SDC reporting warranty
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    Default SDC reporting warranty

    Another contractor working on an outside of IR35 PS contract has a reporting warranty clause in her contract whereby she needs to notify the agency if she comes under SDC. Sheís a bit worried by this as this is the haziest part of IR35 with confusing case law and guidance. Sheís not sure sheíll judge this right and meet the reporting requirements although she does think that, as of now, she is not under SDC.

    Could she be liable for damages to the agency if it is pursued for taxes if the contract is later deemed inside IR35 and she didnít report she was under SDC. Would PI insurance cover this sort of claim?

    Whatís the panelís view? How common is this? I donít have this clause (although I was concerned about an indemnity- see earlier post - which covered similar territory). Is it fair? I can understand the reasoning but it does seem to be another attempt to transfer liability.

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    Does she have evidence from the PS in the form of the output from the ESS tool?
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    Yes, she does. CREST (or whatever they call it) says the contract is outside of IR35. The decision seems to be *mainly* based on ROS, not on lack of SDC. Obviously this would need to be invalid too for IR35 to apply.

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    Quote Originally Posted by supersteamer View Post
    Yes, she does. CREST (or whatever they call it) says the contract is outside of IR35. The decision seems to be *mainly* based on ROS, not on lack of SDC. Obviously this would need to be invalid too for IR35 to apply.
    Never heard of CREST. It's the output from ESS tool you need.
    I would be VERY nervous if RoS is the only thing putting me outside, and in PS org as well. In my experience they are the last people that would be happy with it on the ground.
    I'm also pretty bemused how any PS body says no SDC either with the culture it the ones I've been in but that's another discussion.
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    Quote Originally Posted by northernladuk View Post
    Never heard of CREST. It's the output from ESS tool you need.
    CEST is the new name for ESS.
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    Quote Originally Posted by supersteamer View Post
    Could she be liable for damages to the agency if it is pursued for taxes if the contract is later deemed inside IR35 and she didnít report she was under SDC. Would PI insurance cover this sort of claim?

    Whatís the panelís view? How common is this? I donít have this clause (although I was concerned about an indemnity- see earlier post - which covered similar territory). Is it fair? I can understand the reasoning but it does seem to be another attempt to transfer liability.
    What's the exact wording of the clause?

    It looks like it's an attempt by the fee payer to try to push their liability back onto the contractor if the PSB has got the IR35 determination wrong, which is why she could (theoretically) be liable for taxes that the fee payer gets caught with. I am not convinced that an attempt to push the liability for those taxes onto the contractor would stand up in court, but it would take a good test case to settle the matter.
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    Quote Originally Posted by northernladuk View Post
    Never heard of CREST. It's the output from ESS tool you need.
    I would be VERY nervous if RoS is the only thing putting me outside, and in PS org as well. In my experience they are the last people that would be happy with it on the ground.
    I'm also pretty bemused how any PS body says no SDC either with the culture it the ones I've been in but that's another discussion.
    She showed me the transcript from ESS / CREST and the PSB were not required to make a judgement on SDC. They were asked if the contractor was a manager (no) and if ROS existed (yes) and it then jumped straight to Outside IR35. No questions were asked about SDC nor MOO so we donít know how the PSB would have answered them.

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    Quote Originally Posted by TheFaQQer View Post
    What's the exact wording of the clause?
    Further to clause x.x, the Consultancy warrants that the Consultancy Staff do not work under (or are not subject to the right of) supervision, direction or control of any person as to the manner in which they provide the Consultancy Services. The Consultancy further warrants that it shall advise the Employment Business in writing immediately that the Consultancy Staff work under (or are subject to the right of) supervision, direction or control of any person.

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    What type of work she doing?

    The above clause assumes the contractor has a very good understanding of a very grey area. If she's a PM she's going to fail it the minute the client offers her a new project but I bet she doesn't know that.
    Last edited by northernladuk; 13th October 2017 at 08:52.
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    Quote Originally Posted by northernladuk View Post
    What type of work she doing?

    The above clause assumes the contractor has a very good understanding of a very grey area. If she's a PM she's going to fail it the minute the client offers her a new project but I bet she doesn't know that.
    Sheís not a PM - sheís a developer working on a project to speed up some reporting jobs and knows not to stray off the reservation onto anything else.

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