IR35 Buddy - worth a closer look, maybe

[LisaContractorUmbrella]

There seems to be a general misunderstanding of what IR35Buddy is all about, and what it can do.

The site is for people who already consider themselves to be outside of IR35 and to allow them to prove this.

So many people seem to think that the BETs have no standing at all, when in reality it’s the Revenue’s assessment template, which they use as a starting point. We all know that BETs are referred to in enquiries, and they form part of the ‘assurance’ that Public Sector contractors have to provide. Everybody is also aware that HMRC have said if you can prove your ‘low risk’ score they will close the enquiry down. IR35Buddy helps you do exactly that.

What you will find on the site are solutions to challenges that are faced by legitimate businesses, every day – no matter how long they’ve been contracting for.

Why would joining a network of similar businesses who can subcontract with one another be a ‘contrived’ solution? Why would making use of national workspaces, that in themselves have only sprung up in reaction to the changing nature of a workforce that is now mobile, be artificial?

Regarding the Passport you simply can’t get one unless your contract and working practices have been fully reviewed and approved.

The site is also intended to help you source the best service providers and help you stay in contract.

So – on the premise that users are all genuinely in business, we offer genuine business solutions.

How on earth will 'buddies' help contractors 'prove' that they are outside IR35??? If they have a fettered right of substitution which will only allow a sub if the agency or end-client have pre-approved them having a 'buddy' who may or may not be a suitable replacement and may or may not be available to work will be of no use whatsoever. Having business premises is not the same thing as getting a £10 pm credit towards booking out a conference room at someone else's premises - all they would be doing is hiring a room for meetings away from their business premises which would have little or no bearing on IR35. As for the advertising 'buddy' - it's ridiculous to think that sitting at home updating your linkedin profile or a buddy profile could in any conceivable way comparable to paying for advertising.

[LisaContractorUmbrella]

I'm saying that the buddies give you the evidence to back up the ticks. BETs are yes/no answers, I don't think they give HMRC the scope to say "well, yes you met the criteria, but we don't like how you've done it".

Per QDOS, HMRC have been involved with the creation of the site, so presumably have seen what the buddies are about and not had any major objections. I don't think QDOS would put their name to it otherwise.

The 'buddies' give you nothing of the sort - how is spending an hour a week updating an online profile that same as £1200 per year expenditure on advertising for example?

[TheFaQQer]

Per QDOS, HMRC have been involved with the creation of the site, so presumably have seen what the buddies are about and not had any major objections. I don't think QDOS would put their name to it otherwise.

Gosh, HMRC don't have any issue with a website which can lure people into thinking they are safe, when in reality they are a bigger target by signing up.

Call me convinced.

[northernladuk]

I'm saying that the buddies give you the evidence to back up the ticks. BETs are yes/no answers, I don't think they give HMRC the scope to say "well, yes you met the criteria, but we don't like how you've done it".

Per QDOS, HMRC have been involved with the creation of the site, so presumably have seen what the buddies are about and not had any major objections. I don't think QDOS would put their name to it otherwise.

I think QDOS are being a bit clever here. The types of contractor that will get pulled in by this are the ones looking for a lazy way out with minimum effort so unlikely to have PI/PL and IR35 insurance. Putting their name to it they have new customers lining up like lambs to the slaughter

[DaveB]

The 'buddies' give you nothing of the sort - how is spending an hour a week updating an online profile that same as £1200 per year expenditure on advertising for example?

Especially since HMRC's own guidance lists copies of the advert and invoices as appropriate evidence.

If I was HMRC looking at a submission that claimed to have "spent" £1200 updating an online profile I'd expect to see evidence that that time could have been spent generating income at least equal to that amount. If you did it on your own time you weren't getting paid for it anyway, if you did in in billable hours you should be able to show invoices minus the time spent resulting in a cost to your business.

It just doesn't fly IMO.

[jamesbrown]

There seems to be a general misunderstanding of what IR35Buddy is all about, and what it can do.

The site is for people who already consider themselves to be outside of IR35 and to allow them to prove this.

So many people seem to think that the BETs have no standing at all, when in reality it’s the Revenue’s assessment template, which they use as a starting point. We all know that BETs are referred to in enquiries, and they form part of the ‘assurance’ that Public Sector contractors have to provide. Everybody is also aware that HMRC have said if you can prove your ‘low risk’ score they will close the enquiry down. IR35Buddy helps you do exactly that.

What you will find on the site are solutions to challenges that are faced by legitimate businesses, every day – no matter how long they’ve been contracting for.

