IR35 - vagaries of status

[northernladuk]

Did you ask HMRC during the initial contract, or during the new contract? IR35 is on a contract basis, you are just starting your second contract.

The answer is in the first line of his post.

[WordIsBond]

The answer is in the first line of his post.

Maybe, but he also said this (emphasis added):

However, prior to this i [perhaps naively] asked HMRC to check my status,

[northernladuk]

Maybe, but he also said this (emphasis added):

But that would be prior to him agreeing his extension no?

[chomps]

It was an initial 3 month contract. I then agreed to extend it, after which point I started to become aware of the complexities of all this, I then used their online tool to check my status which was "inconclusive", and they advised speaking to them directly, so I did.

It's through an agency, whose contract is designed to be ir35 neutral, for example it states a right to substitution...in agreement with the client etc.

The key to this seems to get the contract checked and then amended, although given that the contract seems designed to be neutral it's not the contract which is the problem, it's the working arrangements which have been deemed to be too much like an employee, although even the HMRC response suggests only just. So what would any contract amendments actually achieve?

In any case if they refused to make any amendments (which i feel is unlikely given the relationship I have with them and impending deadlines) , I would probably just pack it in (as per the termination period), as the financial consequences would make the contract not worth the bother. I'd be better off looking for a perm job.

All the client wants is the projects delivered, which I'm happy to do on a limited company basis, but not ir35 as it would make it financially impractical. This isn't about dodging tax.

[northernladuk]

It's through an agency, whose contract is designed to be ir35 neutral, for example it states a right to substitution...in agreement with the client etc.

And this is where it starts to go wrong. There is no such thing as IR35 Neutral. It's either inside or outside. There is more to just a substitution agreement as well. It needs to be unfettered so the wording has to be exactly right.

The key to this seems to get the contract checked and then amended, although given that the contract seems designed to be neutral it's not the contract which is the problem, it's the working arrangements which have been deemed to be too much like an employee, although even the HMRC response suggests only just. So what would any contract amendments actually achieve?

It would achieve a first line of defense but that would crumble at anything more than a light investigation in to working practices.

In any case if they refused to make any amendments (which i feel is unlikely given the relationship I have with them and impending deadlines) , I would probably just pack it in (as per the termination period), as the financial consequences would make the contract not worth the bother. I'd be better off looking for a perm job.

If you pay for a contract review from QDOS they will negotiate it on your behalf. Some agents will listen, others will not. Gotta take your chances and see. If you pay for the full service they will review your working practices as well. Not the best place when you've already accepted though as there is nothing in it for the agent. The only thing that might sway them if they believe you will leave so they will be out of pocket until they get a replacement. Never underestimate how far an agent will go to keep his pocket lined so it could work.

All the client wants is the projects delivered, which I'm happy to do on a limited company basis, but not ir35 as it would make it financially impractical. This isn't about dodging tax.

Again you need to understand this. You can do it on a limited company basis both inside and outside IR35. You need to do it as a supplier company, not a disguised employee.

[chomps]

And this is where it starts to go wrong. There is no such thing as IR35 Neutral. It's either inside or outside. There is more to just a substitution agreement as well. It needs to be unfettered so the wording has to be exactly right.



It would achieve a first line of defense but that would crumble at anything more than a light investigation in to working practices.


If you pay for a contract review from QDOS they will negotiate it on your behalf. Some agents will listen, others will not. Gotta take your chances and see. Not good when you've already accepted as there is nothing in it for the agent. The only thing that might sway them if they believe you will leave so they will be out of pocket until they get a replacement. Never underestimate how far an agent will go to keep his pocket lined so it could work.

Again you need to understand this. You can do it on a limited company basis both inside and outside IR35. You need to do it as a supplier company, not a disguised employee.

Thanks. I can sort this out. The only thing which really vexes me is the substitution rule. HMRC explicitly state that the client must not care to one day or another who turns up/does the work. How can this work in practice and be agreed to? If I was doing a repetitive job which didn't require any understanding of the client and their needs then it might work, but masses of projects and assignments would suffer if random people kept turning up to do the work. It goes against the entire concept of client/supplier relationships. I can think of numerous examples where a supplier must supply their services using the same person, otherwise the work would be totally incoherent.

[northernladuk]

Thanks. I can sort this out. The only thing which really vexes me is the substitution rule. HMRC explicitly state that the client must not care to one day or another who turns up/does the work. How can this work in practice and be agreed to? If I was doing a repetitive job which didn't require any understanding of the client and their needs then it might work, but masses of projects and assignments would suffer if random people kept turning up to do the work. It goes against the entire concept of client/supplier relationships. I can think of numerous examples where a supplier must supply their services using the same person, otherwise the work would be totally incoherent.

It doesn't say that at all for a start.....

[Lance]

It doesn't say that at all for a start.....

And even if it did there’s a difference between what HMRC say and the law. Don’t trust HMRC. Do research and learn.

[mudskipper]

Have a look at IPSE's guide to IR35

https://www.ipse.co.uk/resource/guid...35-v1-pdf.html

[chomps]

They'll go through a very detailed and highly stressful investigation as at least one of our members can attest to. I'd expect it's up to you to provide evidence to defend yourself. We don't really know the exact reasons for an investigation to start but it's been said it can start from any other form of investigation being random or due to inconsistencies in your filing and the like.

IMO yes it's something you should worry about. It takes awhile to get a half decent grasp but it will apply though out your contracting career so essential to know. Once you are up to speed it doesn't take long to follow the right process, have your contract checked, make sure you don't fall in to traps on site, get IPSE+ or TLC35 insurance etc and also to collect any information you can, emails to say you aren't allowed to attend permie does, copy of your pass if it says contractor on it.

Once you've got that nailed you can, if you wish, take a rather more lax approach to it dependant on your evaluation of the risk vs loss. Some people on here don't give a flying monkies as there are so few wins it won't happen to them. IMO everyone that got investigated thought it wouldn't happen to them so I'm quite happy to tow the line to stay off the radar rather than deal with 2 years of crap.

I'm not so sure value comes in to anything HMRC do. They aren't well known for using common sense.

On to common sense. Contacting HMRC to ask if you are inside or outside is utter suicide IMO. Actually being inside isn't a reason to investigate. It's a valid situation, most of the Public sector are there but they now know your status. All they have to do is check you are accounting correctly and they've got themselves a live one. I think someone mentioned it's an impartial service but I just can't believe that. Steer well clear.

Confirmation of arrangements 'might' help but the problem is getting someone in the right position to sign it. Better to have a good knowledge of IR35 and collect the evidence.

IMO working from home has sod all to do with IR35. Permies can do that so it doesn't differentiate in anyway really. Also it's not unreasonable for a client to say contractors can't work from home. It's not a flag as they may just want to keep an eye on expensive suppliers so they are getting value for money. All IR35 neutral.

No point trying to get a confirmation of arrangements when you are referring to your client as 'manager'. Permies have managers. Pedantic I know but get it on your heard and other things will come naturally to you.



How do you think this will go when on one side is you who admits they don't have a strong grasp of IR35 and the other is HMRC who believe they know chapter and verse on it and wrote the legislation? They'll drop potentially thousands of pounds of claim on your word. Think again buddy

IMO put the time and effort in and learn it. THEN you can make your own call as to whether you bother with it. Making that call with only a half baked understanding is a poor decision.

Any advice on contract review providers? IPSE is 160+vat although they use Abby Tax which, on their own website advertises double that. Qdos is a lot less.