Query regarding public sector opportunities

[pmeswani]

Ok, I will do some reading up on the blurb regarding IR35 and public sector. My understanding is that any contract with a public sector organisation is within IR35.

Now, I have been approached by an agency who tells me that they may have a way around IR35 by having a letter of engagement. I am not convinced of this being outside IR35, and am wondering what people think.

Mods, if you feel I deserve a mockingn please feel free to move this to the appropriate group.

[northernladyuk]

Ok, I will do some reading up on the blurb regarding IR35 and public sector. My understanding is that any contract with a public sector organisation is within IR35.

Now, I have been approached by an agency who tells me that they may have a way around IR35 by having a letter of engagement. I am not convinced of this being outside IR35, and am wondering what people think.

Mods, if you feel I deserve a mockingn please feel free to move this to the appropriate group.

Do some reading. Your understanding is wrong. Mods, do the needful please.

[pmeswani]

Do some reading. Your understanding is wrong. Mods, do the needful please.

Thanks Northernladyuk. I look forward to the warm fuzzy mocking.

[eek]

Do some reading. Your understanding is wrong. Mods, do the needful please.

Not quite

Ok, I will do some reading up on the blurb regarding IR35 and public sector. My understanding is that any contract with a public sector organisation is within IR35.

Now, I have been approached by an agency who tells me that they may have a way around IR35 by having a letter of engagement. I am not convinced of this being outside IR35, and am wondering what people think.

Mods, if you feel I deserve a mockingn please feel free to move this to the appropriate group.

While your first statement is wrong - not all public sector contracts will be inside IR35 the second bit is equally wrong.

For a public sector contract to be outside IR35 the public sector organisation must determine that the contract is outside IR35. If they have determined that it is outside IR35 (and the working practices of both sides keep it that way) than the contract can be treated as outside IR35. Equally the issue is then not one you need to worry about its the public sector organisation and agent who are responsible for any tax due not yourself.

So I'm not sure where the letter of engagement comes in. The end client should have determined the status of the contract (i.e. is it inside or outside) and that determination should be the basis on which the agency identifies and recruits the contractor and the basis on which the final contract is given....

[pmeswani]

Not quite


While your first statement is wrong - not all public sector contracts will be inside IR35 the second bit is equally wrong.

For a public sector contract to be outside IR35 the public sector organisation must determine that the contract is outside IR35. If they have determined that it is outside IR35 (and the working practices of both sides keep it that way) than the contract can be treated as outside IR35. Equally the issue is then not one you need to worry about its the public sector organisation and agent who are responsible for any tax due not yourself.

So I'm not sure where the letter of engagement comes in. The end client should have determined the status of the contract (i.e. is it inside or outside) and that determination should be the basis on which the agency identifies and recruits the contractor and the basis on which the final contract is given....

Ok, a little bit more information, now that I'm on the computer and not on my mobile. The contract the agent and the client co has is within IR35. The agent states (No exact word for word) "The Letter of engagement is the only way we can work with the client outside IR35". To me, as the original contract is within IR35, irrespective of whether there is a letter of engagement, the opportunity within itself is within IR35. The letter of engagement, from what I understand from the agent, is going to be based on a consultancy basis and not as a contractor basis.

I appreciate there is a large gap in my knowledge, and I need to fill that gap soonish, but alarm bells rang when I was approached by the agency for the opportunity.

[ladymuck]

There is a higher likelihood of a contract being inside IR35 because some departments take a risk adverse route and blanket assign status even though they're not supposed to.

As with private sector contracts, you need to look at the working arrangements as well as the contract. The rules determining in/out haven't changed, just who makes that decision has changed and they need to demonstrate that they have done a proper assessment.

Ask for the details of how they made their decision and it'll soon become clear whether any proper thought went into it. You can have a go at challenging an inside decision.

[BlasterBates]

Yes it does look like a letter of engagement is a big help in defining yourself outside IR35.

https://en.wikipedia.org/wiki/Engagement_letter

In other words it looks like the agent does know what he is talking about.

[pmeswani]

There is a higher likelihood of a contract being inside IR35 because some departments take a risk adverse route and blanket assign status even though they're not supposed to.

As with private sector contracts, you need to look at the working arrangements as well as the contract. The rules determining in/out haven't changed, just who makes that decision has changed and they need to demonstrate that they have done a proper assessment.

Ask for the details of how they made their decision and it'll soon become clear whether any proper thought went into it. You can have a go at challenging an inside decision.

The contract itself is within IR35, however, the agency is now trying to move to a Letter of Engagement arrangement with the client co, which they advise is going to be IR35 friendly.

With private sector contracts, I always get them reviewed by QDOS as I am too much of a simpleton to know what will put me inside, even though my judgement on the contract looks ok. With Public Sector opportunities, I usually run a mile.

[pmeswani]

Yes it does look like a letter of engagement is a big help in defining yourself outside IR35.

https://en.wikipedia.org/wiki/Engagement_letter

In other words it looks like the agent does know what he is talking about.

Generally speaking I would agree with you, but as the agency has approached me with an opportunity that was originally within IR35, would a letter of engagement (between the agency and the client as well as agency and myself) get around this issue?

[ladymuck]

...the agency is now trying to move to a Letter of Engagement arrangement with the client co, which they advise is going to be IR35 friendly.

....

Hmm...I wonder if the PSB is going to be happy that their agency is trying to overturn their decision making?