IR35 letters going out to GlaxoSmithKline contractors

[Kladderadatsch]

An external IT Consultant who has been working at GSK for 20 years and lives in a £1.15million five-bed detached house in Ascot has made the news today:

'Boozed-up' IT consultant 'racially abused British Airways stewardess' court hears | Daily Mail Online

Perhaps all GSK IT Consultants should lie low and behave themselves in order to avoid any unwelcome publicity in case HMRC happen to read Daily Mail and other news media.

I know this guy. He is definitely part and parcel. You can see why HMRC have picked on GSK

[eazy]

GSK : Primary Path Judement

In 2011 Mr Philip Winfield, an IT database consultant providing services to GSK via his LTD Company, took the brave step of appealing to the tax tribunals following an initial ruling from HMRC that he was caught by IR35. The tribunal found unequivocally that Mr Winfield was not in an employment relationship with GSK and was in fact, outside of IR35.

Article :
Post | Nasa Group | Umbrella Company & Limited Company Services

Judgement: Primary Path
https://static.wixstatic.com/ugd/37b...6dd761c840.pdf

[cojak]

How absolutely smashing for Mr Winfield.

I wouldn't rely on that if I was a contractor there, just because he was careful doesn't mean the others were/are.

[Lance]

In 2011 Mr Philip Winfield, an IT database consultant providing services to GSK via his LTD Company, took the brave step of appealing to the tax tribunals following an initial ruling from HMRC that he was caught by IR35. The tribunal found unequivocally that Mr Winfield was not in an employment relationship with GSK and was in fact, outside of IR35.

Article :
Post | Nasa Group | Umbrella Company & Limited Company Services

Judgement: Primary Path
https://static.wixstatic.com/ugd/37b...6dd761c840.pdf

I'm not convinced I agree with Nasa's summary of the findings.
They conclude...

A key benefit of this case is that it will give GSK, and other end clients in the private sector, the confidence that from April 2020 when IR35 reform is introduced, that they can operate their contractors outside of IR35 where:

- The client has the right self-employed style contracts in place, and
- Their contractors do not receive employee benefits or access to HR processes

neither of which are strong indicators of being outside. And may not necessarily reflect working practises.
I'm pretty sure GSK will have some actual legal expertise working out what they do. And the tax affairs of contractors will be far lower on their list than potential liabilities of getting it wrong.

[malvolio]

In 2011 Mr Philip Winfield, an IT database consultant providing services to GSK via his LTD Company, took the brave step of appealing to the tax tribunals following an initial ruling from HMRC that he was caught by IR35. The tribunal found unequivocally that Mr Winfield was not in an employment relationship with GSK and was in fact, outside of IR35.

Article :
Post | Nasa Group | Umbrella Company & Limited Company Services

Judgement: Primary Path
https://static.wixstatic.com/ugd/37b...6dd761c840.pdf

Fought and funded by his IPSE membership, incidentally...

Agreed its a single case, but ut does throw GSK's blanket approach into doubt

[cojak]

Fought and funded by his IPSE membership, incidentally...

Agreed its a single case, but ut does throw GSK's blanket approach into doubt

You could say that about every won case.

And everything is in doubt.

[DZ2]

So QDOS are sending the letter on my behalf to HMRC this week; it is very generic but is just what's needed at this stage. It basically says the contract was clearly outside of IR35 scope due to right of substitution and lack of supervision. It also says "If you are unable to agree with our conclusion please provide us with a full and detailed explanation as to why you believe that the contract between our client’s PSC and GlaxoSmithKline (GSK) comes under the off-payroll working rules ‘IR35’.". We'll see what happens next.

With regards to (some) GSK contractors being part of furniture at GSK as suggested above... I don't know, perhaps some were, but I am confident that I wasn't, and my contractor colleagues weren't either. I was hired to work on specific project only and no one ever asked to do anything outside of it. I stayed for 2 years and left when project came to an end. When they offered short extension (which I didn't accept) it was specifically said that they can't offer anything longer because there isn't much left to do on our project and we are wrapping up things, so there was no moving shuffling contractors between tasks like perms.

