Be careful if you take Outside IR35 contracts

[Fred Bloggs]

The only way I can currently see to mitigate any risk is by a combination of an outside SDS and removal of any clawback clauses.

I don't think anyone could dispute that including myself. That's not the end of the story though and one must also be prepared for what may or may not develop down the line too.

[SueEllen]

Second point is the small company exemption. Small companies are likely to be an IR35 nightmare as they aren't big enough to be well structured enough to offer a proper SoW piece of work with no D&C and will allow substitution. They will often want all hands to the deck and expect everyone to muck in.

From my own experience this sub-point isn't necessarily true. However like with any outside contract make sure you are only doing what is in the SOW.

[northernladuk]

From my own experience this sub-point isn't necessarily true. However like with any outside contract make sure you are only doing what is in the SOW.

Yep. Maybe 'likely' was a bit strong but I did try to use woolly terms so it wasn't black and white. We've had a number of posts on here where it's come out they've become part of the team getting on with it and the one time I've come close to a small type company it was definitely a requirement to just do whatever was needed.

I just put that in as another gotcha to watch out for on top of cojaks points. IMO greater focus is needed when defining your own IR35 status in small companies, not just the nod many people have been giving to 'standard' contracts in the past.

[eek]

If I was going for a contract at the moment - a chapter 8 small business outside IR35 contract would be my preferred option as I seriously doubt HMRC will investigate any, given the far bigger paydays available from shaking a large corporate or 2.

[WTFH]

If I was going for a contract at the moment - a chapter 8 small business outside IR35 contract would be my preferred option as I seriously doubt HMRC will investigate any, given the far bigger paydays available from shaking a large corporate or 2.

The easiest ones to go after would be banking and pharma, where there's always plenty of contractors hanging around.
Depending on how much government influence there is on HMRC, the banking sector might get off a bit more lightly.

I suspect that the big 4 will encourage that thinking, to push more business their way.

[jamesbrown]

If I was going for a contract at the moment - a chapter 8 small business outside IR35 contract would be my preferred option as I seriously doubt HMRC will investigate any, given the far bigger paydays available from shaking a large corporate or 2.

Agree with this.

Also, there are upsides w/r to IR35 when working with small businesses, providing you are not doing BAU/BOS work (but that in itself is probably less likely). The main one being that it's less likely, when under investigation, that you will get an arse/elbow scenario with the client because the people involved with the initial SoW and contracting will most likely to be dealing with any queries later and they are less likely to have a large compliance/legal department involved, which often leads to said arse/elbow situations.

[jamesbrown]

The easiest ones to go after would be banking and pharma, where there's always plenty of contractors hanging around.
Depending on how much government influence there is on HMRC, the banking sector might get off a bit more lightly.

I suspect that the big 4 will encourage that thinking, to push more business their way.

True, but a lot of these contracts will now be inside (where they should've been all along). In due course, once they've exhausted the low-hanging fruits of companies that have tens/hundreds of contractors outside under Chapter 10, they will eventually get around to all the legacy Chapter 8 contracts in industries like banking/pharma where the contracts are now largely inside, regardless of what HMRC says about this.

[eek]

The easiest ones to go after would be banking and pharma, where there's always plenty of contractors hanging around.
Depending on how much government influence there is on HMRC, the banking sector might get off a bit more lightly.

I suspect that the big 4 will encourage that thinking, to push more business their way.

It will be whatever Pharma wasn't scared off by the previous GSK shakedown as banking has very much adopted a blanket No PSC approach... Offpayroll highlighted an outside IR35 contract last week that shows both how rare they are (and when you looked at the skills required) how clearly outside the contract was.

[Paralytic]

We are all big boys and girls and can make our own decisions.

Off topic for this post, but I'd argue that *many* posts across these boards (not least the "loans" tax avoidance schemes people openly signed up for) suggest the second part of that sentence does not entirely hold true.

I think its great this potential issue is being highlighted. Whilst I do believe the chance of any single individual being caught out is relatively low, the impact if it does happen is significant, so people do need to understand the risks, ask the right questions and make their own judgements from there. My concern is that so many contractors *are* disguised employees, not business owners, act as such and want others to tell them what to do.

[northernladuk]

We are all big boys and girls and can make our own decisions.

Let me introduce you to Psychocandy....