Public Sector and determined as outside - better than before ?

[contractor abc]

I've been offered a contract with a PS body and the agency advised the role was outside of IR35. I was skeptical of this and asked the agency for the details of this determination. The client has completed the online tool and the agency has forwarded onto me the results of the this and indeed the determination is that the intermediaries legislation does not apply to the role

So my thinking now is that for this gig I am completely bulletproof on the IR35 front ? If for some reason HMRC decided that this contract should be/have been within the scope of IR35 (eg the tool was filled in incorrectly by the client) the liability for the tax that should have been paid falls to the client as they made the determination via the tool that it was outside.

Therefore I am in a stronger position than any private sector contract could possibly be ? Or am I misunderstanding sthg here ?

[TheFaQQer]

You are right - the client has made the assessment that you are outside. If the assessment is wrong, then the fee payer (it doesn't even go to the client, unless you are direct) is liable for their error.

So you have the certainty that you can operate in a genuine B2B arrangement and cannot be caught for IR35 for this engagement.

[northernladuk]

You are right - the client has made the assessment that you are outside. If the assessment is wrong, then the fee payer (it doesn't even go to the client, unless you are direct) is liable for their error.

So you have the certainty that you can operate in a genuine B2B arrangement and cannot be caught for IR35 for this engagement.

But what happens about the OP and working practices slipping back inside? The last significant case I remember was JLJ where it started inside but though part and parcel and taking his eye off the ball it fell inside. HMRC have shot themselves in the foot if the determination is final over the duration of the entire contract and they cannot come in and investigate if it's still outside further down the line surely.

If he became part and parcel the client would still be responsible? I understand it's for the client to make the determination and stick to it but a contractor is also able to turn a good outside gig in to an inside one as well? Zero come back on the contractor at all?

Even if all the above is squarely in the clients lap I'd still not be comfortable ever using the term 'bullet proof' when it comes to IR35. I'd still be putting the effort in to keep myself out but maybe that's just old habits dying hard.

[Gomez]

I still don't get how these public sector clients can be happy making accurate determinations of status without understanding how the potential supplier operates (financial risk generally). It must be that they are happy that substitution is OK because that generally makes the HMRC tool bail out early with an 'Outside' determination.

[TheFaQQer]

But what happens about the OP and working practices slipping back inside? The last significant case I remember was JLJ where it started inside but though part and parcel and taking his eye off the ball it fell inside. HMRC have shot themselves in the foot if the determination is final over the duration of the entire contract and they cannot come in and investigate if it's still outside further down the line surely.

If he became part and parcel the client would still be responsible? I understand it's for the client to make the determination and stick to it but a contractor is also able to turn a good outside gig in to an inside one as well? Zero come back on the contractor at all?

Even if all the above is squarely in the clients lap I'd still not be comfortable ever using the term 'bullet proof' when it comes to IR35. I'd still be putting the effort in to keep myself out but maybe that's just old habits dying hard.

The client is responsible for determining the IR35 status. If they get it wrong then the legislation is clear - the liability sits with the fee payer.

If the status changes during the duration of the contract (and JLJ started outside then moved inside) then it remains the responsibility of the client to assess the status of the contract and ensure that correct taxes are deducted. If they fail to do that then the liability still sits with the fee payer.

[Hobosapien]

Can't see it being anywhere near bullet proof when you have HMRC making up the rules for determination as they go along (changes to the tool questions and result), the client having to use HMRC's rules to make a determination, and the agency (if not direct) having to foot any tax bill if the determination of outside is subsequently deemed to be inside.

Yep, all straightforward and nothing to worry about.

[TheFaQQer]

Can't see it being anywhere near bullet proof when you have HMRC making up the rules for determination as they go along (changes to the tool questions and result), the client having to use HMRC's rules to make a determination, and the agency (if not direct) having to foot any tax bill if the determination of outside is subsequently deemed to be inside.

Yep, all straightforward and nothing to worry about.

Every assessment of IR35 status is made according to the rules and case law, whether that's inside or outside public sector.

The rules for determination are only changed by law or legal precedent, nothing else.

[Hobosapien]

Every assessment of IR35 status is made according to the rules and case law, whether that's inside or outside public sector.

The rules for determination are only changed by law or legal precedent, nothing else.

So how come the HMRC assessment tool has changed at least once that I know of since it went live?

[TheFaQQer]

So how come the HMRC assessment tool has changed at least once that I know of since it went live?

Nobody has to use the ESI - the client has to make a determination of the status, but using HMRC's tool is not mandatory, they could use the Contractor Calcuulator one, or ask Qdos, or ask the contractor, or cast bones for all it matters as long as they make a determination. Any changes to the assessment tool do NOT change the law or anything set by precedent - and nothing has significantly changed there for a while now.

Where things could get very interesting is if someone gets an inside determination from the tool and then challenges that status at tax tribunal, but I suspect that most people would walk rather than wait the months to be proved right.

[eek]

Nobody has to use the ESI - the client has to make a determination of the status, but using HMRC's tool is not mandatory, they could use the Contractor Calcuulator one, or ask Qdos, or ask the contractor, or cast bones for all it matters as long as they make a determination. Any changes to the assessment tool do NOT change the law or anything set by precedent - and nothing has significantly changed there for a while now.

Where things could get very interesting is if someone gets an inside determination from the tool and then challenges that status at tax tribunal, but I suspect that most people would walk rather than wait the months decade to be proved right.

ftfy