I know some contractors who have been at GSK for quite a number of years, even for them it wasn't just one massive extension. They just happened to find another GSK contract (it's obviously easier from inside) while finishing their current one; for them it meant re-applying for "new" contract with different team, re-negotiating rate etc. But that was in biometrics, perhaps IT or other departments work differently.

[Hobosapien]

With regards to (some) GSK contractors being part of furniture at GSK as suggested above... I don't know, ...

Yes time at a client is only an indicator that the working practices and actual engagement over that time needs looking at. Someone doing as you did is much less likely to be caught inside IR35 than someone that has done the same contract over a much longer period, but even then the nature of the engagement matters more than the time spent in calendar years.

The longer a contract lasts without breaks the easier it is for someone to drop their guard and get sucked into working practices that makes any initial contract review meaningless. By sticking to an agreed set of deliverables such as those project based and having contract breaks between re-engagement on a different project, even if the break is just a new contract detailing the new project and deliverables rather than a period of time away from the client, you are able to show how you maintained the engagement and working practices to meet the contract review that deemed it outside IR35 at the start.

So those worried that a long stint at a client is bad news, you need to look at how the working practices and contract(s) engagement proceeded after the initial contract review, and if all stands up to scrutiny then there is much less to worry about. Especially if you have a reputable third party such as QDOS or (A)IPSE fighting our case.

[Fred Bloggs]

So QDOS are sending the letter on my behalf to HMRC this week; it is very generic but is just what's needed at this stage. It basically says the contract was clearly outside of IR35 scope due to right of substitution and lack of supervision. It also says "If you are unable to agree with our conclusion please provide us with a full and detailed explanation as to why you believe that the contract between our client’s PSC and GlaxoSmithKline (GSK) comes under the off-payroll working rules ‘IR35’.". We'll see what happens next.

With regards to (some) GSK contractors being part of furniture at GSK as suggested above... I don't know, perhaps some were, but I am confident that I wasn't, and my contractor colleagues weren't either. I was hired to work on specific project only and no one ever asked to do anything outside of it. I stayed for 2 years and left when project came to an end. When they offered short extension (which I didn't accept) it was specifically said that they can't offer anything longer because there isn't much left to do on our project and we are wrapping up things, so there was no moving shuffling contractors between tasks like perms.

I know some contractors who have been at GSK for quite a number of years, even for them it wasn't just one massive extension. They just happened to find another GSK contract (it's obviously easier from inside) while finishing their current one; for them it meant re-applying for "new" contract with different team, re-negotiating rate etc. But that was in biometrics, perhaps IT or other departments work differently.

It'll be interesting now to observe whether the QDOS letter gets your case filed under "too difficult". There will be lots and lots of ripe, lower hanging fruit at GSK.

[northernladuk]

I know some contractors who have been at GSK for quite a number of years, even for them it wasn't just one massive extension. They just happened to find another GSK contract (it's obviously easier from inside) while finishing their current one; for them it meant re-applying for "new" contract with different team, re-negotiating rate etc.

I find this very hard to believe as it's stated above. I've worked in a large pharma that had a habit of keeping people on for a very long time and only in very rare cases did I this happen. The vast majority did the same role for the period, just moved on to different projects/work in the same area. Only very rarely did an contractor on site have to spot a gig and apply for it.

I do see it's mentioned in the court case that he did this so it's possible that might have happened at some point but I have a very hard time believing the situation is as described above.

I think I can count the number of times I've seen a contractor have to apply for jobs at the same client. Compare that to the number of people I've seen just extended and extended. Very low percentages so it just doesn't add up for me.

There is of course the situation that people might believe that's the truth as they are just tick box contractors but the outside view is very different.

But that was in biometrics, perhaps IT or other departments work differently.

And there is the differentiator. I am certain they do.