IR35 insurances required going forward?

[jamesbrown]

And, in the second case, they'll have a viable/immediate means of claw back because there will be outstanding payments.

[Fred Bloggs]

I'm inclined to agree but I'd also like to see it tested. In theory, you've signed a contract and so agree to that clause. Whether its enforceable would probably require it going to court for a ruling? I presume the legal team that put those clauses in place think they're enforceable or else why bother putting them there?

I don't disagree. But on the other hand, I think you give too much credit for the way agency > contractor contracts are written. I haven't had to worry about them for quite some time now, but they never struck me as being high grade legal documents. Quite the opposite. It is possible that one of these clauses could be tested in court. But I doubt it will ever happen. If there was something in existence along the lines of a professional contractor group or similar, they would proactively submit several of these clauses to a top flight barrister for an opinion. But that won't happen either.

[Fred Bloggs]

It absolutely cannot override statute, but I don't think these clauses are purporting to do that. In the first instance, the liability would absolutely fall on the Fee Payer, else someone else in the chain via the transfer of debt rules, so they would be paying it. However, these clauses are all "after the fact" claw backs on commercial terms so they don't attempt to override statute. Whether they hold is still highly debatable, though, and I suspect they mostly would not, but there is a chance they would.

I disagree. The sole purpose of such clauses is to undermine the agency's statutory responsibility and place it squarely onto the contractor. We might see it legally tested one day. But I doubt it. I think HMRC have far too many other priorities. It's highly probable that the legislation has already met it's aim of putting the majority of bums on seats inside IR35 where they always should have been. But we'll never know that.

[jamesbrown]

I disagree. The sole purpose of such clauses is to undermine the agency's statutory responsibility and place it squarely onto the contractor. We might see it legally tested one day. But I doubt it. I think HMRC have far too many other priorities. It's highly probable that the legislation has already met it's aim of putting the majority of bums on seats inside IR35 where they always should have been. But we'll never know that.

Unless they are badly drafted, they probably don’t. Insofar as the clauses are understood and agreed by all parties at the time the contract is signed, there is a non-trivial chance they will hold and it will be self-evident via any claim that takes place after the statutory process that the statutory process was not circumvented. Liability clauses are bread and butter in commercial contracts. You have a responsibility to not sign contracts that contain stupid clauses that you understand and otherwise nominally agree to.

[Fred Bloggs]

Unless they are badly drafted, they probably don’t. Insofar as the clauses are understood and agreed by all parties at the time the contract is signed, there is a non-trivial chance they will hold and it will be self-evident via any claim that takes place after the statutory process that the statutory process was not circumvented. Liability clauses are bread and butter in commercial contracts. You have a responsibility to not sign contracts that contain stupid clauses that you understand and otherwise nominally agree to.

It's likely you are right. And indemnity clauses are common, agreed. However, referring back to my analogy of being caught drunk driving and derogating the responsibility to someone else - You can't expect someone else to pick up the liability, no matter what you previously agreed to with a third party. Anyway, it's moot because it's very unlikely that any if this is going to matter. As long as the majority of bums on seats are inside IR35, that's all that's going to matter.

I am very happy I am no longer in the position of having to worry about it.

[ladymuck]

Unless they are badly drafted, they probably don’t. Insofar as the clauses are understood and agreed by all parties at the time the contract is signed, there is a non-trivial chance they will hold and it will be self-evident via any claim that takes place after the statutory process that the statutory process was not circumvented. Liability clauses are bread and butter in commercial contracts. You have a responsibility to not sign contracts that contain stupid clauses that you understand and otherwise nominally agree to.

Responsibility, yes, but I think most of us have been in a situation where the agency refuse to budge on one or more clauses in the contract and you either sign it or look for work elsewhere. To those that need the work, there is very little scope to exercise that responsibility.

I guess, one option is to inform the agency that you believe the clause to be unsound and that you're signing it under duress? Feels sketchy but it's all about arse covering at the end of the day.

[jamesbrown]

Responsibility, yes, but I think most of us have been in a situation where the agency refuse to budge on one or more clauses in the contract and you either sign it or look for work elsewhere. To those that need the work, there is very little scope to exercise that responsibility.

I guess, one option is to inform the agency that you believe the clause to be unsound and that you're signing it under duress? Feels sketchy but it's all about arse covering at the end of the day.

Yes and, under those circumstances, it would be a legal battle as to whether the contract as a whole is a valid agreement, more so than any individual clause.

As above, I think there's some uncertainty about whether these clauses would have the desired effect and whether they would hold, but they might hold (or, rather, some of them you see out in the wild might hold) - you cannot assume they won't. I'm not offering a definite view one way or another - I'm not a commercial lawyer examining a specific contract - but I think it's risky to assume they won't hold, in general. Obviously, there are many people out there drafting and reviewing contracts that think they will provide some level of mitigation.

[ladymuck]

Yes and, under those circumstances, it would be a legal battle as to whether the contract as a whole is a valid agreement, more so than any individual clause.

As above, I think there's some uncertainty about whether these clauses would have the desired effect and whether they would hold, but they might hold (or, rather, some of them you see out in the wild might hold) - you cannot assume they won't. I'm not offering a definite view one way or another - I'm not a commercial lawyer examining a specific contract - but I think it's risky to assume they won't hold, in general. Obviously, there are many people out there drafting and reviewing contracts that think they will provide some level of mitigation.

I'm with you on that.

I'm fortunate to not have such a clause in my current contract but I did see draft contracts from a previous client where they were trying to work out how to deal with the new way of doing things and I definitely wasn't happy to see them trying to pass the liability down the chain. I seem to recall there being a few posters here sharing similar clauses as they cropped up.

They had their place in the old world, when the contractor made the determination, but I'm very wary of them being in new contracts where the client is making the determination.

[jamesbrown]

Agree. I would refuse any such contract, but I've been doing this long enough to be able to refuse and you're right that "take-it-or-leave it" will mean "take it" for some contractors who are desperate for the work or who don't know any better. As eek alluded to earlier, the real risk is probably more with changed determinations mid-contract and withheld payments than any transfer of debt several years down the line. Brave new world.

[l35kee]

I'm considering renewing IPSE.. Did you make a decision northernladuk?