IR35 Q - Just Cant Seem To Get Answered

[TheCyclingProgrammer]

If they have no right of substitution AND the client exercises direction and control AND there is continuing mutuality of obligation, then they are inside IR35. If they can show that one or more of those is absent, then they are outside IR35.

Technically true, but RoS is often quite an easy clause to target for HMRC (lets be honest...for a lot of contractors its probably a bit of a sham clause) and if the contractor has been there for a while there's a good chance that HMRC will attack on MOO too. Which often makes D&C and by extension, your working practices, one of your key defences IMO.

I don't agree with the above comment that its inevitable that you'll become caught if you work somewhere for a long time but I do think its reasonable to say that the longer you are at a single client, the more likely it is for you to become part and parcel of the organisation and for you to become complacent which is why its always good to constantly review your working practices and remain diligent about acting like an independent professional rather than an employee.

If your RoS and/or MOO defence is solid then small little working practice issues like attending staff parties etc. are unlikely to be an issue but if you're largely relying on D&C then all of those little things start to add up to build a bigger picture.

[KayMan]

After what time period do people believe this to be the case? It's inevitable that after so long in any gig that you become 'part of the furniture' and your working practices change to that of a normal employee.

Personally I try to avoid anything over a year, 1) because of the above but more importantly, 2) because I'm bored tulipless by then.

There are people in my current gig just starting their 5th year and they organise company nights out, hang out the xmas decorations, order stationery etc etc. They operate outside IR35 but there's no way that can be genuine.

Hear hear, especially on number 2, that's the whole reason I got into contracting to keep things fresh. Why any contractor would continue working for a single company after 18-24 months is beyond me. Those for me (the people that you mentioned) are the ones that HMRC should be out to get, they are just not conducting themselves as contractors and ruining it for the rest of us...

One thing I've noticed. The professional take on contracting varies quite considerably by sector, and in IT, because we are mostly heavily office bound, we tend to become "part" of an office without realising it. You suddenly have a set desk, a work phone, a pedestal, then your shmoozing and socializing next thing you know it you are sharing inside jokes and buying everyone donuts on Friday (a couple of contractors on my project just bought us all cakes - not complaining!).

In other sectors freelancing comes more naturally, like journalism, photography, design, etc...

[KayMan]

Technically true, but RoS is often quite an easy clause to target for HMRC (lets be honest...for a lot of contractors its probably a bit of a sham clause) and if the contractor has been there for a while there's a good chance that HMRC will attack on MOO too. Which often makes D&C and by extension, your working practices, one of your key defences IMO.

I don't agree with the above comment that its inevitable that you'll become caught if you work somewhere for a long time but I do think its reasonable to say that the longer you are at a single client, the more likely it is for you to become part and parcel of the organisation and for you to become complacent which is why its always good to constantly review your working practices and remain diligent about acting like an independent professional rather than an employee.

If your RoS and/or MOO defence is solid then small little working practice issues like attending staff parties etc. are unlikely to be an issue but if you're largely relying on D&C then all of those little things start to add up to build a bigger picture.

On RoS, I think it is one of those ones where the client plays hardball for no reason. In another thread I spoke of problems I am having with the HR Resource Manager. I was willing to go out of my way and wanted to get in writing that I would be prepared to provide an experienced sub if I were to become unavailable for some reason. I spoke to some contractor friends of mine and I got their buy in - BUT the RM just didn't want any of it. She was adamant that they would not accept outside contractors. So I thought okay maybe not through me but through my agency, again she didn't budge, even though my contract clearly stipulates that I need to provide a sub in case Im away.

She did agree that I can liaise with other contractors on the team and hand over work to them. I said okay - still not ideal, but I got that from her in writing and in case on an investigation the argument is I tried (and failed).

Good on control and MOO though - plus I have made sure I do things like bring some of my equipment to the office. Even though I am not allowed to use my laptop on site, I still use nothing else from the client's side. No monitors, keyboards, notepads, nothing, all from my side. Overtly cautious? maybe - but as I said earlier, all about how you position yourself. And I can feel it, other contractors are too embedded in the company, I'm floating and doing a job. Project ends, I'm out.

[VectraMan]

If they have no right of substitution AND the client exercises direction and control AND there is continuing mutuality of obligation, then they are inside IR35. If they can show that one or more of those is absent, then they are outside IR35.

I'm not under D&C, as is the case for most people in senior positions.

The other thing is you might follow all the reasonable and sensible advice now, but nobody can say for sure that you won't get investigated in 6 years time. And in 6 years time they may be applying completely different criteria. At best, all the outside IR35 contractors are relying on there being a grey area.

