IR35 defeat costs IT contractor £99,000

[tim123]

I read this as him being the same as every other contractor I've ever known; expected to come in for X hours per week, and no chance you won't be paid your standard weekly hours because of a temporary shortage of work.

Not where I've ever worked. I come in and get paid for the hours that I do some client work. If there isn't work to do, I go home and don't get paid. That's what having no MOO is all about (though on its own it's not enough to get out of IR35 IMHO).

OTOH if there isn't enough work, and I'm not prepared to go home the manager will find me something to do. And there we have instant D&C and inside IR35 I am.

You can't have it both ways. ISTM that whichever way you cut it, comeing in, sitting at a desk and getting paid for either: "doing nothing at all", or "whatever job just happens to be available", puts you fair and square inside IR35.

tim

[tim123]

This is what I don't get. We hear that with ROS if the two contracts contradict themselves it's a sham and there's no ROS, but above we see that with control if the two contracts contradict themselves there is control.

That's because in both cases the confusion is resolved in favour of the client.

There's nothing at all strange in resolving it this way. The client is the one paying the money, it is absolutely normal to resolve ambiguties in favour of the person paying the bill. Asking for any other resolution is, in business terms, unreasonable IMHO.

tim

[tim123]

Time to fight back people! What do other businesses do when their costs go up (in this case having to pay all income as salary)? Pass them onto the client.

So, I propose everyone up their rate by at least 30% this year to cover the loss of income to comply with the absurd legislation. I'm upping mine by 60% beacuse I feel like it. Who's with me!!??

If you can do that, I'm happy for you.

For what I do, I'm still struggling to put my rate back up to the level that it was before IR35 was invented, after the effects of the 2000-3 downturn. (I.e clients are still offering rates that were, very ocasionally, offered in 2003, the only difference being that there are actually some jobs now).

tim

[ASB]

Disagree totally with the logic, although it is what seems to be happening. Both companies are legal entities subject to the same laws. You can't simply disregard one's contractual rights because it is smaller than its client.

I agree entirely. The point of a contract is for when things go wrong. Just because rights have not been exercised does not mean they are not there. Unfortunately the view seems to be inverse to that. i.e. it didn't happen therefore you don't have the right. I find this bizarre.

[Ruprect]

Anyone know if this is going to be taken further? High court, House of Lords etc?

[VectraMan]

Not where I've ever worked. I come in and get paid for the hours that I do some client work. If there isn't work to do, I go home and don't get paid. That's what having no MOO is all about (though on its own it's not enough to get out of IR35 IMHO).

This all assumes lots of short term tasks, but as a developer I've never been in a situation of not having work to do. I usually have months of work ahead of me, so therefore do full time hours each week as that delivers a reasonable amount of progress.

No doubt that could be used against me as evidence of MOO.

[malvolio]

Anyone know if this is going to be taken further? High court, House of Lords etc?

I don't know, but certainly PCG would consider supporting a sensible legal challenge if it would bring better clarity or prevent injustices. Snag is we need to find a suitable case and, more importantly, someone who lost the case who has the willingness to prolong what has already been a long and difficult period. There aren't that many Geoff & Diana Joneses out there.

[BoredBloke]

I'm not a pcg member but I suspect that I will be very very soon. What are they saying over there on this?

[tim123]

Did this guy have legal representation? Perhaps he could have won if he had a good brief.

Accountax

I think that he was badly advised (see below).

Having seen some more info on his position (and I haven't yet read it all, so I may have missed something that changes my view), I think the judge got it right:

For the prosecution:

1) The "you get paid for 40 hours whether there is any work to do or not" rule clearly, IMHO, creates MOO. Now, having MOO doesn't, of itself, mean that you have a contract of employment, but it does deny you the defence of "I don't have MOO therefore I can't have a contract of employment!".

2) There seems to be a high level of D&C. You come in and you do whatever task we give you to do today.

The defence appeared to be:

1) He had an RoS and didn't actually have to do the work himself, he could have sent in a replacement to do it.

2) He was "in business" because he paid some costs and had another client.

(1) was blown out of the water when it was revealed that the head contract did not mirror this right, and the client said that they would not accept a sub. Now, you can be as rude as you like about the agency and possibly even the client, for letting the consultant think that he had RoS when he didn't, but you can't blame the judge for ruling that there was no RoS, because clearly, in fact, there wasn't.

The article says that this fact was "Seemingly a surprise to Mr Bessell" and this is where he should have been better advised. If the prime factor in your defence is the RoS, you really should make the enquiries to see that it is real, before getting this far. I'm made some more comments on this issue below.

Which leaves (2). I, for one, don't think that this is ever going to be enough to counter the level of D&C above and it is no surprise to me that the judge ruled that it wasn't.

I know that there are people who think that it should, but I don't think that anyone has ever won a case based simply upon "being in business" where there was such a high level of D&C, perhaps I am wrong.

tim

[tim123]

Disagree totally with the logic, although it is what seems to be happening. Both companies are legal entities subject to the same laws. You can't simply disregard one's contractual rights because it is smaller than its client.

.

You are not considering the fact that the contacts are via an Intermediately.

The RoS rights are only enforcable between the consultant and that Intermediately.

So yes, you can simply disregard that right when assesing the contract with the client, but it has nothing to do with the size of the companies.

If this gives the contractor a problem, his only remedy is to sue the Intermediately, imposing the clause on the client (if he won't accept it) is not a legally available solution.

tim