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IR35

As temporary contract worker I've been using a management company to process payments due to me, from whichever agency.

However, the management company recently sent me forms to sign and whereby I'd become the director of my own Ltd company, rather than remain the employee of an umbrella company. They explained that the service I'd previously been using was discontinued and this was the new one to replace it.

Being clueless about tax efficient payroll management, other than I couldn't seek very much employment without using it, I request any comments from other readers better informed.

It seems a very radical change of my employment status that I'm agreeing to. I've no problem with the professional standard of the management company but am concerned if there are any questions I should be asking them about this proposal.

JB

Reply to
John Burke
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What's their new fees?

Reply to
Peter Saxton

I didn't do the arithmetic yet.

My first concern here is for whatever change in personal liability I may be agreeing to.

Their charges (on anecdotal comparison) seem to be reasonable, I don't anticipate a price hike.

Reply to
John Burke

Best to ask them.

Reply to
Peter Saxton

Are you an employee or self-employed? You state that you're an employee of the umbrella, which would imply that you're within IR35, in which case you can still be within IR35 in a Ltd and they can process the Ltd's payroll in the normal manner (i.e. PAYE). There won't be any change in status or in your tax liabilities, Gordon likes contractors to be on PAYE.

Reply to
shano

For tax purposes I was an employee of the management company, self employed isn't an option for me.

Thanks, but I'm not so much concerned with the tax efficiency but simply with any broader liabilities/resposibilities of becoming a company director for that purpose.

JB

Reply to
John Burke

1) The reason the management company are doing this is likely to be because with the current structure, technically you are their employe and they have realised that as such they are liable to pay you: holiday pay, sick pay, maternity pay, renundancy pay etc etc and by moving you to a Ltd Co director this liability falls to you. 2) This type of composite structure is the one which Gordo announced in the budget that he didn't like and is looking to take action to close. 3) In light of the failure of the Muscat appeal (that I read today) this change, instigated as it is by the management company is possibly going to be ineffective for the purpose of (1).

Methink that these PAYE management companies really do need to consider their business model.

HTH

tim

Reply to
tim (back in SY)

This doesn't sound very promising.

Thanks. Figure I'll phone the management company tomorrow.

JB

Reply to
John Burke

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