Contract to perm

[WordIsBond]

I just don't see it that way. We did exactly this back in my permie days:

1. Brought a contractor on for a six month contract on a project we expected to last 9-12 months.
2. Decided he was a good fit with our team and was obviously good at what he did.
3. Figured we'd have a lot of things we could have him do if he stuck around.
4. Made him a really good permie offer.

For the next five months he was doing exactly what he'd been doing before as a contractor. The only thing that was different is he couldn't send in a substitute. The real change took place 5 months after he became an employee -- instead of him leaving, or us offering him a new contract for a different role, we just moved him to a different task. That obviously wouldn't have happened if he were still a contractor.

We could have moved him as soon as he became an employee, of course, but we didn't. He kept on doing the same thing and working in exactly the same way as he did when he was a contractor, for the first five months of his employment.

How does that put his pre-employment contract inside IR35? It doesn't.

You can do the exact same thing as an employee and yet employment status is different because of rights. You don't have the right to send a substitute any more. The employer does have the right to exercise SDC (whether they do or not). You have employment rights that you didn't have before. You have the right to expect the employer to fulfil their obligations and they have the right to expect you to fulfil yours, and those obligations are different than when you were a contractor (MOO). But the actual work you do and the way you do it could end up being exactly the same, and that wouldn't prove you were inside IR35 before.

If you are legitimately working outside IR35 right now and you become an employee, all you have to do is clearly document what has changed. The most obvious thing is Supervision/Direction/Control. If you aren't working under SDC now but you become an employee, you are then under it. Ask them to give you a letter saying one of the reasons they wanted to hire you was to be able to move you from task to task, a right they didn't have when you were a contractor. Sorted.

[PTP]

Nothing has change but his remuneration method

There should also be a big drop in the value of his remuneratoin (even if you factor in benefits)
There should have been a big premium in the deal when he was a contractor

If there's a big drop and there's not much change in the deliverables, then that ought to prove that it wasn't all disguised salary before and there was actually a premium

[Hobosapien]

If the contract 'outside' determination is backed by evidence of an independent contract review then there must be circumstances that are defendable should HMRC ever investigate.

Just because you go employee doing exactly the same role delivered in the same manner doesn't mean you would fail IR35 even though now an employee if the working practices would still pass an outside determination test. What would fail is the different employment contract. So by moving from contract to perm there is an indisputable difference.

Also wasn't there mention in the budget relating to future IR35 and private sector where it said HMRC was not going to retrospectively investigate cases, instead concentrating on ensuring clients are ready for the pending IR35 changes to the private sector? i.e. if currently in private sector then less likely to be investigated, if the government can be taken at its word.