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IR35 blanket assessment from 2017 - what to do?

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    IR35 blanket assessment from 2017 - what to do?

    Long-time lurker and grateful for any advice or pointers on what to read/ resources:
    My consultancy company 'specialist-advice' - SAco for short (which was also my employer at the time) is owed money from an agency from back in 2017 when the IR35 changes impacted public sector. SAco was contracted on very flexible terms to an agency (let's call it Agency-crappo'), which sub-contracted the resource to Capita, who sub-contracted it again to a Govt dept as end client. When SAco did not get paid an invoice by 7th April 2017, an enquiry was raised with Agency-crappo and they advised that they were unable to pay SAco and would only pay the person working on the job directly (which was me), because the end client Govt Dept had unilaterally deemed the appointment inside IR35. This came a surprise to SAco, as no notice of any contractual changes were notified from Agency-crappo as required under the passing contract - there had been no communication whatsoever. SAco immediately suspended work on the contract and walked away as there were other clients on the books the same week (NHS and a charity) and plenty of work to fill the gap.
    5 years on I am seeking to get payment for SAco - I am aware of the legal time for contracts is 6 years.
    Given that Agency-crappo did not provide any information or any form of SDS in writing, I have had to obtain info regarding the blanket assessment from the end client using subject information requests. Info forwarded has confirmed that the assessment was blanket and that they did no liaison whatsoever with SAco (so no reasonable care was taken for the SDS). SAco has conducted the CEST assessment unilaterally and the work is deemed to have fallen outside IR35.
    Having contacted Agency-Crappo, they have stated that they are happy to pay SAco the monies owed directly, but insist that they must deduct the national insurance and tax due to the end client's assessment etc and so they want my own NI details etc. I am confused whether SAco has any ability at all to contest the blanket assessment this far down the line with the Govt Dept - or how to do this without any formal SDS paperwork to dispute? Alternatively, I have read somewhere that there is a HMRC form that SAco can fill out to reclaim the monies wrongly deducted (due to lack of a formal SDS/ lack of reasonable care) should payment net of NI etc be accepted- but i can't find any information about this, and the small accountant SAco uses has no idea whatsoever and has suggested a rather expensive IR35 specialist- which may not be VFM.
    I should be most grateful for any advice on how to proceed - or experiences - thank you.

    #2
    Wow. That's very hard to read

    Originally posted by Elansofar View Post
    My consultancy company 'specialist-advice' - SAco for short (which was also my employer at the time)
    Are you sure it was your employer? You have a signed contract of employment? You are being paid over the NMW etc?

