi,
I would have expected the accountant you spoke to, to be able to help you catergorise your IR35 status, as they should be more familiar with the circumstances in which it applies?
I would suggest having a look at HMRC's definition of when the legislation applies, and compare it to your situation. http://www.hmrc.gov.uk/ir35/leg-applies.htm
If you're still in any doubt, you can ring my firm 0845 345 5759, and I could get Mr Murphy, who is the senior tax partner, and our resident IR35 expert to see if he can help you arrange your status.
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