Contractors working under hsmp visa

[baba1]

Hi there,

I am planning to work as a contractor from the next month. Please advice what minimum salary I need to show as my net salary because the composite companies tends to show minimum wages to reduce your tax.As your invoices / salary slips will be from your umbrella company, how one will show that he/she is working in the same field as described in the hsmp entry level application.

please reply,

Cheers

baba1

[Smit]

Baba1,

Will you be an employee of the umbrella company? For HSMP extensions, you need to show economic activity and there is no prescribed minimum salary.

To be on the safe side, your payslips should show market rates for jobs similar to yours.

If you are an employee of the umbrella company, the employment contract should show job position/description to prove that you are working in your field, otherwise the contract betweem your umbrella company and the employment business will most likely name you as a Consultant and denote the services being provided.

S

[baba1]

Thanks Smit. I am planning to go with an unbrella composite company called brooksons and they will invoice to my Agency. The agency will invoice the company with whom I would be working. I am thinking to show minimum salary which I wrote during my hsmp entry level application. I will also try to get an experience letter from the company with whom I would be working. Is this suffice my requirement for ILR. (At the moment I am on hsmp extension visa for 3 years).

Cheers,

Baba1

[Smit]

Baba1,

I am very familiar with the arrangements between the umbrella company, agency (actually known as employment business and not agency) and end user (client).

How it works (for you to get IR35 protection) is that there is a contract for services between your umbrella company and the employment business and there is a separate consultancy contract between the employment business and end user.

Typically, you are an employee of the umbrella company and it takes care of your payroll after receiving money from the employment business. I would be surprised if you obtain a letter directly from the end user attesting to your skills as there is no contractual relationship between the two of you, but who knows, you may get lucky. In any event, a letter from the employment business should suffice.

I would not anticipate any problems with your ILR application as long as you can demonstrate your economic activity (contracts, letters of attestation, payslips etc) during your 4 years in the UK.

Smit

[baba1]

Thanks Smit for ur reply. In that case I will try to get another letter from the agency as well. I am little bit confused about my IR35 status. I have seen some contractors working under IR35 and some outside IR35. What do you reckon about it?

Sorry for troubling you once again.

Regards,

Baba1

[John]

I have seen some contractors working under IR35 and some outside IR35. What do you reckon about it?

This is a highly technical tax issue and it is totally impossible for anyone to start to come to a conclusion without sight of all the various contract documents, and indeed knowing whether what happens in practice actually accords with those written contracts.

As someone who has done IR35 contract reviews in the past I would say that the general trend is that IR35-friendly contracts are tending to push out those where HMRC has a better chance of winning a battle. In other words the better wordings that are now around are tending to make life more difficult for HMRC.

[baba1]

Thanks John, is it possible for you to tell me what words/sentences I should pay more attention to while going thru my contract. I would like to be out of IR35 as it will increase my take home.

Regards,

Baba1

[John]

Baba1, no sorry, it is not nearly that simple. It is not possible to do what you request.

[Smit]

Baba1,

I agree with John. It is not as simple as you think to tell whether or not you would fall outside of IR35.

Your umbrella company/agency/accountant should be able to tell you whether your contract falls outside IR35. A good starting point would be for you to opt out of the Conduct of Employment Agencies and Employment Businesses Regulations 2003. I would suggest that you contemplate joining PCG (if you have not done so already).

S