    is owed money from an agency from back in 2017 when the IR35 changes impacted public sector. SAco was contracted on very flexible terms to an agency (let's call it Agency-crappo'),
    What does very flexible terms mean? If you've got a payment dispute then this could be key so need the details.
    which sub-contracted the resource to Capita, who sub-contracted it again to a Govt dept as end client. When SAco did not get paid an invoice by 7th April 2017, an enquiry was raised with Agency-crappo and they advised that they were unable to pay SAco and would only pay the person working on the job directly (which was me), because the end client Govt Dept had unilaterally deemed the appointment inside IR35. This came a surprise to SAco, as no notice of any contractual changes were notified from Agency-crappo as required under the passing contract - there had been no communication whatsoever.
    Bearing in mind there was a huge amount of noise about the changes in the public sector and the fact well over 80% of contracts were expected to go inside did you not think to raise this with your agency? You not being aware of the changes in the legislation is not an excuse and if you were aware the sensible thing would be check with your agency. You will have needed an SDS so shouldn't have left it that late.
    SAco immediately suspended work on the contract and walked away as there were other clients on the books the same week (NHS and a charity) and plenty of work to fill the gap.
    5 years on I am seeking to get payment for SAco - I am aware of the legal time for contracts is 6 years.
    5 years? Why so long?
    Given that Agency-crappo did not provide any information or any form of SDS in writing, I have had to obtain info regarding the blanket assessment from the end client using subject information requests.
    Are you sure it was a blanket assessment and not that they had just decided not to use PSC's anymore? If they decided not to use PSCs then they don't need to issue an SDS. We've had a lot of confusion over the differences. Also this was new so there was a lot of confusion in the clients. They shouldn't blanket ban but many did so.
    Info forwarded has confirmed that the assessment was blanket and that they did no liaison whatsoever with SAco (so no reasonable care was taken for the SDS). SAco has conducted the CEST assessment unilaterally and the work is deemed to have fallen outside IR35.
    So why did you not pro-actively approach the agency bearing in mind the huge amount of noise and potential fall out from this? Can't really call the agent out for not doing anything when you didn't either.
    Every contractor that has self assessed their contract got an outside result but you do not know the clients intentions. It's highly unlikely they would be happy with RoS for a start. You can put what you think but you don't know what the client decided. Means nothing anyway.
    Having contacted Agency-Crappo, they have stated that they are happy to pay SAco the monies owed directly, but insist that they must deduct the national insurance and tax due to the end client's assessment etc and so they want my own NI details etc.
    After 5 years I'd have told you to do one But yes that is right, the new IR35 status has to be applied to any invoice after the 6th of April regardless of when it was worked so they are right. What you should have done should you have been a bit more proactive is ask them to pay on the 5th like many agencies did so the invoice could have been paid the old way.
    I am confused whether SAco has any ability at all to contest the blanket assessment this far down the line with the Govt Dept - or how to do this without any formal SDS paperwork to dispute? Alternatively, I have read somewhere that there is a HMRC form that SAco can fill out to reclaim the monies wrongly deducted (due to lack of a formal SDS/ lack of reasonable care) should payment net of NI etc be accepted- but i can't find any information about this, and the small accountant SAco uses has no idea whatsoever and has suggested a rather expensive IR35 specialist- which may not be VFM.
    I should be most grateful for any advice on how to proceed - or experiences - thank you.
    Although there were mechanisms to report this it was back to the client so absolutely bloody pointless. So yes there is a way to report the incorrect assessment but it's to the people that gave it so not a chance in hell of it going anywhere. No one has ever challenged this so you are on a hiding to nowhere.

    After 5 years I'd say take your money and close the whole chapter. It's ancient history now.

    'CUK forum personality of 2011 - Winner - Yes really!!!!

    Comment


      #3
      Hi - Northernladuk thanks for response - I am most grateful. I am a Director of SAco but also paid a wage as an employee - so I was already paying NI and tax on my salary.

      Flexible terms means that I came and went as I wanted- no fixed hours. The client told me what outcomes they wanted for the project and by when and I just liaised with them and other people in the organisation as and when I needed to. This meant that projects / workstreams for SAco's other clients and charities could be prioritised when necessary. SAco had own website, circle of clients, advertising/ blog. Own transport, own specialist computer hardware/ software, site safety PPE and tools/ paid own professional subscriptions and PI/PL insurances etc - conducted own risk assessments etc. The only item provided by the end Client was access to desktop PC to receive emails off a .gov secure system. When I was in the Client's office situated within a secure site, I sat alone in an empty open plan office. No one else on the entire site was involved with the project and I was left to my own devices and not supervised at all. My client representative was circa 7 hours drive away at another secure site and we would communicate by email of phone. I sent in weekly invoices for SAco on a hourly rate which the end client authorised and SAco was paid.

      Ref the agency, no I did not call and ask if IR35 applied. I spoke to an agency representative late in March 2017, they had no idea what was going on and so I asked them to put in writing any changes that IR35 would mean - as SAco had a contract with them requiring a months formal notice of any change to the contract.
      This is the very early days of the IR35 thing, there was no guidance from HMRC, no information, no text books or youtube or webinars, no guidance, the company accountant had no idea - nor did the Federation of Small Businesses helpline when I called them. There was no published process about what to expect or how to dispute etc so I had no idea of the impact of the legislation. When I heard nothing, I ceased work on the last day of March. I put in the invoice which was authorised for payment by the end client on 5th April 2017. When the money didn't arrive I raised a query and was advised by the agency that the work had been deemed inside IR35 by the end client and they would only pay me personally, and net of NI.

      Why so long? There was no guidance on disputing SDS for months and even today im unclear what guidance there is where a blanket SDS occurs and is not provided in writing. Plus I had too much going on, but I think the main cognitive burden has been nursing sick parent with motor neurone disease through to the end and 3 house moves.

      Did i kick up a fuss with the agency? Yes I did but there was a wall of silence and they insisted that they would only pay me personally net of NI etc. I instructed debt collectors in 2020 and the agency finally sent a copy email from Capita which provided a little information about the blanket IR35 decision.

