IR35 Query

pinewood12

A portion of my income (about 20%) falls under IR35 where I work for a company, invoice them for the work undertaken and they pay me via traditional payroll / taxed at source etc. 

I don't have a contract for this work, but have 13 months of payslips and a letter from their HR confirming my continued work for at least another 12 months at the same pay rate I have been earning. 

The lender has come back twice to reject this letter, once as it was addressed to them (so I resent it addressed to me) and secondly because...well i'm not too sure. 

I was wondering if anyone would have an idea of how best to try and resolve this and what lenders might specifically be looking for within an employment agreement. 

Thanks in advance. 

pinewood12

PS. my timeline to date:

02/09 - AIP Confirmed 
08/09 - Application Submitted
13/09 - Valuation Report Received 
15/09 - Further Income Documents Requested
21/09 - Further Income Documents Requested 
28/09 - Case moved to senior underwriter - "no more documents required"
29/09 - Further Income Documents Requested

K_S

@pinewood12 Which lender is this? If you have a broker they would be best placed to advise you on what the actual issue is. What documentary requirement are you not able to meet? Did the lender mention why they declined the letter the second time?

If you went direct, hopefully you did run your situation past the lender in detail to confirm that you ticked all their boxes for contractor criteria and (what looks like) secondary income.

Do you need this 20% of your income for affordability?

pinewood12 said:

A portion of my income (about 20%) falls under IR35 where I work for a company, invoice them for the work undertaken and they pay me via traditional payroll / taxed at source etc. 

I don't have a contract for this work, but have 13 months of payslips and a letter from their HR confirming my continued work for at least another 12 months at the same pay rate I have been earning. 

The lender has come back twice to reject this letter, once as it was addressed to them (so I resent it addressed to me) and secondly because...well i'm not too sure. 

I was wondering if anyone would have an idea of how best to try and resolve this and what lenders might specifically be looking for within an employment agreement. 

Thanks in advance. 

Grumpy_chap

Have you provided your Broker with your SA302s for the past two years?

pinewood12

Thanks @K_S / @Grumpy_chap:

Nationwide are the lender and yes I am using a broker who spoke to Nationwide about my situation in order to gain my AIP. Something along the lines of further clarification of my employment status which I don't really have. As explained they have a letter from our HR dept. stipulating i've been working there 13 months and will continue to do so for at least another 12. 

Yes I would need the 20% for affordability. 

@Grumpy_chap I've never filed self assessment as i've never done any 'self employed' work - when put on IR35 it was explained to me I would be taxed at source and HMRC recognises you are 'employed'. 
 
Hope this helps 

K_S

pinewood12 said:

Thanks @K_S / @Grumpy_chap:

Nationwide are the lender and yes I am using a broker who spoke to Nationwide about my situation in order to gain my AIP. Something along the lines of further clarification of my employment status which I don't really have. As explained they have a letter from our HR dept. stipulating i've been working there 13 months and will continue to do so for at least another 12. 

Yes I would need the 20% for affordability. 

@pinewood12 With Nationwide, given that you are not on a perm PAYE contract, and your tax and NI is deducted by the client/employer, this *should* fall under 'Fixed Term Contract' criteria and that's what you need to meet.

The Nationwide underwriter will usually need a contract to tick off the criteria requirements (eg: min 12 months on FTCs) but since you don't have one, your broker needs to speak to them to understand what (if anything) they will accept as an alternative. Ideally, he/she should have asked that question of Nationwide (and confirmed the same with you) before recommending them.

pinewood12

K_S said:

pinewood12 said:

Thanks @K_S / @Grumpy_chap:

Nationwide are the lender and yes I am using a broker who spoke to Nationwide about my situation in order to gain my AIP. Something along the lines of further clarification of my employment status which I don't really have. As explained they have a letter from our HR dept. stipulating i've been working there 13 months and will continue to do so for at least another 12. 

Yes I would need the 20% for affordability. 

