Am I caught by IR35 a Contractor Asks – Here’s the Answer

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Caught by IR35
Caught by IR35 tax

Caught by IR35

Are you caught by IR35?

This permanent employee, who wants to become a contractor, has asked the question of us. Read his question and our reply.

IT Contractor Question from Dorian

I have been a permanent employee at my current company for three years and I have just handed my notice in as I want to become an IT Contractor.

However, my current company want me to do some work for them on areas of the system where I have expertise.

caught by ir35
Caught by IR35

They say that this would average around 5 days a month, more some months, less in others.

Worried about IR35

However, I‘m a bit worried about starting my career being caught by IR35.

I know that IR35 was started because of this situation where people leave their company one week and start as a contractor the next week.

Do you have any advice Dr McLaughlin?

Dr McLaughlin‘s IT Contractor Surgery

Yes I have – take it.

Although it is the same company the situation is totally different.

If you were doing the same hours and the same job under the same conditions as you were before then you would certainly be caught by IR35.

Mutuality of Obligation

However, everything has changed.

They wouldn‘t have many employees who just do 5 days a month.

Also, if 5 days a month is only an average then there seems to be no Mutuality of Obligation on either of your parts as presumably there might be none some months where you do no hours, e.g near Christmas (although unlikely it is possible).

IR35 Tax and HMRC
IR35 Tax and Contractors

You will be doing variable hours each month unlike your colleagues that you have left behind.

Another IT Contract

The only caution you should have is whether you can get another contract that allows you to work just 4 days a week.

If you can get one, then that takes you further outside IR35 as you have two clients at the same time.

It depends when you can do this 5 days a month.

If you could do them at weekends or evenings or just be on the end of the phone to do some consultancy, that would be prefect – as long as the rate was right.

Outside IR35

I would take it anyway.

A bird on the hand is worth two in the bush.

You have some income coming in and when you get a contract you can always pack your old company in if you can‘t fit in the two jobs.

Of course, if you can it would be perfect for you – and you would be far, far outside IR35.

Good luck!

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