      So then I sent a Subject Access Request to the end client and has confirmed that it was a blanket assessment and that no SDS was undertaken / paperwork issued by the end client.

      I would like to dispute the historic assessment given i have had to find out about it using Subject Access Request I'm not sure how to do so. Like you say it might not be worth the time and effort - which is why I came here to ask to see if anyone else had this experience... I don't give up easily, which is probably why clients like me...



      Comment


        #4
        As a point of order, I think you’re confusing the content/requirements of the 2017 and 2021 reforms. The 2021 reforms were similar, but not the same and did not merely extend the 2017 reforms to the private sector but, as I recall, introduced both the SDS and the reasonable care requirement associated with it.

        Comment


          #5
          Originally posted by Elansofar View Post
          Hi - Northernladuk thanks for response - I am most grateful. I am a Director of SAco but also paid a wage as an employee - so I was already paying NI and tax on my salary.
          That does not make you an employee. Go read up on small business and pay particular attention to the role of a director/office holder
          Flexible terms means that I came and went as I wanted- no fixed hours. The client told me what outcomes they wanted for the project and by when and I just liaised with them and other people in the organisation as and when I needed to. This meant that projects / workstreams for SAco's other clients and charities could be prioritised when necessary. SAco had own website, circle of clients, advertising/ blog. Own transport, own specialist computer hardware/ software, site safety PPE and tools/ paid own professional subscriptions and PI/PL insurances etc - conducted own risk assessments etc. The only item provided by the end Client was access to desktop PC to receive emails off a .gov secure system. When I was in the Client's office situated within a secure site, I sat alone in an empty open plan office. No one else on the entire site was involved with the project and I was left to my own devices and not supervised at all. My client representative was circa 7 hours drive away at another secure site and we would communicate by email of phone. I sent in weekly invoices for SAco on a hourly rate which the end client authorised and SAco was paid.
          First sentance relevant, the rest not.
          Ref the agency, no I did not call and ask if IR35 applied. I spoke to an agency representative late in March 2017, they had no idea what was going on and so I asked them to put in writing any changes that IR35 would mean - as SAco had a contract with them requiring a months formal notice of any change to the contract.
          This is the very early days of the IR35 thing, there was no guidance from HMRC, no information, no text books or youtube or webinars, no guidance, the company accountant had no idea - nor did the Federation of Small Businesses helpline when I called them. There was no published process about what to expect or how to dispute etc so I had no idea of the impact of the legislation. When I heard nothing, I ceased work on the last day of March. I put in the invoice which was authorised for payment by the end client on 5th April 2017. When the money didn't arrive I raised a query and was advised by the agency that the work had been deemed inside IR35 by the end client and they would only pay me personally, and net of NI.
          I just don't believe this. There was plenty of guidance and discussion. Here are some examples. Some of which actually touch you as one article particularly mentions capita.
          Article from Dec 2016
          https://www.contractoruk.com/ir35/fo...right_now.html

          Article from Jan 2017
          https://www.contractoruk.com/news/00...re_caught.html

          Detail post covering everything. Posted March 2017 but its full of information gained well before that
          https://forums.contractoruk.com/ir35...bout-ir35.html

          Gov pages on it Feb 2017
          https://www.gov.uk/guidance/off-payr...es-legislation

          And so on.
          Why so long? There was no guidance on disputing SDS for months and even today im unclear what guidance there is where a blanket SDS occurs and is not provided in writing. Plus I had too much going on, but I think the main cognitive burden has been nursing sick parent with motor neurone disease through to the end and 3 house moves.
          Fair enough
          Did i kick up a fuss with the agency? Yes I did but there was a wall of silence and they insisted that they would only pay me personally net of NI etc. I instructed debt collectors in 2020 and the agency finally sent a copy email from Capita which provided a little information about the blanket IR35 decision.
          They insisted because that was the law
          So then I sent a Subject Access Request to the end client and has confirmed that it was a blanket assessment and that no SDS was undertaken / paperwork issued by the end client.
          There was a lot of noise at the time about blanket assessments and the general consensus outside of HMRC is they are illegal as it's not reasonable car. HMRC made millions from it and they believe if it's the same contract the assessment is sound. Only a judicial review in top courts is going to change that and you won't be doing that. Thousands of contractors got caught and many senior tax specialists piled in, as did IPSE and FCSA but it came to nothing. Times changed and very few will be doing them now. It just is what it is I am afraid and no one will be bothering about it for the sake of one months invoice.
          I would like to dispute the historic assessment given i have had to find out about it using Subject Access Request I'm not sure how to do so. Like you say it might not be worth the time and effort - which is why I came here to ask to see if anyone else had this experience... I don't give up easily, which is probably why clients like me...
          There is not giving up easily and there is flogging a dead horse. You'll have to take the full might of HMRC on and Capita will be on their side. It's you and your one months invoice vs the system. Good luck with that.

