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Assessing IR35 working practices before signing contract

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    Assessing IR35 working practices before signing contract

    Please forgive me if this is covered elsewhere - I have looked but although have found lots on IR35 I'm less clear about how to assess working practices before signing contract.

    Private sector role. Three month contract ('for a start' - which kind of sets off some bells). I'm QDOS insured so obv will be getting the contract assessed. But as it's on working practices and not contract, how do you personally explore these with the client before turning up? If the contract checks out fine but you get there and think 'uh oh', I guess you could leave but this would be a waste and other opportunities will have passed by.

    any value in getting them to run through the public sector ESS tool? (don't flame me, only a thought )

    #2
    Firstly you get QDOS to review the contract.

    Secondly at interview you should have asked questions to determine how they work, what the role is about and the type of project. You should then feed this information to the reviewer when they review the contract for IR35.

    In regards to them saying 3 months "for a start" that is meaningless. I've had roles where the contract length was dependent on the tranche of money being released for the next phrase of the project. Other clients give contracts in strange patterns e.g. 3 months then 6 months then 3 months then 2 months as per their HR contractor policy as your role isn't permanent. In both these scenarios if the contractor isn't performing at the 3 month stage they get let go.
    "You’re just a bad memory who doesn’t know when to go away" JR

    Comment


      #3
      Thanks Sue

      With hindsight I should have asked more questions. It was a telephone interview with a lot of delay, which threw me off guard.

      I guess I'm asking two things: what contractors more experienced than I do to assess the situation before accepting a contract, and then what I need to do with this particular situation.

      For the first question, does everybody ask those questions at an interview when you have no idea if you've got the gig? And which do you focus on?

      For the second, I've not yet got the contract, being raised on Monday by the agency, so I've got time to contact agency and say I need more info.
      Last edited by groovybeetlecar; 21 May 2017, 06:29.

      Comment


        #4
        Originally posted by groovybeetlecar View Post
        Thanks Sue

        With hindsight I should have asked more questions. It was a telephone interview with a lot of delay, which threw me off guard.

        I guess I'm asking two things: what contractors more experienced than I do to assess the situation before accepting a contract, and then what I need to do with this particular situation.

        For the first question, does everybody ask those questions at an interview when you have no idea if you've got the gig? And which do you focus on?
        An interview is a two way process. I've turned down roles when I've decided the environment wouldn't suit me. Therefore you need to have a general chat with them about the things I mentioned regardless of whether you are going to get the role or not. You do this at the end whether it is a telephone interview or face-to-face when they ask do you have any questions. Yes they are permie type questions but if you remember that most people like talking about themselves including their favourite technologies and their work so you should know where to start.

        The agent won't know little things like that particular person interviewing you views on agile in the company or the precise make up of the department/team. I've also been told by agents there wasn't a chance of flexible hours or home working when the client has said something completely different. Another thing agents commonly mislead contractors on is the length of a project. So you need to ask questions around that.

        Also be aware some clients just want a bum on seat so won't give you a chance to ask those questions or assess the work environment. If you are happy with that fine but if not you need to learn to start engaging with interviewers.
        "You’re just a bad memory who doesn’t know when to go away" JR

        Comment


          #5
          In the private sector IR35 is still a voluntary* tax mitigated by assessing how the role fits into project type work rather than BAU/do whatever they want type role.

          If length is only likely to be a few months then not worth getting too stressed about IR35 as in the unlikely event HMRC get round to investigating you they aren't going to be wanting a massive amount of tax if you end up caught inside IR35.

          If the inital contract term looks like it will be extended for much longer than a few months then spend those early few months at the client making sure your working practices are as outside IR35 as you can. Make it clear to client/team members why you aren't and can't do certain activities if asked, so if they are ever interviewed by HMRC they will remember that actually yes you didn't behave like a permie as they remember you refusing (tactfully declining) to do certain things that had no real impact on the project you're there to work on.

