IR35 review

[LisaContractorUmbrella]

What would be your view on a CoA from the bank then?


Is this a change that is being introduced? If so, do you know when will be applied from? Are there any links on it? It is unlikely my contract will receive another extension beyond July 2014, and I plan to seek out other client projects in the meanwhile anyway, preferably not PPI related.

Comes into force April 2014

[LisaContractorUmbrella]

It isn't, and that's not my intention, since HMRC could well ramp up its investigations and target them to include the sort of contract I am on, but I'm trying to get an appreciation of the figures involved here, and what they look for specifically for their targeted investigations.

Unless the cases end up in court - who knows. What they look for are people who are very obviously disguised employees who are trying to pretend that they are in business on their own account. They may target large financial institutions where many contractors have been taken on, for specifics tasks such as PPI claims, to work alongside permanent employees
HTH

[Zero Liability]

Agreed, the high profile nature of PPI at the moment probably will increase the risk of an investigation triggering should HMRC decide to review the banks' practices in hiring contractors; however, could not a COA letter signed by the bank mitigate this risk, especially since it is on the working practices element that the review came back as a fail?

[LisaContractorUmbrella]

Agreed, the high profile nature of PPI at the moment probably will increase the risk of an investigation triggering should HMRC decide to review the banks' practices in hiring contractors; however, could not a COA letter signed by the bank mitigate this risk, especially since it is on the working practices element that the review came back as a fail?

Again, you could but as we have all said - if what you have on a piece of paper is not an accurate reflection of what actually happens in practice it's worth squat

[Zero Liability]

I would have thought the COA would constitute a stronger piece of evidence, since it confirmed what rights you could exercise in practice during the contract, and clarified the nature of the arrangement between you and the end client. Are you envisioning something along the lines of HMRC taking the view that for PPI projects as a whole the working practices would never reflect what the contracts/COAs stipulated, and therefore insisting the working practices and documentation don't align?

With what you have said in mind, I will probably go down the route of submitting the accounts as inside IR-35 to reduce risk, and look to getting in touch with PCG re theirIR35 payback scheme.

Anyway, thanks for the advice and patience.

[LisaContractorUmbrella]

I would have thought the COA would constitute a stronger piece of evidence, since it confirmed what rights you could exercise in practice during the contract, and clarified the nature of the arrangement between you and the end client. Are you envisioning something along the lines of HMRC taking the view that for PPI projects as a whole the working practices would never reflect what the contracts/COAs stipulated, and therefore insisting the working practices and documentation don't align?

With what you have said in mind, I will probably go down the route of submitting the accounts as inside IR-35 to reduce risk, and look to getting in touch with PCG re theirIR35 payback scheme.

Anyway, thanks for the advice and patience.

Yes, exactly - if you are working alongside permies, doing the same job, in the same way, for the same number of hours, in the same place, it doesn't matter what you have in writing - you are still a disguised employee

[jamesbrown]

I would have thought the COA would constitute a stronger piece of evidence, since it confirmed what rights you could exercise in practice during the contract, and clarified the nature of the arrangement between you and the end client. Are you envisioning something along the lines of HMRC taking the view that for PPI projects as a whole the working practices would never reflect what the contracts/COAs stipulated, and therefore insisting the working practices and documentation don't align?

With what you have said in mind, I will probably go down the route of submitting the accounts as inside IR-35 to reduce risk, and look to getting in touch with PCG re theirIR35 payback scheme.

Anyway, thanks for the advice and patience.

A CoA isn't legally binding, it's just an attempt to clarify working practices, beyond the contract, and is generally supportive if signed by someone at the client that is actually familiar with your working practices (i.e. not an HR person). In practice, HMRC will look at the facts, compare the upper and lower contracts, and may talk to someone at the client that did not sign your CoA. If you're not convinced that you're operating as a legitimate business outside of IR35, don't try to convince yourself on technicalities like having a CoA in place (statistically speaking, the chances of investigation and loss may be low, but the price will be high). No one really knows how cases are flagged for investigation - it isn't exactly public info., for obvious reasons.

[gingerjedi]

Yes, exactly - if you are working alongside permies, doing the same job, in the same way, for the same number of hours, in the same place, it doesn't matter what you have in writing - you are still a disguised employee

Even if you're told to take time off unpaid because they want to save money when it's quiet?

[northernladuk]

Even if you're told to take time off unpaid because they want to save money when it's quiet?

Unfortunately it is highly unlikely that a temporary setup such as this will have managers that are astute enough as to how contractors work to actually enforce this. They will be used to working with temps and will treat the contractor as such I would guess.

[LisaContractorUmbrella]

Even if you're told to take time off unpaid because they want to save money when it's quiet?

That may have a bearing but how would you base status on that at the start of the contract without knowing whether it would be likely to happen - even so I am still not sure that this one point alone would put you outside IR35