IR35 Update following discussion group yesterday - survey request

[Danglekt]

so if a client says the contract is inside IR35 then contractors get employment rights?

[Pondlife]

What ya done?

Erm, filled in the survey from the OP.

[centurian]

It's not a case of holding out, I would just get a cushy position at a consultancy and deliver sub-standard service

The client hires me because they want me to build an automated testing framework, is that direction? Under the currently considered proposals that would put me under IR35 (maybe I'm being a bit neurotic here).

Thing is though they'd have no say on how I create it, it's too easy for clients to say yeah it's inside IR35 as there are no consequences for them.

Ask any contractor whether they would accept a 15% rate cut and practically everyone says they would walk if it was imposed.

Yet, time and time again, whenever banks pull this stunt, hardly anyone leaves (which is why they keep doing it).

[WordIsBond]

I don't think you could actually do that via a contract - even if it was signed, if there was then an issue that went to a Tribunal, say, I don't think the disclaimer would have any weight in law

Oh. Well, I never worked in HR.

Seems ridiculous to tell people that they can't mutually agree something, but I guess we have to protect the idiots.

[WordIsBond]

so if a client says the contract is inside IR35 then contractors get employment rights?

Seems like it would be fun to make that argument to a tribunal and see what happens.

"Yes, sir, they told HMRC I was a disguised employee."

[jamesbrown]

so if a client says the contract is inside IR35 then contractors get employment rights?

No, IR35 is about taxation, not about employment rights. If the client says that you're an employee (by offering a contract of employment), then you have employment rights. The problem here is with the (lack of) overlap between taxation and employment law, and the IR35 consultation explicitly notes that there is no intention to redefine the latter. In other words, there's quite a bit of "have cake and eat it" going on here.

[SueEllen]

No, IR35 is about taxation, not about employment rights. If the client says that you're an employee (by offering a contract of employment), then you have employment rights. The problem here is with the (lack of) overlap between taxation and employment law, and the IR35 consultation explicitly notes that there is no intention to redefine the latter. In other words, there's quite a bit of "have cake and eat it" going on here.

So that's what we should be demanding.

[WordIsBond]

No, IR35 is about taxation, not about employment rights.

That's the case today. And that's how it will be -- until someone challenges it in court as fundamentally unfair that an engager can tell HMRC to tax you like an employee but tell employment tribunals you aren't an employee.

And maybe some judge decides to be a hero by sticking it to big business.

If anyone in Big Corporation UK is thinking about this, they want to be as Far Away As They Can Be from deciding IR35 status.

It's unfair to be taxed as an employee if you don't get employment rights. But it is REALLY unfair to have the people who aren't giving you employment rights be the ones who decide that you should be taxed as an employee. If that becomes the way the law works, it won't last long. HMG and Corporate UK can argue all day that they are separate laws and unrelated, but the press will pick up on it, find some low-paid victim who is on the losing end of both of these "unrelated" laws, and make noise until it changes.

[jamesbrown]

So that's what we should be demanding.

We can demand what we like, but the discussion starts out by excluding this possibility (in so many words).

That said, I do think that it's reasonable to have a shared burden whereby the client is responsible for that portion of the IR35 deemed payment that represents Employer's NI. On the flip side, if they want to deem everyone inside by default (to avoid that risk), there does need to be some means to dissuade that and encourage a reasonable assessment. That "thing" could be employment rights, but there is a separation between tax law and employment law. Also, accepting that SDC might apply (= IR35 caught) is not quite the same as demonstrating that it does apply (= potential basis for employment rights). It's not totally implausible though. For example. It's difficult to know how all of this might pan out...

[jamesbrown]

That's the case today. And that's how it will be -- until someone challenges it in court as fundamentally unfair that an engager can tell HMRC to tax you like an employee but tell employment tribunals you aren't an employee.

I agree, and it has been done before. It is a possibility. However, I don't think it's a straightforward one.