Does The Ir35 Proof Scheme Really Exist

[Mindomoo]

hmmm

Once again, MOO has nothing to do with you agreeing, or otherwise, to do stuff outside of the contract (or beyond it). It is all about being obliged to do the stuff that is in the contract.

tim

Which is one of the most ridiculous aspects of the whole thing. If to have no MOO you are not obliged to do what is in the contract, what is the point of a contract at all.

If I sign a conract with someone, I expect them to be legally bound to deliver what they sign up for, regardless of whether they feel like it half way through.

[malvolio]

Which is why I tend to diagree with Tim's interpretation, which is (IMHO) backwards - if I do work I'm contracted for, I expect to be paid. If I do work I am not contracted for, I don't. And, from the client's side, the same basic premise will apply.

Only if they have to pay me for not doing anything because they have nothing for me to do and I have to do something if there is work for me to do, is there the requisite level of mutuality.

None of this has been properly tested in court yet, hence all the FUD.

[tim123]

Which is one of the most ridiculous aspects of the whole thing. If to have no MOO you are not obliged to do what is in the contract, what is the point of a contract at all.

If I sign a conract with someone, I expect them to be legally bound to deliver what they sign up for, regardless of whether they feel like it half way through.

That's the whole point that I am making about it being a holy grail.

Sometime back in history there was a ruleing that somebody doing a job that really could be dropped like a hot potato, had no MOO and therefore wasn't an employee. This particular case was about employment rights.

So, the IR35 team turned this around and said, "if we can show no MOO in our contracts we pass the IR35 test". They've been looking for the magic bullet of showing no MOO ever since. What is it? 7 years now, and they still haven't found it.

But this is because the type of job that has no MOO (working piece rate in a factory, for example) isn't anywhere near close to the kind of deal that the average 300 quid per day contractors or their users want. Yeh sure, you can construct a deal that has no MOO, but IMHO 95% of cons aren't going to agree to it and 99.9% of clients aren't either.

You have a dead duck here.

tim

[tim123]

[QUOTE=malvolio]Which is why I tend to diagree with Tim's interpretation, which is (IMHO) backwards - if I do work I'm contracted for, I expect to be paid. If I do work I am not contracted for, I don't. And, from the client's side, the same basic premise will apply.
QUOTE]

It's not my interpretation. It's the one of most legal experts.
Read around on the subject and see what you can find.

start here

http://www.john.antell.name/article004.htm

tim

[malvolio]

I have done a little research, strangely, including having read that particular piece in the past. Where does it contradict what I said? It caveats it, it interprets it and it argues that, in different contexts the term itself is open to interpretation but it does not contradict it. In fact. most of the debate is about absence of mutuality, not presence.

The problem is, as you have demonstrated, that the whole thing about MOO has got so complex and self-referential that it will need a court case that hinges only on the interpretation to resolve the question. In reality, where most of us live, it's probably not even worth considering, contractually, and people should really concentrate on Substitution and D&C - plus, of course, the usual care about the actual working arrangements.

[boredsenseless]

There is only one true way to be 100% certain that you are IR35 proof.

You engage with a client (agency, direct whatever) and agree on a scope of work.

You fix a price for this work and agree to do it until it is complete. If you do it quicker than you want you win... if you do it on-time hopefully you've factored some contingency into the quote and you still win. If you are late then you lose money and the customer wins.

The only cast iron way to be outside IR35 is to be contracted to provide a piece of work that you can resource however you want and that crucially you can make a 'real' loss on the project. Thats a true B2B contract and no-one can argue that you are an employee in these occasions since no employee would offer to take on a project and suggest that if it takes them longer than they planned the company could withhold salary.

Every other solution has risks but if the above isn't an option then the best answer is to discover how much you would be paid for your skillset in a permie role (get documentary proof) and pay yourself that as a salary. You can't very well claim to be a 'business' if you pay your employees 10 times less than market value.

[malvolio]

discover how much you would be paid for your skillset in a permie role (get documentary proof) and pay yourself that as a salary. You can't very well claim to be a 'business' if you pay your employees 10 times less than market value.

Hmmm... Appreciate the point but not the logic. If I paid myself the actual market salary for my role, there wouldn't be much left for the company. The trick is to pay yourself enough to live on (£20k to £30k for most people I would guess) and take divis out of profit when it's there. It's people taking monthly (or even weekly) divis that are most at risk of an investigation.

This is sort of what the appeal judge said in the Arctic case (admittedly that was about S660 not IR35 but the same principle was under examination)- the artificially low salary and split divis made it difficult to argue that this was not a tax avoidance arrangement rather than a business one.

The only slight snag is, it's perfectly legal to work it that way... which is why my peers get really umpty when I suggest paying yourself a roughly market salary should be the recommended way to work

[Bookworm]

Oh so simple..not

The way forward now so clear, in that there is no way forward. It appears that there would have to be a lot of change involved to get a consistent and water tight way of using the contract and the various guises.

Is this the only way forward, or is there other IR35 proof ways of operating. Still doing my check list and need to exhaust all avenues.

I now have to admit that with even more research and the comments being made here at CUK that I need infuse even more information before I can bow out of this discussion gracefully...

ANY IDEAS WELCOME

[malvolio]

Actually, it can be very simple. Ignore all the legalities and fine disucssion and billshut and it comes down to two realistic options:

1) Decide that you are caught by IR35, because your job and the contract terms clearly fail one or more of the various criteria above. Take off 5% plus travel expenses and pay the rest as salary.

2) Decide you are not caught, by the same criteria. Pay yourself a sensible wage, take dividends when you can afford it - not too often and not too regularly - keep all your paperwork in order and all returns in on time. That way you behave like a business - as defined by Dawn Primarola - and are not "cheating" Dim Prawn out of large amounts of money. So you probably won't get investigated, when there's all the other juicy targets to pick from. And even if you do the shortfall won't be that onerous becuase you will have paid the right amount of tax anyway and only saved some NICs.

So if you think about it a bit more, there is a fair chance you can work safely outside IR35. Especially if you get professional advice on the contract from someone like Bauer and Cotterell, who will argue necessary changes with the agent for you.

At the end of the day, it's your decision.

[rootsnall]

The last post is a good summary and you won't find a clear and simple way of ensuring you are outside IR35 when working in a normal contractor/agent/client relationship. You've either got to live with the risk of declaring yourself outside IR35 or play it safe and pay the full NICs on your earnings. Have a look at the PCG website ( http://www.pcg.org.uk/ ) and if you believe the stats your risk is pretty low as things stand.