Checklist for IR35 exemption working conditions

[swamp]

One of the suppliers at my current site is a global company with a turnover in excess of $5bln and over 20,000 employees, so no one would ever argue that they are not a 'real' business. According to the OP all consultants/developers on site would would be deemed employees of the client?

1. The supplier invoices based on hours (not days) worked
2. The guys on site have to be approved (CV/profile reviewed) i.e. we're not paying £x per hour to train some graduate.
3. They all use the staff canteen
4. Certain key personel have to be on site (and working the same hours as the client) during various phases of the project.
5. They work on client owned systems accessed via client machines.
6. They fill in timesheets.

This is common on large scale projects but certainly doesn't mean that they are deemed employees of the end client.

7. They are paid in salary.

[XLMonkey]

One of the suppliers at my current site is a global company with a turnover in excess of $5bln and over 20,000 employees, so no one would ever argue that they are not a 'real' business. According to the OP all consultants/developers on site would would be deemed employees of the client?

1. The supplier invoices based on hours (not days) worked
2. The guys on site have to be approved (CV/profile reviewed) i.e. we're not paying £x per hour to train some graduate.
3. They all use the staff canteen
4. Certain key personel have to be on site (and working the same hours as the client) during various phases of the project.
5. They work on client owned systems accessed via client machines.
6. They fill in timesheets.

This is common on large scale projects but certainly doesn't mean that they are deemed employees of the end client.

Argh, that be where you're wrong. They may well be deemed employees (and will probably be subject to TUPE in the event that the client wishes to terminate/change contracts with the supplier). However, Gordon doesn't care either way because they are all salaried employees paying NI and income tax at "market average" rates.

[Emperor Dalek]

Tell that to a plumber, electrician, decorator etc.

Barristers, surgeons.....

[boredsenseless]

Denny,

I don't necessarily agree with everything you write but I'm glad you write it as it opens up a discussion whereby everyone can put across their views, the people on here without their own view can read them all and decide what they believe.

Also sometimes I learn something I didb't know I needed to know.

I'll quit crawling now and get on with general sniping and whinging again!

[Mordac]

Argh, that be where you're wrong. They may well be deemed employees (and will probably be subject to TUPE in the event that the client wishes to terminate/change contracts with the supplier). However, Gordon doesn't care either way because they are all salaried employees paying NI and income tax at "market average" rates.

Yep, thems the rules. The people at the top can pay themselves huge divis based on the efforts of others but the individual freelancer cannot. Tough.

Dim Prawn
pp G Brownstuff.

[Pondlife]

7. They are paid in salary.

Argh, that be where you're wrong. They may well be deemed employees (and will probably be subject to TUPE in the event that the client wishes to terminate/change contracts with the supplier). However, Gordon doesn't care either way because they are all salaried employees paying NI and income tax at "market average" rates

My point is that the client's project procedures that need to be followed should not impact whether you are a viewed as a real business.

If for example part of your role involves training, then there is a requirement for you to be on site at a time dictated by the client and you cannot send an unqualified numpty in your place. This doesn't mean your are instantly inside IR35 does it.

As for salary, deemed salary is based on the revenue on a contract by contract basis. The fact that you have multiple contracts (sequentially or in parallel) should mean that you are outside of IR35 anyway.

I'm not saying this is the case I'm just winging about the whole situation.

*wanders of for a quiet cry in the corner.

[Denny]

One of the suppliers at my current site is a global company with a turnover in excess of $5bln and over 20,000 employees, so no one would ever argue that they are not a 'real' business. According to the OP all consultants/developers on site would would be deemed employees of the client?

1. The supplier invoices based on hours (not days) worked
2. The guys on site have to be approved (CV/profile reviewed) i.e. we're not paying £x per hour to train some graduate.
3. They all use the staff canteen
4. Certain key personel have to be on site (and working the same hours as the client) during various phases of the project.
5. They work on client owned systems accessed via client machines.
6. They fill in timesheets.

This is common on large scale projects but certainly doesn't mean that they are deemed employees of the end client.

You really don't get it do you! Of course big end-client organisations use pools of consultants etc from larger companies and are paid in salary and take advantage of the staff canteen etc. But that's the point: they are not contractors, they are employees of the contractor and their work terms and conditions often demand that they fit into the end-client culture as much as possible, as if they were actually working for them and not their own consultancy. These consultants are the contractor's substitutes not the contractor.

This is very different from freelancers (or owner managed businesses, if you use your own limited). We are the contractor and therefore, it is vital to be as detached from the end-client, as per my spec list (and the IR criteria I listed later) not to fall foul of potential IR35 inclusion.

[Denny]

My point is that the client's project procedures that need to be followed should not impact whether you are a viewed as a real business.

If for example part of your role involves training, then there is a requirement for you to be on site at a time dictated by the client and you cannot send an unqualified numpty in your place. This doesn't mean your are instantly inside IR35 does it.

As for salary, deemed salary is based on the revenue on a contract by contract basis. The fact that you have multiple contracts (sequentially or in parallel) should mean that you are outside of IR35 anyway.

I'm not saying this is the case I'm just winging about the whole situation.

*wanders of for a quiet cry in the corner.

Your first point: if there is a requirement for you to be on site to carry out a clear deliverable and it can't be carried out from your own premises, than this shouldn't make any difference. Following project procedures doesn't make any differerence either or even using the end-client letterhead. The problem kicks in if you are on site because you are expected to be supervised for your hours, are told how to do the work and the work you are actually doing at a particular time could just as easily be done from elsewhere - report writing and so on.

Your second point: In any one tax year a sequential spread of contracts would not help you at all. Each contract is deemed on it's own merits for IR35 purposes. The fact you've done 3 full time contracts in one year which disallowed you to work in parallel for other clients whilst carrying out their own work, for example, would make no difference at all.

[Denny]

Tell that to a plumber, electrician, decorator etc.

They tend to operate either as employees of a company or they are Self Assessed freelancers (not owner managed). Plus they work for a fixed fee most often than not.

Totally irrelevant to hourly paid IT contractors.

[Billy Pilgrim]

If you're hourly paid then you are not acting as a real business and you shouldn't be billing the client for time taken off site to eat whether it's in the staff restaurant or not.

Just joking about charging for the dinner hour.....I'm bloody starving tonight mind you

However I am effectively charging my time (sorry the time of the consultant carrying out work on behalf of MyCo) by the hour...is this not a time and materials basis ?? A lot of consultancies do this...so why not MyCo ???

I was going to charge per day -- but the client themselves has told me to bill in two hour chunks - which is how they bill the end client

Am I causing trouble for myself here ????