Why would joining a network of similar businesses who can subcontract with one another be a ‘contrived’ solution? Why would making use of national workspaces, that in themselves have only sprung up in reaction to the changing nature of a workforce that is now mobile, be artificial?

Regarding the Passport you simply can’t get one unless your contract and working practices have been fully reviewed and approved.

The site is also intended to help you source the best service providers and help you stay in contract.

So – on the premise that users are all genuinely in business, we offer genuine business solutions.

Actually, I think there's quite a good understanding of what you're proposing. At the very best, you're helping people collate information that is largely incidental to the case law and, at worst, you're going to confuse the unwary about what the key factors are. Aside from the profit element, the animosity here perhaps stems from the similarity between what you're doing and what HMRC try to do in terms of muddying the water. You have the tail wagging the dog with your approach. If I need to substitute or subcontract, I'll do so in accordance with my contracts, not as some artificial mechanism to try and circumvent IR35. The same applies to advertising and business premises. These are business decisions. If you're simply offering a portal to connect contractors to resources, why is it called "IR35Buddy" and why are you trying to push a useless "passport" that simply re-states the facts that any diligent contractor will know to be true through their own contract review process. Why do we need you to manage the contract review process and place your stamp it?

[LisaContractorUmbrella]

The problem with all of this approach to IR35 is that a contract can be written to be outside IR35. One assumes that this contract will contain no MOO, no mention of supervision, direction and control and an unfettered ROS and will be used as a template? One also assumes that the 'buddy' system will be used as evidence to support the contents of the contract? But what if the contents of the contract don't reflect the working practices of the individual and the 'buddies' don't provide anything other than a smoke screen?

This is a comment from Diplock LJ in the case of Snook v London & West Riding Investments which was quoted in the Autoclenz v Belcher and others case:

""I apprehend that, if it [ie the concept of sham] has any meaning in law, it means acts done or documents executed by the parties to the 'sham' which are intended by them to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations (if any) which the parties intend to create. But one thing, I think, is clear in legal principle, morality and the authorities … that for acts or documents to be a 'sham', with whatever legal consequences follow from this, all the parties thereto must have a common intention that the acts or documents are not to create the legal rights and obligations which they give the appearance of creating."

[Maslins]

Gosh, HMRC don't have any issue with a website which can lure people into thinking they are safe, when in reality they are a bigger target by signing up.

Call me convinced.

Are you also a bigger target if:
You join the PCG?
You have your contract reviewed by an IR35 specialist?
You get a right of substitution clause put in your contract?

All the above are things people do with the primary purpose of gaining comfort they're outside IR35. If IR35 didn't exist, no contractor would bother with any of the above (with the possible exception of the last one, but only for a tiny minority). They're all artificial reactions to tax law. I don't see why this is any different.

[mudskipper]

Surely if you are outside IR35, you will be able to prove this by letting HMRC examine your contract and working practices?

Ready Mixed Concrete established that Personal Service, Control and MOO are the components of an employment contract and if one is absent then it is self-employment. Having and office or an advert isn't going to affect any of these factors - they will simply help you score points on the Business Entity Tests which are meaningless in the determination of IR35...

Craig

This isn't meant to provoke an argument, I'm genuinely curious as to the rationale behind the advice you give - but are you not just perpetuating the general misunderstanding about what really matters for IR35, legally, when you're implying that the Business Entity Tests are an indicative factor for employment status?

It seems unlikely that HMRC would just drop an IR35 case just because somebody was low risk..if they looked at a contract and found that it was essentially an employment contract and thus caught by IR35, I don't think that they would just drop it because the company scored highly on the BETs.

I would also suggest that if somebody entered into a 'buddy' arrangment in order to advertise their business or give them office space when there is absolutely no need for it commercially then HMRC would be able to see straight through it.

Craig

Indeed, and that's partly my concern. HMRC may be able to see certain details on CH and via tax returns etc, but that's different to having a list of people who are all so worried about IR35 that they've joined a network in order to contrive a pass on the BET. That's waving a red flag surely?

I'd go with a decent contract review combined with IR35 insurance and PCG membership personally.

You both seem sceptical about the benefits of this, but the site is promoting both NW and InTouch as Ltd Services buddies - how does that work then?

[Clare@InTouch]

No idea! Personally I can't say, hand on heart, that I agree with every single thing on every single website that we advertise on. Mainly because I have little say in the places we advertise as I have better things to do - like post here or answer emails from clients!

This is me posting as me, for good and bad, not a PR department posting as InTouch. As such it's possible that from time to time I get feisty and say what I think, rather than the stock answer of what I SHOULD say

I'm interested enough to find out though, so I'll check it out tmrw.