Big IR35 Bonus for Contractors
There could be a big IR35 bonus for contractors when their agency goes bust.
When an agency doesn‘t pay an IT contractor on time, the radar usually starts to prick up.
However, IT contractors are usually reassured by their first call to the IT agency. They tell them that there is nothing to worry about. It may be true or it may be a cock and bull story to buy time for a major Cash Flow problem.
It‘s a time of great worry for contractors.
However it needn‘t be. We have previously pointed out how it could be a major opportunity to cash in.
There could be another major bonus too. Their agency going bust and owing them money could cause them to be outside IR35. That’s even if HMRC has ruled previously that they are inside.
One leading IT Accountant said:-
‘One thing that I would say is that if they do go under owing the contractor money this is a huge pointer towards “self employment”. You would therefore be outside IR35.
‘In this situation there is a big justification for claiming that they are outside IR35 if they are not already doing so. The impact of the bad debt could just be offset against the potential claw back of PAYE and NI following a reclassification from IR35 to non IR35’.
Contractors Inside IR35
So there we have it!
A contractor who is inside IR35 and paying his agent 20%-30% of the money he earns, could now be in clover.
If he follows our previous instructions, and also gets himself or herself outside IR35 as well, AND removes himself from those restrictive agency clauses, the few weeks money he or she has lost may be well worth it in the long run.
So, don‘t get into despair when it happens. It may be your luckiest break so far. You could get a big IR35 bonus out of it.
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