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IR35 in reality

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    #11
    Originally posted by matt99 View Post
    Been away from UK for a while (7 years) and just catching up on latest IR35 information. I know you should get your contract reviewed from QDOS, but unless contracting in a clients workplace has changed dramatically I still think a huge amount of people would fall inside IR35 and are just hoping for the best. I mean HMRC can investigate you for last 20 years of taxes.

    For example say you are a C# developer on a 6 month contract hired through an agency after having an interview (like a permie) at a clients office

    1. Substitution
    Would the client really except somebody else from your LTD company turning up for the day and doing your work? What about if you take a day off? You should really supply a replacement for yourself. I wonder if this has ever happened in reality

    2. SDC
    You undertake pair programming as part of the contract (I’ve seen this advertised in many roles), is this a form of supervision, who knows? Do you decline?

    The client tells you that you need to “do” a piece of code in a certain way to follow company practices, is this direction?

    Your contract states you have been engaged to create a banking portal backend. The project is held up by 2 days, the client asks if you can help out on another project? Do you say no, I can’t or I would need a new contract? Or leave for those 2 days unpaid

    Most of the job ads I see on Indeed for example read like disguised permanent roles

    “learning from and passing knowledge to like-minded and talented colleagues”
    “Share and seek knowledge to enhance the output of the team”
    “Work to deadlines”
    “Share options in a rapidly growing company”
    “You will need to work closely with our Senior Developer to successfully implement the company requirements”
    You're correct on all points.

    Would the client really except somebody else from your LTD company turning up for the day and doing your work?
    No, clients almost universally won't accept this. Where they do, it's because the substitution clause allows the client to have "veto" over any sub - thereby making it not a real substitution clause but a sham.

    You undertake pair programming as part of the contract (I’ve seen this advertised in many roles), is this a form of supervision, who knows?
    Yes, this a form of supervision and direction.

    The client tells you that you need to “do” a piece of code in a certain way to follow company practices, is this direction?
    Yes, this is direction.

    Your contract states you have been engaged to create a banking portal backend. The project is held up by 2 days, the client asks if you can help out on another project? Do you say no, I can’t or I would need a new contract? Or leave for those 2 days unpaid
    Helping out the client on that "other project" is direction and control. Of course, refusing (which is technically the "correct" thing to do if you were truly independent) would likely get your contract terminated pretty quickly.

    “learning from and passing knowledge to like-minded and talented colleagues”
    “Share and seek knowledge to enhance the output of the team”
    “Work to deadlines”
    “Share options in a rapidly growing company”
    “You will need to work closely with our Senior Developer to successfully implement the company requirements”
    Yes, these are all indicative of contracts that are effectively disguised permanent roles, subject to some level of SD&C and very highly likely to be inside IR35.

    Every "IT Contractor" who operates by accepting a contract as you've outlined above (which is virtually all contracts out there) are 99.9% likely to be inside IR35 as what the client really wants (and believes they are hiring) is a temporary permie and not a truly independent contractor.

    The only ones that genuinely are independent are the freelancers. The ones that meet with the client, assess their requirements and needs, then go away and develop the necessary software/website/whatever entirely on thier (i.e. their Ltd's) own with no other influence from the client (save for status meetings, reviews, updates etc.) until the deliverables are finally delivered.

    HTH.

    Comment


      #12
      Originally posted by billybiro View Post
      Every "IT Contractor" who operates by accepting a contract as you've outlined above (which is virtually all contracts out there) are 99.9% likely to be inside IR35 as what the client really wants (and believes they are hiring) is a temporary permie and not a truly independent contractor.
      HTH.
      I agree that 99% of IT contractors are inside IR35 but the question is how many of those will actually pay full PAYE tax/NIC? Most of the contractors I know they are just going to risk it. According to this article https://goo.gl/cQANFy the chances to get caught is 1 in 60000

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        #13
        Actually many public sector contractors are now working outside of IR35 as a result of slightly contrived arrangements between recruitment agencies and public sector organisations for the recruitment agency to act as a consultancy. Public sector organisations clearly decided the new rules were unworkable if they actually wanted to deliver anything!

