HMRC Investigation Protection

[LisaContractorUmbrella]

Although arguably the end result is the same...

No it isn't You can know everything there ever was to know about IR35 but what if you are working on an IT helpdesk for £17, doing exactly the same job as 20 other people???? To tell people to just forget about IR35 is really irresponsible. I have read the minutes from the IR35 Consultation Forum and you know as well as I do that HMR&C won't let it go - they are just trying to find ways to get more efficient at catching people out

[prozak]

No it isn't You can know everything there ever was to know about IR35 but what if you are working on an IT helpdesk for £17, doing exactly the same job as 20 other people???? To tell people to just forget about IR35 is really irresponsible. I have read the minutes from the IR35 Consultation Forum and you know as well as I do that HMR&C won't let it go - they are just trying to find ways to get more efficient at catching people out

Then god help you. Cos someone has duped you into being a contractor and is skinning you alive.

[malvolio]

No it isn't You can know everything there ever was to know about IR35 but what if you are working on an IT helpdesk for £17, doing exactly the same job as 20 other people???? To tell people to just forget about IR35 is really irresponsible. I have read the minutes from the IR35 Consultation Forum and you know as well as I do that HMR&C won't let it go - they are just trying to find ways to get more efficient at catching people out

Yes, but they are also looking to get more focussed on who they pick on. Jobbing contractors are no longer the prime target. And you can do helpdesk work and still be outside IR35 if you can genuinely satisfy any one the big three tests.

And my point is the more you know about how and why IR35 works and what puts you inside or outside, the better equipped you are to avoid it. That has to be preferable to assuming you are caught and paying out taxes you don't actually owe. Being a PCG members doesn't mean you can automatically ignore IR35, but you will sure as hell have access to all the information and advice you need, not only on IR35 but on all the aspects of being a freelance contractor. And if it goes wrong, you've got enormous support on your side.

[LisaContractorUmbrella]

Yes, but they are also looking to get more focussed on who they pick on. Jobbing contractors are no longer the prime target. And you can do helpdesk work and still be outside IR35 if you can genuinely satisfy any one the big three tests.

And my point is the more you know about how and why IR35 works and what puts you inside or outside, the better equipped you are to avoid it. That has to be preferable to assuming you are caught and paying out taxes you don't actually owe. Being a PCG members doesn't mean you can automatically ignore IR35, but you will sure as hell have access to all the information and advice you need, not only on IR35 but on all the aspects of being a freelance contractor. And if it goes wrong, you've got enormous support on your side.

How do you work that one out Mal? If there is someone working on a helpdesk doing the same job as 20 permies under the same conditions how on earth can they possibly be considered outside IR35?

[malvolio]

How do you work that one out Mal? If there is someone working on a helpdesk doing the same job as 20 permies under the same conditions how on earth can they possibly be considered outside IR35?

Because of Mutuality, D&C and RoS. You only need one to exist in reality and contractually.

If the contractor is to be sent home without pay when the service is down but the permies go down the pub on full pay, or if the contractor is terminated immediately the workload drops off while the permies keep their jobs, there is the required minimum level of MOO.

D&C does not apply where the "rule" being controlled applies to everyone, permie or contractor, and is necessary to the performance of the work. Otherwise would I be inside IR35 because I have to use a secure network to connect to the client's systems, not my own network? I don't think so...

And a reasonable right to substitute an equally competent replacement, even if never used, is not something a permie can claim.

The sensible route is always to assume you are outside and look for reasons why you might be inside, not the other way round.

[LisaContractorUmbrella]

Because of Mutuality, D&C and RoS. You only need one to exist in reality and contractually.

If the contractor is to be sent home without pay when the service is down but the permies go down the pub on full pay, or if the contractor is terminated immediately the workload drops off while the permies keep their jobs, there is the required minimum level of MOO.

D&C does not apply where the "rule" being controlled applies to everyone, permie or contractor, and is necessary to the performance of the work. Otherwise would I be inside IR35 because I have to use a secure network to connect to the client's systems, not my own network? I don't think so...

And a reasonable right to substitute an equally competent replacement, even if never used, is not something a permie can claim.

The sensible route is always to assume you are outside and look for reasons why you might be inside, not the other way round.

From HMR&C themselves who, like it or not, made up IR35:


In order to determine the nature of a contract, it is necessary to apply common law principles. The courts have, over the years, laid down some factors and tests that are relevant, which is included in the overview below.

