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  1. #1

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    Default New contract within IR35 by default?

    Hi all,
    I've just been offered a new contract where the agency has said by default the contract will be within IR35.
    The information the gave me was:
    "From April 6th 2016 legislation has changed in respect of Travel and Subsistence (T&S) for umbrella company contractors, “restricting” T&S expenses for such workers.

    The government believes that it is unfair that contractors (especially those on their umbrella’s payroll) claim tax relief on travel and subsistence expenses for home-to-work travel costs, when permanent employees cannot.

    Originally this legislation was aimed at the Umbrella Market, but consequently, HMRC has decided that workers who operate through an intermediary (recruitment agency, umbrella company or PSC (a Limited Company)) would also no longer be able to claim tax relief on travel and subsistence expenses if they are under the Supervision, Direction or Control (SDC) of anyone within the contractual chain.

    This denial of tax relief, will also apply to such contractors if anyone in the chain merely has the 'right' to supervise, direct or control them, even if that person does not exercise that right to SDC. From now onwards, HMRC will assume that all contractors who work through an intermediary will be under SDC unless they can prove otherwise.

    If this cannot be proved by the client then we must take that as confirmation the contract will be “supervised” and that all contractors who work through an Umbrella or Limited Company (PSC) will be under SDC therefore they will be inside IR35.
    "


    It is not a public sector contract. Do I have any options? Or is this what all agencies are now planning to do?
    I'm getting contract review by QDOS.

  2. #2

    Should post faster

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    Which Agency is it so I can avoid them? I assume you work through a Ltd?

  3. #3

    TPAFKAk2p2

    mudskipper is a fount of knowledge

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    Default

    Quote Originally Posted by Echo1234 View Post
    Hi all,
    I've just been offered a new contract where the agency has said by default the contract will be within IR35.
    The information the gave me was:
    "From April 6th 2016 legislation has changed in respect of Travel and Subsistence (T&S) for umbrella company contractors, “restricting” T&S expenses for such workers.

    The government believes that it is unfair that contractors (especially those on their umbrella’s payroll) claim tax relief on travel and subsistence expenses for home-to-work travel costs, when permanent employees cannot.

    Originally this legislation was aimed at the Umbrella Market, but consequently, HMRC has decided that workers who operate through an intermediary (recruitment agency, umbrella company or PSC (a Limited Company)) would also no longer be able to claim tax relief on travel and subsistence expenses if they are under the Supervision, Direction or Control (SDC) of anyone within the contractual chain.

    This denial of tax relief, will also apply to such contractors if anyone in the chain merely has the 'right' to supervise, direct or control them, even if that person does not exercise that right to SDC. From now onwards, HMRC will assume that all contractors who work through an intermediary will be under SDC unless they can prove otherwise.

    If this cannot be proved by the client then we must take that as confirmation the contract will be “supervised” and that all contractors who work through an Umbrella or Limited Company (PSC) will be under SDC therefore they will be inside IR35.
    "


    It is not a public sector contract. Do I have any options? Or is this what all agencies are now planning to do?
    I'm getting contract review by QDOS.

    Quite simply, they are wrong. See https://www.ipse.co.uk/news/contract...n-direction-or

  4. #4

    Nervous Newbie

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    Default

    Quote Originally Posted by mudskipper View Post
    Thanks for that.
    So does that mean I can get them to reword the contract?
    Currently the title of the contract is:
    "TERMS OF ENGAGEMENT WITH A LIMITED COMPANY CONTRACTOR WHO HAS OPTED OUT OF THE CONDUCT REGULATIONS (WITHIN IR35 AND UNDER SDC)"
    I'm waiting for QDOS with their review, but the contract currently does not have any right of substitution clauses or the other IR35 friendly clauses.
    I am running through a LTD, so if I can't get them to change the contract an IR35 friendly contract I guess my only option is to walk away?

  5. #5

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    Quote them your "Inside IR35 Rate".

  6. #6

    My post count is Majestic

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    Are you getting the full check including working practices. You've wasted your time and money otherwise. It's not all about the contract as working practices trump that. You can get what you want put it in but if the client has no intention to honour it then you are inside.

    If it looks like a duck, walks like a duck and sounds like a duck it's a duck.

    Being inside IR35 isn't the end of the world. Just not as lucrative. You just decide if it's for you or not.
    'CUK forum personality of 2011' - Winner - Yes really!!!!

  7. #7

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    Could you please let us know the name of this agency?

  8. #8

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    Quote Originally Posted by northernladuk View Post
    Are you getting the full check including working practices. You've wasted your time and money otherwise. It's not all about the contract as working practices trump that. You can get what you want put it in but if the client has no intention to honour it then you are inside.

    If it looks like a duck, walks like a duck and sounds like a duck it's a duck.

    Being inside IR35 isn't the end of the world. Just not as lucrative. You just decide if it's for you or not.
    Who and how exactly will check working practises BEFORE the contract/work has started?

    If the contract wording is you can work wherever (home/office), whenever (not 9-5), however (methods of work), you will supply your own equipment, don't have holidays, or any other perks, what else is needed?

    Out of interest.

  9. #9
    GB9
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    SDC and IR35 are 2 completely different things. It's quite possible to be under SDC but outside IR35 subject to other clauses.

    Scrub what was here. Seen it now.

    As per other posters, who is this agency. I have a new contract with nothing like that in it and that passed the qdos review at the first attempt. It sounded like it's been worded by their administration team.
    Last edited by GB9; 21st April 2016 at 09:23. Reason: found the link

  10. #10

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    Quote Originally Posted by GB9 View Post
    SDC and IR35 are 2 completely different things. It's quite possible to be under SDC but outside IR35 subject to other clauses.

    Could someone confirm if the bit about Ltd co contractors under SDC but outside ir35 not being able to claim expenses actually went through?

    As per other posters, who is this agency. I have a new contract with nothing like that in it and that passed the qdos review at the first attempt. It sounded like it's been worded by their administration team.

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