        Comment


          #14
          Originally posted by dingdong View Post
          Actually many public sector contractors are now working outside of IR35 as a result of slightly contrived arrangements between recruitment agencies and public sector organisations for the recruitment agency to act as a consultancy. Public sector organisations clearly decided the new rules were unworkable if they actually wanted to deliver anything!
          Really.

          Not sure I'd be comfortable working under that set up. Will be interesting to see what happens when HMRC investigate such a setup and whether they decide it's acceptable, or akin to other avoidance schemes that they then introduce retrospective rules to close an exploited loophole that was not in the spirit of the existing legislation. i.e. It wasn't technically tax evasion at the time but could deemed to be in future, so pay up retrospectively 'it's only fair'.
          Maybe tomorrow, I'll want to settle down. Until tomorrow, I'll just keep moving on.

          Comment


            #15
            Originally posted by Hobosapien View Post
            Really.

            Not sure I'd be comfortable working under that set up. Will be interesting to see what happens when HMRC investigate such a setup and whether they decide it's acceptable, or akin to other avoidance schemes that they then introduce retrospective rules to close an exploited loophole that was not in the spirit of the existing legislation. i.e. It wasn't technically tax evasion at the time but could deemed to be in future, so pay up retrospectively 'it's only fair'.
            How Ironic would it be if HMRC are one of the public bodies using this setup to cover up the mess they have created !!!!
            STRENGTH - "A river cuts through rock not because of its power, but its persistence"

            Comment


              #16
              Originally posted by Hobosapien View Post
              Really.

              Not sure I'd be comfortable working under that set up. Will be interesting to see what happens when HMRC investigate such a setup and whether they decide it's acceptable, or akin to other avoidance schemes that they then introduce retrospective rules to close an exploited loophole that was not in the spirit of the existing legislation. i.e. It wasn't technically tax evasion at the time but could deemed to be in future, so pay up retrospectively 'it's only fair'.
              Impossible.

              Comment


                #17
                Originally posted by dingdong View Post
                Actually many public sector contractors are now working outside of IR35 as a result of slightly contrived arrangements between recruitment agencies and public sector organisations for the recruitment agency to act as a consultancy. Public sector organisations clearly decided the new rules were unworkable if they actually wanted to deliver anything!
                Some recruitment agencies have always claimed they were consultancies anyway, and other agencies are suppliers to consultancies so there isn't as much lying as you think going on in some circumstances.

                Where it is dodgy is for roles on frameworks like the Digital Outcomes and Specialists Framework where only direct suppliers e.g. consultancies should be bidding for work, but instead the roles are advertised by agencies who are definitely not consultancies. (Oh and a lot of the roles are now advertised as being outside IR35 by the respective government agency. )
                "You’re just a bad memory who doesn’t know when to go away" JR

                Comment


                  #18
                  Originally posted by pscont View Post
                  Impossible.
                  Oh ok, I'll sleep easy knowing the agents are trustable after all. [I presume no sarcastic icon is really needed here, said in a sarcastic way.]
                  Maybe tomorrow, I'll want to settle down. Until tomorrow, I'll just keep moving on.

                  Comment


                    #19
                    Originally posted by Hobosapien View Post
                    Really.

                    Not sure I'd be comfortable working under that set up.
                    Why? The burden is on the public sector client, not you, if the IR35 declaration is wrong

                    Working outside IR35 in public sector is the safest thing you can do now - no risk

                    Comment


                      #20
                      Originally posted by pr1 View Post
                      Why? The burden is on the public sector client, not you, if the IR35 declaration is wrong

                      Working outside IR35 in public sector is the safest thing you can do now - no risk

                      I'm just not comfortable accepting such a position if the agency is trying to mislead the PS client and/or HMRC by operating in a way that would otherwise not allow the client to declare the contact outside IR35.

                      It's one of those things that regardless of paperwork the actual working practices may mean the approach comes undone if HMRC investigate, and as yet there's been no court case to prove the client would be liable under the new PS IR35 rules. If the agency became liable they would no doubt try to pass the responsibility for tax due on to the contractor somehow.

                      It just seems a murky thing that HMRC will not see in a good light unless absolutely nailed down as above board in HMRC's eyes. Not sure how that could be proven up front without legal interpretation via a court.
                      Maybe tomorrow, I'll want to settle down. Until tomorrow, I'll just keep moving on.

                      Comment

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