I am an IT consultant who works through my own Ltd company.

I have been offered a job that is within IR35 this means I will pay tax, NI and all other deductions which I dont have a problem with.

However the employer wants to deduct from me their costs such as Employers NI in other wrds bear their employer costs, is this right?

I am due to sign the contract tomorrow so urgent guidance/help would be really appreciated.

Thanks

Would you remain self employed / working for your own company in this new position?

Is it a contract as such / a contractor role?

No not self employed being in IR35 you are considered employed

it's really just changing the price of the contract. Would you be happy with / accept the lower pay rate? If not negotiate up to cover it.

I don't know about the legal details of this but I think it's really a commercial question for you, not a legal or tax question. The employer wants, financially, to be in the position he would be in if IR35 didn't apply. ie, he'd pay you a sum of money each month and have no other costs whatsoever. He knows that IR35 doesn't let him do that but he can achieve the same financial position by making you contractually liable for paying employers NI. The precise payment routes and mechanism to achieve that I can't comment on. The question for you is simple. They have offered you a gross pay rate and told you what deductions you will pay yourself (under the deal they are proposing to you). What will that leave you with Net and are you prepared to work for that? If yes accept the offer. If no negotiate a higher gross pay rate. Everything else is detail and paperwork.

I don't know about the legal details of this but I think it's really a commercial question for you, not a legal or tax question. The employer wants, financially, to be in the position he would be in if IR35 didn't apply. ie, he'd pay you a sum of money each month and have no other costs whatsoever. He knows that IR35 doesn't let him do that but he can achieve the same financial position by making you contractually liable for paying employers NI. The precise payment routes and mechanism to achieve that I can't comment on. The question for you is simple. They have offered you a gross pay rate and told you what deductions you will pay yourself (under the deal they are proposing to you). What will that leave you with Net and are you prepared to work for that? If yes accept the offer. If no negotiate a higher gross pay rate. Everything else is detail and paperwork.

The question I am asking is about the legality of it, I can do the math and work out the numbers the questions is are they allowed to do this?

https://www.gov.uk/guidance/ir35-find-out-if-it-applies

http://www.contractoruk.com/ir35/what_is_ir35_rules_explained.html

Hi Ben,

I'm looking at this pragmatically ...........

A bargain is being struck here. You're offering your services to the employer. And they're offering a salary package based on you being dealt with under Schedule E (PAYE) and not Schedule D (self employed).

You being treated as employed means they pay Employers NIC on the salary they pay you.

Bottom line is, will they pay you enough (after making whatever deductions they see appropriate) to make you happy, after you've paid employees NIC and PAYE tax.

They can make you any offer they like whether they refer to clawing back Employers NIC or not.

But I doubt they'll refer to this specific issue when confirming the job offer in writing.

The question I am asking is about the legality of it, I can do the math and work out the numbers the questions is are they allowed to do this?

Suit yourself. If that's your attitude I won't bother to offer further help.

https://www.gov.uk/guidance/ir35-find-out-if-it-applies

 

http://www.contractoruk.com/ir35/what_is_ir35_rules_explained.html

Thanks for those links, but i am employed and paid directly by the employer so my question is can they deduct from me their NI payments

If it's explicitly in your contract or you otherwise agree to it, and I does not take you below minimum wage, I'd say yes http://www.acas.org.uk/index.aspx?articleid=4125

You seem to be very confused. First you say that you work through your own Ltd company, then that you are employed and paid directly by the employer.

Also, you say that the 'job' is within IR35. Who has decided this? Is this within the public sector? You may be able to agree a contract that is outside IR35, as long as the working practices are in line with the contract.

You seem to be very confused. First you say that you work through your own Ltd company, then that you are employed and paid directly by the employer.

 

 

Also, you say that the 'job' is within IR35. Who has decided this? Is this within the public sector? You may be able to agree a contract that is outside IR35, as long as the working practices are in line with the contract.

If you look at my 1st post I state I am IT Consultant working through my own Ltd company but offered a role within IR35. They decided it was within iR35 as it is the position of least risk, the working detail is in fact, outside IR35 for example I am supplying my own equipment but they are too frightened b HMRC saying if they find out in thr future a rule is within IR35 then they become liable for any tax and NI.

So not confused just questioning the legality of having to pay employers NI Liability then deducting it from the employee

if in doubt ask HMRC direct

Hi Ben,

Thanks for those links, but i am employed and paid directly by the employer so my question is can they deduct from me their NI payments

As Emmzzi says, if your contract refers to the employer recouping the cost of employer's NIC, and you agreed to it, then it may be acceptable.

However if you did NOT agree to such deductions in your contract, then I think they can be challenged.

As far as I am aware the decision regarding IN or OUT of IR35 lies with you (Ltd Co). Your client currently is not at risk of getting this wrong, unless the client is a Public Sector organisation. If you were to deem this contract outside of IR35 and HMRC later challenged this then they would look to you for the shortfall in NIC/tax (not your client). Maybe you can convince them that there is no risk to them?

If you were to allow them to deduct the Employers NI then how can you be sure that they pass this on to HMRC? I don't think that there is a mechanism for them to pay this to HMRC as you are not their employee.

In my opinion your client is just trying to knock down your rate. You have to ask yourself how much do they need you, and how much do you need the gig? It is a commercial decision that only you can make.

Hope this helps.

I'm not an accountant, but it doesn't sound to me like this arrangement works.

Is the suggestion that you would pay HMRC on behalf of the employer? Or is the suggestion that the employer would not pay their employer's NI contributions, and would refer HMRC to you when they get chased?

A clause which makes an employee liable for paying employer's NI contributions is not enforceable. I'm not sure how it works with IR35 but I would imagine it should be the same situation.

I think you might find this specialist contractor forum thread on IR35 helpful (while not vouching for its accuracy, I'd still call HMRC) http://forums.contractoruk.com/public-sector-ir35/120479-working-public-sector-faq-about-ir35.html