Being a GM and IR35

[Boston4315]

Afternoon all,

Newbie here with what could be a daft question, so please be kind.

I've been asked to be the General Manager at an IT company. I've had the contract, I've reviewed it and had it legally reviewed and it falls outside IR35.

The CEST comes back saying it's outside IR35 too, but lets leave that point to one side for now since I know what people will say about that.

HOWEVER what hasn't been finalised 100% is the scope (so it hasn't been legally reviewed yet). What I do know is that it will be basically setting up a new subsidiary of the business so

1. Setting up and managing the output from all four teams in the business, however the role has no authority over annual leave approval, grievance or performance management etc.

2. Main point of contact on a number of B2B contracts, ensuring they are run effectively etc.

3. Putting in place controls/process etc for the new subsidiary.

4. A number of one off projects to clean the new business up and moving it into its new form etc.

The role isn't a directorship but it is very senior in the company. It's included on the org chart with the teams above reporting into it. The term is likely to be at least 12 months with the scope changing over time as elements of the above are put in place and handed over to perm staff.

I have doubts over the scope being outside of IR35 but the client is adamant that it is.
However it can say that since the responsibility for IR35 won't sit with them, that's both before and possibly after April 2021.

I'm assuming I can't put an indemnity clause in the contract since it then removes the financial element of the IR35 review.

Any advice would be greatly appreciated.

Thanks

B

[jayn200]

Not an expert but it doesn't sound like it's outside from your explanation.

An outside ir35 contract doesn't sit within the organisational hierarchy. You shouldn't have a title within the organisation either. That is a huge red flag there. You should be an external resource.

It might be possible to create an interim role that is outside ir35 but it isn't typical and I gotta imagine it would be pretty difficult to make sure it stays outside. IR35 was created to prevent exactly what an interim contractor is doing. Taking the role of a perm worker working in similar manner but avoiding NI.

Just get it reviewed but i understand you probably want to negotiate rate before that point in time. You could always negotiate an outside ir35 rate and an inside ir35 rate and then tell them you'll do the review and let them know how it comes back and what the rate will be.

[Lance]

The bigger question is whether the client is small or not, and if not, what is their determination of status come April?

[eek]

The bigger question is whether the client is small or not, and if not, what is their determination of status come April?

already answered

However it can say that since the responsibility for IR35 won't sit with them, that's both before and possibly after April 2021.

[jamesbrown]

If you've had it reviewed by an IR35 expert (not an accountant, and the working practices too - as you best understand them now - not just the contractual terms), then what more can we tell you? We are not IR35 experts. My gut reaction would be inside for such a position, but you are not going to get a better opinion here than the expert one you already have (again, caveated as above).

[jamesbrown]

Just get it reviewed

OP has had it reviewed - they were explicit about that (not just CEST).

[jamesbrown]

Is the supply chain based fully outside the UK?

Your username and the fact you're making the assessment post April hint at that (could be a small company too, of course).

That may have been a factor in the review - strong lack of D&C, working remotely for an overseas company.

[Boston4315]

Is the supply chain based fully outside the UK?

Your username and the fact you're making the assessment post April hint at that (could be a small company too, of course).

That may have been a factor in the review - strong lack of D&C, working remotely for an overseas company.

All UK, but i can see where you are coming from.

[jamesbrown]

Afternoon all,
I'm assuming I can't put an indemnity clause in the contract since it then removes the financial element of the IR35 review.

Yes, you could do this, although it is more common to see the other way around

However, bear in mind that the absolute best this gets you is the ability to pursue the client after HMRC have already bent you over. In other words, these contractual clauses mean absolutely nothing to HMRC. If you are doing the assessment, then YourCo is liable for any error and any attempt to recover the tax/penalties/interest from the client would be ex post. So YourCo would pay initially. Also, bear in mind that ClientCo may not even be around to pursue. In summary, it mitigates, but does not eliminate risk.

[Boston4315]

If you've had it reviewed by an IR35 expert (not an accountant, and the working practices too - as you best understand them now - not just the contractual terms), then what more can we tell you? We are not IR35 experts. My gut reaction would be inside for such a position, but you are not going to get a better opinion here than the expert one you already have (again, caveated as above).

I was keen to understand what other people's views were on the hope that I might get a better understanding of the rules, or confirmation that I'm on the right track. Would prefer to not waste money on a legal review if its a non starter.