What options and opportunities are available under IR35?

While the threat of being placed inside IR35 could increase upon the arrival of IR35 reform on 6th April, that’s not to say you will definitely be caught by the legislation. Plenty of companies will assess your contract fairly and allow for outside IR35 engagements.

However, if your contract is shifted inside IR35 by your client, nothing is stopping you from continuing to operate through your Personal Service Company.

Contractors taking on contracts inside IR35 are well within their rights to increase their fees to take into account the significant cost of working inside IR35. That might be hard to negotiate but it’s worth a try especially if your skills are crucial to the end client.

If deemed to be inside IR35, you will have a number of choices. Should you find another contract that will sit outside IR35? Or should you take the financial hit and then either take a staff position if offered, work agency PAYE or work through an umbrella company? But as mentioned, even if you are deemed inside IR35, you can continue to work through your limited company.

The new Off-Payroll (IR35) legislation has not been well accepted by many respected industry commentators including, for example, the Chartered Institute of Taxation and the Institute of Chartered Accountants in England and Wales, who believe that the legislation is not well constructed and needs changing, and lobbying will continue with the Government. In addition, end clients with the threat of losing a valuable skilled contractor workforce may change their IR35 assessments. These factors may result in some u-turns and taxes could be refunded.

When taking into account that thousands of outside IR35 opportunities will continue to exist after the introduction of reform, and the possibility that initial taxes deducted might be refunded, stopping working through your limited company altogether could be viewed as a rash move.

If you’d prefer to carry on working with the same client, operating through an umbrella company is certainly an option and, given that it means IR35 isn’t taken into account – because you are perceived to be an employee of the umbrella company – it is something to consider. Please contact us for further advice about moving to an umbrella company.

It is, however, also worth bearing in mind that if you work through an umbrella company, they will need to reduce the rate paid to you by the cost to them of employers NI and the apprenticeship levy which is about 14 per cent. You will also be subject to PAYE taxes which will be deducted by the umbrella company before paying you.

In conclusion, it boils down to your personal situation as to whether it makes financial sense to carry on working through your Personal Service Company on an inside IR35 contract. And while you might find it tricky to successfully raise your rate for inside IR35 contracts, it is our view that many private sector firms will, going forward, offer a great many outside IR35 opportunities. We believe that in many cases, you can still operate with greater tax efficiency and enjoy the benefits of working through your limited company.

It is important to remember we are here to help and advise you so please contact us and include us in your decision-making process –

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