IR35 - Reviewed by 2 accountants

[Dark Black]

To be honest virtually all contractors can be argued to be in or out of IR35.

If you are a bum on a seat doing what your told as a part of project team, you're probably inside but you can argue that you're not, and get away with it. Most contractors have a bogus substitution clause and then usual things like no holiday to push them outside.

In my view you really need fixed price contracts or provide "real consultancy" i.e. not code up what you're told to, or temporarily be a Project Manager, in other words do something like introduce new processes or provide training etc.

I would agree with this. Saying that though I am sure there are many that genuinely think like a business and want to run it as such so being outside IR35 and try their damnedest to do it but the client environment and maybe the way we work, as blaster says, means we just can't get there.

But for every one of them there will be 100+ bum on seats disguised permies.

I'd say this is spot on - the reason I went contracting was not financially motivated but simply a desire to work for myself and have control over how and when I do the work. However it's increasingly difficult, as NLUK points out, to do this in most client environments - a lot of them just don't seem to want a proper autonomous contractor any more, just bum on seat temps. I've had a few contracts that do fit in the former "proper" model but sadly many more that are much closer to the latter one

With regards to the OP, I'd recommend talking to Bauer and Cottrell (the aforementioned B&C) who will take your working practices into account as well as the contract. As previously mentioned this is very important when trying to determine IR35 status.

[Wanderer]

I have had my contract reviewed by 2 accountant companies, (both recommended on here) one said its inside IR35 and one said its outside IR35... what do I do?

File the outside IR35 review somewhere safe then throw away the one that said you are IR35 caught and forget you ever saw it.

[LisaContractorUmbrella]

No, no no. They are designed (badly) to save Hector's time and energy by seeing if they determine that you are a suitable case for a further investigation to see if you might fall inside the clutches of IR35. While they are totally unfit for that purpose anyway, they are nothing to do with your IR35 position itself.

Also worth noting that they are being largely ignored by contractors...

I said "it will give you their view"

[DirtyDog]

I said "it will give you their view"

You also said

However, if you complete them and are advised that you are 'high risk' it would be a good indicator that you would be likely to fall inside.

which is completely wrong.

[LisaContractorUmbrella]

You also said

which is completely wrong.

Why? The BET's are a reasonable indicator. There is nothing set in stone with IR35 as we all know as, if status is tested, it will come down to the Judge's interpretation of the law but the tests do cover areas which have come up in previous cases e.g. unfettered ROS and do cover things that would definitely indicate that you are in business on your own account.

[mudskipper]

Why? The BET's are a reasonable indicator. There is nothing set in stone with IR35 as we all know as, if status is tested, it will come down to the Judge's interpretation of the law but the tests do cover areas which have come up in previous cases e.g. unfettered ROS and do cover things that would definitely indicate that you are in business on your own account.

I think it would be fairer to say that if you're low risk, it's a good indicator that you are outside.

[LisaContractorUmbrella]

I think it would be fairer to say that if you're low risk, it's a good indicator that you are outside.

Yep I can agree with that

[malvolio]

I think it would be fairer to say that if you're low risk, it's a good indicator that you are outside.

Possibly true, but no more certain.

The problem with the BETs is they either ignore the three main tests of employment that IR35 is driven by, or mark them so low as to be meaningless (RoS being the classic example), and disregard current case law anyway.

It's worth noting that a major survey of PCG members, including many who have passed IR35 investigations, resulted in over 80% being assessed as Medium or High risk (including me...).

[jmo21]

In my opinion, it's pointless having a contract review without also having the working practices reviewed, and even the broader business practices. The contract is just a prerequisite. Also, while it's perfectly fine to have an IR35-trained accountant complete this review, it is also advisable to have a specialist complete the review IMHO, as it's quite nuanced.

Lastly, having tried a few providers, I'd say there's an enormous difference in the depth and quality of these review services (and cost, naturally). I recently had a review completed by Paul Mason at Abbey Tax, and the review was exceptionally detailed and informative. It was significantly more expensive than other reviews I've had in the past, but really worth the money. There was a thorough review of the contract and working practices, as well as broader business practices (based on a detailed questionnaire), accompanied by a detailed explanation as to why the engagement fell outside, and a follow-up phone-call. I would highly recommend them. I've heard that B&C are particularly good also and will work with the client on rewording if required.

A review of working practices is all well and good...... until you actually start the contract and find they will not let you work in the way you would prefer.

In reality, the most you can do is make sure your contract is outside IR35 (based on QDOS, B&C etc opinion) and try your best to make sure your working practices are outside IR35.

Has anyone ever quit a contract after a short amount of time because it is clear the working practices you are forced to work under are IR35 caught?

[jamesbrown]

A review of working practices is all well and good...... until you actually start the contract and find they will not let you work in the way you would prefer.

In reality, the most you can do is make sure your contract is outside IR35 (based on QDOS, B&C etc opinion) and try your best to make sure your working practices are outside IR35.

Has anyone ever quit a contract after a short amount of time because it is clear the working practices you are forced to work under are IR35 caught?

In that scenario, you operate according to your contract (i.e. lack of D&C, and operate your RoS if applicable) and, if they don't like it, they'll can you. Ultimately, it all comes down to the working practices, otherwise it was a sham to begin with.