As a general guide as to whether a worker is an employee or self-employed; if the answer is 'Yes' to all of the following questions, then the worker is probably an employee:

Do they have to do the work themselves? With your helpdesk worker - there is no way any agency would allow a non-fettered ROS whatever they may write in the contract
Can someone tell them at any time what to do, where to carry out the work or when and how to do it? Yes obviously
Can they work a set amount of hours? The hours worked would be stipulated by the client
Can someone move them from task to task? Again no question
Are they paid by the hour, week, or month? Yes, a helpdesk worker will not get a project rate
Can they get overtime pay or bonus payment? Usually yes
If the answer is 'Yes' to all of the following questions, it will usually mean that the worker is self-employed:

Can they hire someone to do the work or engage helpers at their own expense? A helpdesk worker would not and realistically could not do this
Do they risk their own money? No -they are paid for the hours worked
Do they provide the main items of equipment they need to do their job, not just the small tools that many employees provide for themselves? No they work on a helpdesk
Do they agree to do a job for a fixed price regardless of how long the job may take? No they'll be paid an hourly or daily rate
Can they decide what work to do, how and when to do the work and where to provide the services? No way
Do they regularly work for a number of different people? Nope
Do they have to correct unsatisfactory work in their own time and at their own expense? No

[malvolio]

OK, I disagree on several points there, but I'm not going to drag this out unnecessarily. For instance,. I'm paid by the day for the provision of ongoing services and most of your "Control" points also apply to the permies and can be ignored.

IR35 is not clearly defined and every case can be challenged. People are paying around £250m tax a year that probably is not owed. That is the reality.

[LisaContractorUmbrella]

OK, I disagree on several points there, but I'm not going to drag this out unnecessarily. For instance,. I'm paid by the day for the provision of ongoing services and most of your "Control" points also apply to the permies and can be ignored.

IR35 is not clearly defined and every case can be challenged. People are paying around £250m tax a year that probably is not owed. That is the reality.

It's not a case of dragging it out, it's about newbies understanding IR35 and making an informed decision - your position on the subject seems to be similar to that of an Emu

So which points do you disagree on and why?

[malvolio]

It's not a case of dragging it out, it's about newbies understanding IR35 and making an informed decision - your position on the subject seems to be similar to that of an Emu

So which points do you disagree on and why?

Firstly my opinion hasn't changed for eleven years. IR35 is a dangerous, expensive nonsense so you need to be very clear on why you think it applies. Also I'm not going by HMRC's ideas on what IR35 caught represents, I'll stick with case law precedent.

In which case:

With your helpdesk worker - there is no way any agency would allow a non-fettered ROS whatever they may write in the contract
It doesn't need to be unfettered, it only needs to be reasonable. It is unreasonable for the client to be expected to accept a sub that can't immediately sit at the desk and do the job. That doesn't take away the right for a sub to be offered.

The hours worked would be stipulated by the client
But so would every one else's on the desk. No point having the desk there when the users aren't. So irrelevant as a pointer to control

Yes, a helpdesk worker will not get a project rate
But then nor do I...

No -they are paid for the hours worked
While they are working. They are at permanent risk of their money stopping immediately, or of not being paid by the client, the agency or even the umbrella and do not have the same protection as the permies in case of default.

Do they agree to do a job for a fixed price regardless of how long the job may take? No they'll be paid an hourly or daily rate
And...? Case law is clear that how and when you are paid is irrelevant.

Do they provide the main items of equipment they need to do their job, not just the small tools that many employees provide for themselves? No they work on a helpdesk
Nor do I. I have considerably better kit than what the client has given me to use, but it's not their build and cannot be connected to their network. And again, not an IR35 pointer.

Do they regularly work for a number of different people? Nope
Again, not a legal IR35 pointer.

Do they regularly work for a number of different people? Nope
Not concurrentlyperhaps, but they may well have differnt clients over time, It's also not an IR35 pointer, merely a moderate "in business" one.
.
HTH

[LisaContractorUmbrella]

With your helpdesk worker - there is no way any agency would allow a non-fettered ROS whatever they may write in the contract
It doesn't need to be unfettered, it only needs to be reasonable. It is unreasonable for the client to be expected to accept a sub that can't immediately sit at the desk and do the job. That doesn't take away the right for a sub to be offered. OK even if we assume that the ROS needs to be reasonable - how many agencies would allow the substitution in reality, how many clients would allow it and how many contractors would actually be able to provide a substitute?

The hours worked would be stipulated by the client
But so would every one else's on the desk. No point having the desk there when the users aren't. So irrelevant as a pointer to control But HMR&C DO consider it to be a point of control; it is irrelevant what everyone else is doing - the pointer is towards direction and control

Yes, a helpdesk worker will not get a project rate
But then nor do I...

No -they are paid for the hours worked
While they are working. They are at permanent risk of their money stopping immediately, or of not being paid by the client, the agency or even the umbrella and do not have the same protection as the permies in case of default. I really don't think this would count

Do they agree to do a job for a fixed price regardless of how long the job may take? No they'll be paid an hourly or daily rate
And...? Case law is clear that how and when you are paid is irrelevant.

Do they provide the main items of equipment they need to do their job, not just the small tools that many employees provide for themselves? No they work on a helpdesk
Nor do I. I have considerably better kit than what the client has given me to use, but it's not their build and cannot be connected to their network. And again, not an IR35 pointer. Again - HMR&C consider it to be an indicator

Do they regularly work for a number o f different people? Nope
Again, not a legal IR35 pointer. See above

Do they regularly work for a number of different people? Nope
Not concurrentlyperhaps, but they may well have differnt clients over time, It's also not an IR35 pointer, merely a moderate "in business" one See above