@pinewood12 With Nationwide, given that you are not on a perm PAYE contract, and your tax and NI is deducted by the client/employer, this *should* fall under 'Fixed Term Contract' criteria and that's what you need to meet.

The Nationwide underwriter will usually need a contract to tick off the criteria requirements (eg: min 12 months on FTCs) but since you don't have one, your broker needs to speak to them to understand what (if anything) they will accept as an alternative. Ideally, he/she should have asked that question of Nationwide (and confirmed the same with you) before recommending them.

Agreed - and this conversation it sounds like was held between broker/Nationwide in order to obtain my AIP....and a paper trail exists detailing this conversation agreeing they could take on that pay. 

So it's confusing that at the underwriter stage they've come back with a difference stance. 

K_S

@pinewood12 Sorry if this comes across as pedantic, but Nationwide confirming that they will consider an income stream and  Nationwide specifying what documentation they need to consider an income stream are slightly different.

If they confirmed to your broker upfront that they don't need the contract to verify the FTC income, then they should have also said what it is that will do in its place.

Hopefully your broker can check with them what alternative evidence they may consider.

pinewood12 said:

K_S said:

pinewood12 said:

Thanks @K_S / @Grumpy_chap:

Nationwide are the lender and yes I am using a broker who spoke to Nationwide about my situation in order to gain my AIP. Something along the lines of further clarification of my employment status which I don't really have. As explained they have a letter from our HR dept. stipulating i've been working there 13 months and will continue to do so for at least another 12. 

Yes I would need the 20% for affordability. 

@pinewood12 With Nationwide, given that you are not on a perm PAYE contract, and your tax and NI is deducted by the client/employer, this *should* fall under 'Fixed Term Contract' criteria and that's what you need to meet.

The Nationwide underwriter will usually need a contract to tick off the criteria requirements (eg: min 12 months on FTCs) but since you don't have one, your broker needs to speak to them to understand what (if anything) they will accept as an alternative. Ideally, he/she should have asked that question of Nationwide (and confirmed the same with you) before recommending them.

Agreed - and this conversation it sounds like was held between broker/Nationwide in order to obtain my AIP....and a paper trail exists detailing this conversation agreeing they could take on that pay. 

So it's confusing that at the underwriter stage they've come back with a difference stance. 

pinewood12

K_S said:

@pinewood12 Sorry if this comes across as pedantic, but Nationwide confirming that they will consider an income stream and  Nationwide specifying what documentation they need to consider an income stream are slightly different.

If they confirmed to your broker upfront that they don't need the contract to verify the FTC income, then they should have also said what it is that will do in its place.

Hopefully your broker can check with them what alternative evidence they may consider.

pinewood12 said:

K_S said:

pinewood12 said:

Thanks @K_S / @Grumpy_chap:

Nationwide are the lender and yes I am using a broker who spoke to Nationwide about my situation in order to gain my AIP. Something along the lines of further clarification of my employment status which I don't really have. As explained they have a letter from our HR dept. stipulating i've been working there 13 months and will continue to do so for at least another 12. 

Yes I would need the 20% for affordability. 

@pinewood12 With Nationwide, given that you are not on a perm PAYE contract, and your tax and NI is deducted by the client/employer, this *should* fall under 'Fixed Term Contract' criteria and that's what you need to meet.

The Nationwide underwriter will usually need a contract to tick off the criteria requirements (eg: min 12 months on FTCs) but since you don't have one, your broker needs to speak to them to understand what (if anything) they will accept as an alternative. Ideally, he/she should have asked that question of Nationwide (and confirmed the same with you) before recommending them.

Agreed - and this conversation it sounds like was held between broker/Nationwide in order to obtain my AIP....and a paper trail exists detailing this conversation agreeing they could take on that pay. 

So it's confusing that at the underwriter stage they've come back with a difference stance. 

No that makes complete sense; thankyou - I believe that is what they are trying to get to the bottom of. 

Nationwide have the following documents now:
- HR letter stipulating 12 months working for the company + a guarantee of 12 further months
- 21/22 P60 from the company 
- All payslips from the last 12 months.