          * Some may say I'm being lax in treating IR35 as voluntary in relation to private sector, but for the foreseeable HMRC have the public sector honey pot to concentrate on, and HMRC coming to clients to interview staff are about as common as TV licence detector vans. It's mostly scare tactics, but to avoid sleepless nights over a possible investigation years down the line, do the IR35 contract review and actively think about the working practices when you start the contract. There's only so much that can be done up front.

          Even the ESS tool isn't a silver bullet, as when I used it for myself I was deemed outside IR35 yet the client (public sector so in charge of making the determination) says I'm inside due to not allowing substitutions. I guess they've not used the ESS tool to base their decision but are taking the safe option of saying all contractors are inside so there's no comeback later. Oh well, they've upped the rate to pretty much compensate for the determination so their loss.
          Maybe tomorrow, I'll want to settle down. Until tomorrow, I'll just keep moving on.

          Comment


            #6
            Thank you. My concern is that there are indicators from the interview that suggest IR35 to me - they're short of this skill set because of a long term sickness and it's also to work on multiple projects as required on each. On the other hand they liked my skillset as it offers more than they currently have in that role and want to draw on it to make improvements. I've seen other posts on this forum that suggest a simple answer of 'definitely inside' to those factors, with no further discussing.

            Can a contract ever be outside if there's an element of covering for a permanent role and working across multiple projects? Is there any point in discussing working practices to make this outside IR35 or do I just suck it up?

            This is why I feel I need to clarify further beyond the interview discussion.

            Hobosapien, I see your point about low risk- it's been said to me in real life too.

            Comment


              #7
              Sounds risky, but you could mitigate the risk by:
              1. Having a schedule that lists the projects you'll be working on. IR35 does not preclude multiple projects.
              2. Have the contract state that any other projects not in the schedule will require either a new contract or an amendment to the existing contract. (You can verbally agree that the amendment can be as simple as adding the new project to the schedule.)

              If most else in the working practices is outside IR35, that will keep the "multiple projects" issue from putting you inside. If other things put you inside, playing games with the schedule won't do you a bit of good, though.

              It's not the end of the world to accept an inside contract for 3-4 months. Pay your annual salary out of that contract, make your annual pension contribution out of it, and you probably aren't out much tax at all. It's better than bench time.

              Comment


                #8
                Originally posted by groovybeetlecar View Post
                Hobosapien, I see your point about low risk- it's been said to me in real life too.

                I'm sure there are stats about the percentage of contractors that have ever been investigated for IR35, somewhere, and whether the risk in the private sector is more, less, or the same following recent changes to HMRC's approach.

                The smart longer term play may be to put aside an appropriate percentage of income to pay any IR35 charges further down the line. Then if no come back it's a medium term investment or supplement to your warchest. Part of any long term saving/investment strategy if not blowing it all as soon as each invoice gets paid.
                Maybe tomorrow, I'll want to settle down. Until tomorrow, I'll just keep moving on.

                Comment


                  #9
                  Originally posted by Hobosapien View Post
                  I'm sure there are stats about the percentage of contractors that have ever been investigated for IR35, somewhere, and whether the risk in the private sector is more, less, or the same following recent changes to HMRC's approach.

                  The smart longer term play may be to put aside an appropriate percentage of income to pay any IR35 charges further down the line. Then if no come back it's a medium term investment or supplement to your warchest. Part of any long term saving/investment strategy if not blowing it all as soon as each invoice gets paid.
                  Google it but someone calculated it at about 60,000 to 1 of being investigated and losing an IR35 investigation.

                  Comment


                    #10
                    Originally posted by radish2008 View Post
                    Google it but someone calculated it at about 60,000 to 1 of being investigated and losing an IR35 investigation.
                    I don't believe those numbers and it would be a be daft to use them to base any kind of decision IMO but you've got to remember it's at the level it's at because people (well some) make the effort to stay outside. It's a bit like security. We have no thefts so why employ security staff? If people start thinking oh it's a low chance I'll not bother putting any effort in then there could be an increase in cases because people are soft targets.

                    I don't believe the low chance of getting caught should be any reason to take it just as seriously. Take 60000 people that don't bother with IR35 and what are the chances then etc...
                    'CUK forum personality of 2011 - Winner - Yes really!!!!

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