          Remember also, you are only claiming for the difference you got paid so it's what, 20% of the last invoice. Is it really worth it 5 years on. Sounds like you've had a pretty horrible time in that 5 years so just let this one go and focus on what is important in your life.
          'CUK forum personality of 2011 - Winner - Yes really!!!!

          Comment


            #6
            Originally posted by jamesbrown View Post
            As a point of order, I think you’re confusing the content/requirements of the 2017 and 2021 reforms. The 2021 reforms were similar, but not the same and did not merely extend the 2017 reforms to the private sector but, as I recall, introduced both the SDS and the reasonable care requirement associated with it.
            I do believe reasonable care was part of the Public Sector as well but as this was new the noise didn't start until after it had all been done. There was a lot of noise and I believe from what I read and saw on here most places stopped doing it.

            Here is an aticle for QDOS in 2018 discussing blanket bans and says
            The IR35 legislation states the need for public sector engagers to take ‘reasonable care’ when setting a contractor’s status. While ‘reasonable care’ is hard to define specifically, blanket IR35 decisions are neither reasonable nor caring, and therefore should be considered non-compliant.
            https://www.qdoscontractor.com/news/...determinations

            So it appears it was a factor at the time but the problem, as we well know, is HMRC made an absolute ton of money from this so they will fight tooth and nail for it and it was new so people didn't know. It evolved and we moved on so it's ancient history now.
            'CUK forum personality of 2011 - Winner - Yes really!!!!

            Comment


              #7
              I am talking about the SDS and reasonable care requirement connected to that, not about the reforms more generally. As I recall, that wasn’t formalised in the PS reforms, so it’s pointless talking about a timely SDS provided with reasonable care because the requirement didn’t exist.

              Comment


                #8
                This sounds like a perfect candidate for handing over to a debt collection agency - if they can get it sorted you'll get some money, if they don't, you won't be in a worse position than you are right now

                Comment


                  #9
                  Originally posted by pr1 View Post
                  This sounds like a perfect candidate for handing over to a debt collection agency - if they can get it sorted you'll get some money, if they don't, you won't be in a worse position than you are right now
                  It does? How?. The debt he's going after is the difference between what he'd get outside to what he'd get inside so only a percentage of the actual invoice. It's also going to be very complex to work that out as gross in to the company vs net in pocket is going to be so how much is he after?

                  And, more importantly, it's not really a debt. The agency have paid him as per the legislation so not technically a debt until he can overturn the SDS so no chance the debt collection people will take that on. This is a legislation fight, not debt collection.
                  'CUK forum personality of 2011 - Winner - Yes really!!!!

                  Comment


                    #10
                    Originally posted by northernladuk View Post

                    It does? How?. The debt he's going after is the difference between what he'd get outside to what he'd get inside so only a percentage of the actual invoice. It's also going to be very complex to work that out as gross in to the company vs net in pocket is going to be so how much is he after?

                    And, more importantly, it's not really a debt. The agency have paid him as per the legislation so not technically a debt until he can overturn the SDS so no chance the debt collection people will take that on. This is a legislation fight, not debt collection.
                    I just meant from the aspect of it was 5 years ago, mentally almost written off (presumably, otherwise why would you wait 5 years), so passing over to debt collection turns it into a no-win-no-fee low-stress way of potentially getting some money. I understood it that OP was rejecting the inside decision and chasing the full invoice (and had so far received £0)

                    But I've just seen:

                    Originally posted by Elansofar View Post
                    I instructed debt collectors in 2020
                    Glad to know you've been reading as carefully as I have NLUK :-)


                    Comment

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