Post April 2021 - Interested in people's thoughts

[bobf]

Hello all. I'd like to outline my situation and see what people think. Nothing particularly unique here I'm sure. Note that any lack of knowledge on my part should not necessarily be taken as indicative of a lack of research.

I have been under contract for some considerable time for a client. In that time all my QDOS contract reviews have come back as Outside IR35.

Last year management completed a CEST assessment which came back as Outside for myself and all other contractors on site.

This year management repeated the CEST assessment which again resulted in Outside. However before this was distributed HR told management to answer certain questions differently, thereby ensuring an Inside result.

I now hear on the grapevine that from April all contractors in the department will be assessed as Inside.

I had been hoping that the decision was going to be a blanket ban on PSCs. This is because I am under the impression that such a change in the working practices is not really relevant to IR35 and therefore policies such as QDOS TLC package would still have paid out in the event of an investigation. However with a blanket Inside decision I think such policies might be unreliable.

With a blanket ban on PSCs I think I would have been tempted to stay and rely on the insurance if required. However as things stand I'm now seriously considering leaving.

What do you think?

[jamesbrown]

I think that, were you to be investigated on earlier contracts, then you'd be in a tricky position unless you have clearly documented how the earlier working practices were outside and, ideally, how they will now changing substantially. The problem with the latter is that the working practices probably won't change, so you're left with a situation where the earlier working practices may have been outside, but the client now publicly disagrees. This is much harder to defend. Regarding insurance, the T&Cs of any IR35 insurance will demand a "reasonable prospect of success", which is harder to achieve if the client is not onside. You could check with your insurer, but they'll probably give you a non-committal answer because they will evaluation this on a claims made basis, i.e., at the time of a claim.

Overall, you're now at much greater risk than you were, particularly if you accept the working practices from April 6 onwards and they haven't changed, as that is tantamount to an admission that you were inside all along. Best to move on. Whether you will actually be pursued is anyone's guess (the steer from HMRC is that they won't bother - but take that with a pinch of salt - they change their position routinely).

[ShandyDrinker]

I'd probably get out of there in the event of an outside to inside determination.

From a personal perspective, it's just not a risk I'd be prepared to take.

I can never understand people going from outside to inside or outside to permie in the same team with the same client. It's just opening yourself up as a target. Saying that though, it depends on how juicy a target someone could be for subsequent investigation.

Only you can decide whether the risks would be worth it, no matter how slim.

[bobf]

Thanks @ShandyDrinker and @jamesbrown for the insightful comments. I perfectly understand.

Taking this line of reasoning one step further - does this imply that I can never perform a similar role for the client again without risking investigation of previous, even if not contiguous, engagements?

[jamesbrown]

Thanks @ShandyDrinker and @jamesbrown for the insightful comments. I perfectly understand.

Taking this line of reasoning one step further - does this imply that I can never perform a similar role for the client again without risking investigation of previous, even if not contiguous, engagements?

The risk of investigation is not directly related to your actual status (most cases are lost by HMRC) and depends more on luck (in the event it stems from an unrelated investigation, such as VAT) or the information that HMRC might hold about you - in terms of the latter, sticking with the same client through the same agent under a change in IR35 status is asking for trouble. In any case, absent fraud, there's only so far back that an investigation can go (4 years, typically), so it isn't something to worry about if you return many years down the line. After a six-month break, returning under the same working practices and a different tax status, yeah. As noted earlier, if there's a material change in your working practices, then moving from outside to inside is not necessarily a problem, but it's certainly much riskier than leaving and forgetting about this client for a period.

[northernladuk]

If the question HR changed actually reflects the working practices then you are screwed. For example, if they said no way would be allow a substitute then you are up the creek.

Staying anywhere outside to inside is a massive risk. Yes you might have previous determinations to fall back on but it's too late. An investigation has started and that will the the soul from your body for a year or so at which point you 'might' win.. That's no way to live

[BlasterBates]

What HMRC told us about the changes to IR35 | IPSE

HMRC reiterated its assertion that it will not use client determinations to launch retrospective investigations. This doesn’t mean all previous engagements are now ‘out-of-scope’ for HMRC. You are still liable for those engagements and HMRC can go back six years to investigate. But the Department has been clear that if your client decides in April that IR35 does apply – and you had previously been operating on an outside basis in the same contract – the client decision will not be used as starting point to investigate.

[eek]

What HMRC told us about the changes to IR35 | IPSE

There are a whole heap of reports and methods available to HMRC that don't meet that careful chosen statement.

[jamesbrown]

What HMRC told us about the changes to IR35 | IPSE

They went on to tell the story of the Magic Faraway Tree by Enid Blyton, involving the protagonists Dick and Fanny, among others.

[BlasterBates]

They went on to tell the story of the Magic Faraway Tree by Enid Blyton, involving the protagonists Dick and Fanny, among others.

No evidence in the public sector that anyone was caught out like this. Have you an example? I don't see they'll be targeting contractors that have been deemed inside IR35. IR35 in any case was a low risk problem, hardly any investigations.

I would just go ahead and not worry.