[TheCyclingProgrammer]

At best, all the outside IR35 contractors are relying on there being established case law to determine their employment status and HMRC's general incompetence.

FTFY.

[Zero Liability]

Hear hear, especially on number 2, that's the whole reason I got into contracting to keep things fresh. Why any contractor would continue working for a single company after 18-24 months is beyond me. Those for me (the people that you mentioned) are the ones that HMRC should be out to get, they are just not conducting themselves as contractors and ruining it for the rest of us...

Could be any number of reasons and unless your WP change to the degree that you become inside, I don't see the relevance of it other than in terms of increasing likelihood of the client seeing you as part of the furniture (i.e. where you aren't mindful of your WP), as TCP put it, which is only something that will come up if HMRC choose to pick you; their risk assessment seems to be predicated on yield more than anything. Many "real" businesses have enduring relations with their clients and other parties. You, as a contractor, just need to ensure you keep your client aware of what you are. A client, for instance, which invokes its right to terminate, via the agency/consultancy/whatever, contractors who've been there for years with immediate effect, is not treating them as permies. The only situation where that feasibly may occur to a permie is gross misconduct.

You could say in some cases that it's analogous to treating them as temps, and it does seem there's a lot of overlap between what goes into a temp contract and a contractor's in some cases, but as it stands, lack of MoO, lack of D&C and/or a reasonably unfettered ROS all put you outside IR35. Also, the conflation with temps is ill-advised, simply because either the end client or any intermediary providing them is still their employer and, as a result of this relationship, owes them duties which it does not owe contractors, which it engages on a B2B basis. As a contractor, you are forfeiting the rights permies and temps enjoy.

[Gaz_M]

Hear hear, especially on number 2, that's the whole reason I got into contracting to keep things fresh. Why any contractor would continue working for a single company after 18-24 months is beyond me. Those for me (the people that you mentioned) are the ones that HMRC should be out to get, they are just not conducting themselves as contractors and ruining it for the rest of us

Couldn't agree more.
One person in my current gig admits they "are only in it for the money" and "aim to get as long out of the gig as possible". I have met several contractors with the same attitude over the years.

I'll never understand wanting to stay somewhere over 18-24 months. For me, 12 months is just about it because then I want (and need) a change. It's the nature of the game imo.

[TheDandy]

She did agree that I can liaise with other contractors on the team and hand over work to them. I said okay - still not ideal, but I got that from her in writing and in case on an investigation the argument is I tried (and failed).

You tried and failed because it is a sham clause. IMO a genuine RoS would have you paying the substitute and YourCo still assuming the contractual responsibility to deliver. It would be better not to show you attempted it and failed miserably. Unless there was reasonable cause not to grant the RoS then it is a breach of contract. The argument holds no water.

[Contreras]

She did agree that I can liaise with other contractors on the team and hand over work to them. I said okay - still not ideal, but I got that from her in writing and in case on an investigation the argument is I tried (and failed).

In other words you have it confirmed in writing that there is no Right of Substitution.

Useful if you want to claim breach of contract but kidding yourself if you believe it would help in the event of an IR35 investigation.

[malvolio]

Hear hear, especially on number 2, that's the whole reason I got into contracting to keep things fresh. Why any contractor would continue working for a single company after 18-24 months is beyond me. Those for me (the people that you mentioned) are the ones that HMRC should be out to get, they are just not conducting themselves as contractors and ruining it for the rest of us...

Nonsense. I've been with the current client about 30 months now. The work is close to home, I'm largely home-based anyway, the rate is good (and to go elsewhere for the same net would add around £150 to my day rate for no benefit) and clearly they like my work since I'm still being renewed. Why would I give up a good, profitable business on the off chance HMRC may object? If they do I can demonstrate no D&C and probably no MoO as well, and I have IPSE Plus cover, so bring it on. And my skills are ban up-to-date, thanks.

One thing I've noticed. The professional take on contracting varies quite considerably by sector, and in IT, because we are mostly heavily office bound, we tend to become "part" of an office without realising it. You suddenly have a set desk, a work phone, a pedestal, then your shmoozing and socializing next thing you know it you are sharing inside jokes and buying everyone donuts on Friday (a couple of contractors on my project just bought us all cakes - not complaining!).

If you do that's your fault. It's up to you to maintain the professional separation. I have an internal email address and that's it. When I'm in the office I grab whatever workspace I can find.

In other sectors freelancing comes more naturally, like journalism, photography, design, etc...

Which is why IPSE are going through a major re-launch. Those sectors do not have any representation in Westminster...