IR35 defeat costs IT contractor £99,000

[thunderlizard]

There is lots of craziness in that judgement (e.g. how he pieces together the notice period in the hypothetical employment towards the end) and I'm not sure he even finishes his argument on the 'control' section. Plus lots of swashbuckling through the case law without going into why the cases differ. It'll be interesting to see what the PCG says about it, if anything.

[VectraMan]

In this ruling, Mr Hellier cited the upper contract, the agreement between the AA and DGG International Ltd, Mr Bessel’s recruitment agency, as evidence of employee-style control.

Seemingly a surprise to Mr Bessell, the contract states DGG would “provide a consultant to perform certain services for the client [AA] under the client’s [AA’s] direction.”

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.

The one that should hold the most weight as far as matters concerning the contractor, is the contractor's contract. If the two contradict each other, and that caused a conflict during normal working (say the client tried to exert control and the contractor refused), then it's the agent that's in breach of contract. So the contractor's working arangements can only be dictated by his contract.

They're looking at both contracts, and the actual working arrangements, and picking and choosing the bits that they can best use against you.

Preaching to the converted I know.

Who are these commisioners? Presumably they're impartial, or at least meant to be.

[beaker]

The whole thing is designed to make us unattractive to the end client. So you either work as you would normally, trying to get renewals and repeat work but get taxed via IR35 or you act like an @rse and get to keep a bigger percentage of fecc all. I think I see the governments thinking. WHat I can't understand is why nobody is jumping up and down about this. Yes the guy had pointers which looked similar to employment, but those which would obviously not point to employment were completely ignored.

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!!??

[pisces]

No, absolutely not. IR35 is a personal tax, not a corporate one, it's merely paid by the company on your behalf. The whole point is that the company is a fiction, isn't it.

Only I know someone personally who was taken to court over this and it was thrown out because the company was closed and was no longer trading.

Probably like IR35 it can be one of those things that can vary case to case based on whatever they decide to argue at the time

[pisces]

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

[Ardesco]

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

Good question, one of the guys that lost represented himself (bad move IMHO, get a professional in to do the job for you, it doesn't matter how innocent you are, you are asking for trouble going up against a professional who knows exactly how to make you look like a criminal...). No idea about the second one.

Does anybody know?

This could just highlight the need for professional representation if all the cases that have been lost have been people defending themselves.

[ASB]

They're looking at both contracts, and the actual working arrangements, and picking and choosing the bits that they can best use against you.

I'm not sure that's quite the case. What they seem to be doing is simply saying "where there is any difference then what it says in the upper contract goes in the implied contract". There is some logic to this - he who pays the piper etc.

Take substitution. The upper contract says "ASB will do ...". The lower contract says "ASBco will provide ...., ASBco can substitute". These are not incompatible until such point as ASBco tries to send a sub. Most business takes this risk. They do not trade on the same terms with suppliers and clients. If it then goes wrong they negotitate.

How often will small co actually try and sue their agency when they send a sub and the client says "no"? Close to none I imagine. As a general principle BigClient says "jump" and small supplier company simply says "how high and when".

This is probably why the commissioners tend to place more weight on the agency - client contract.

[malvolio]

I'm not sure that's quite the case. What they seem to be doing is simply saying "where there is any difference then what it says in the upper contract goes in the implied contract". There is some logic to this - he who pays the piper etc.

Take substitution. The upper contract says "ASB will do ...". The lower contract says "ASBco will provide ...., ASBco can substitute". These are not incompatible until such point as ASBco tries to send a sub. Most business takes this risk. They do not trade on the same terms with suppliers and clients. If it then goes wrong they negotitate.

How often will small co actually try and sue their agency when they send a sub and the client says "no"? Close to none I imagine. As a general principle BigClient says "jump" and small supplier company simply says "how high and when".

This is probably why the commissioners tend to place more weight on the agency - client contract.

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.

The core issue with IR35 is that it starts from the assumption that the contractor's company does not and should not exist. Sadly it does, and should not be disregarded. It's also why it is fruitless to try and join IR35 defences with employement rights defeences. IR35 invents an employment scenario merely to prove that such a relationship exists (I think they call that a syllogism?) so you can pay more tax, there is no intention to say you are actually an employee as a result.

[Chugnut]

I still find it amazing that an individual can be found to be in breach of a contract they have no access to. Time for the European court of human rights?

The agency is the only party with access to both contracts. For them to sign a contract with terms that they know are negated by the other one is surely deception. How come HMRC are not looking at the "working practices" of the bloody agencies?

It seems the line you HAVE to take is to ask your agency to view the upper level contract. If they say "no, none of your business", ask them to sign a statement claiming that the terms in your contract cannot invalidated by the terms in the upper level contract. If they say "no, not doing that, chum", you either walk or declare yourself inside IR35.

An unwanted side effect of all this is that you will potentially end up with a yo-yo salary, as contracts either fall inside or outside IR35. A few self assessments later and Hector is likely to come sniffing for that reason alone. How can you or your company perform any sort of long-term financial planning?

[Weltchy]

Bugger it.

I'm having something written into my contract that says something along the lines of 'If the upper contract and the lower contract don't match, and they're responsible for myself being caught inside IR35, the agency is going to get their arsed sued to tulip!!!!!'