Off Payroll / IR35

[Mustard]

In the following situation, is it clear where responsibility lies?

Ltd Co contractor -> Recruitment Agency -> SI consultancy -> Public Sector client.

Who is responsible for declaring IR35 status of the contract and who is responsible for what deductions if deemed inside?

Appreciate any help.

[cojak]

Today you are, which is why you should get every contract checked by QDOS or B&C to confirm that it's outside IR35.

It's also up to you to show that you are outside IR35 while in contract.

[Neil@Intouch]

The Public Sector (PS) body is responsible, unless the consultancy is providing a service to the PS body, in which case then it is the contractor, but they could be doing stuff to protect their status.

[Mustard]

Today you are, which is why you should get every contract checked by QDOS or B&C to confirm that it's outside IR35.

It's also up to you to show that you are outside IR35 while in contract.

In the above scenario I am the hiring manager at the SI.

[Mustard]

, unless the consultancy is providing a service to the PS body,

Isn't that what all consultancies do?

[mudskipper]

The PS client decides whether they need to make a determination. In this case, it sounds like it is 'out of scope' - they are buying a service from the SI, so the responsibility sits with the contractor. (which is different from the PS body deciding IR35 does not apply)

After April 2020, the responsibility will probably sit with the SI.

[malvolio]

Alll quite correct as of now, but looking forward to 2020 and the private sector changes, the SI may still decide that you are inside IR35 wrt your engagement with them. You are, potentially, not supplying a service to them, merely manpower. So normal due diligence and negotiations on terms are still necessary. In essence, you need to get as close as possible to a true B2B arrangement; only then will you be safely outside IR35.

[northernladuk]

In essence, you need to get as close as possible to a true B2B arrangement; only then will you be safely outside IR35.

And it's going to be interesting how consultancies that just body shop to clients achieve this. It's long been a discussion point about having 2 sets of criteria to try meet i.e. the engagement with the client and then the engagement with their client.

If a consultancies business model is to supply permies bodies to their client with the profit coming from the difference of pay to charge it's going to be difficult to to argue the contractor is not just filling a hole a permie would. Will take some creative thinking from both parties I would have thought?

[malvolio]

And it's going to be interesting how consultancies that just body shop to clients achieve this. It's long been a discussion point about having 2 sets of criteria to try meet i.e. the engagement with the client and then the engagement with their client.

If a consultancies business model is to supply permies bodies to their client with the profit coming from the difference of pay to charge it's going to be difficult to to argue the contractor is not just filling a hole a permie would. Will take some creative thinking from both parties I would have thought?

Well yes, which is why it's is such a serious challenge. None of the necessary parties are used to thinking like that - yet...

It can be done, you have to engage your contractor to deliver a given piece of work, either as a discrete contract or as a schedule to a n overarching contract of engagement (for services, not of service). If, for rough example, the SI's role is to deliver a cloud-based payroll system, your contractor will be responsible for a high level design or a piece of it, the later low level design (or again a piece of it) and a successful implementation (define that how you will but it's not that hard).

Ultimately the line has to be that you are engaging skills, not people. It may mean that most long-running gigs are no longer an option and will be replaced by several smaller ones, or even, in the above example, several parallel HLDs for different clients, but the management overhead will be a lot less than looking after all the complexities of intermediary payrolls and risk management.

[cojak]

Dagnabit! That twice!

Sorry folks.