SoW after Inside IR35 Determination

[Relle05]

Hi,

I've been a silent lurker following the IR35 threads with keen interest.

So myself and about 30 other contractors have been deemed inside IR35 from the 6th of April onwards by ClientCo. They have retained the services of an Umbrella company to take on contractors from April 6th onwards.
I immediately declined and informed them i'll be leaving on the 31st of March. However ClientCo has now come back to me and 3 other Contractors (who have also decided to leave) with a new SoW contract as we are critical to the project. They basically will pay us against deliverables under agreed terms e.t.c. This SoW is deemed outside and we'll be engaged through our PSCs directly.

My question is should I appeal the SDS for my current contract (ending in march) , so that i'm not remotely liable for any retrospective tax? On one hand i'm thinking there is no need as any future engagement will be a new SoW deemed outside IR35 (which is due to commence 1st of May and end in September 2020). But on the other hand is there any risk due to being the same client for both contracts? Any help/advise will be appreciated.

Thanks

[rocktronAMP]

Hi,

I've been a silent lurker following the IR35 threads with keen interest.

So myself and about 30 other contractors have been deemed inside IR35 from the 6th of April onwards by ClientCo. They have retained the services of an Umbrella company to take on contractors from April 6th onwards.
I immediately declined and informed them i'll be leaving on the 31st of March. However ClientCo has now come back to me and 3 other Contractors (who have also decided to leave) with a new SoW contract as we are critical to the project. They basically will pay us against deliverables under agreed terms e.t.c. This SoW is deemed outside and we'll be engaged through our PSCs directly.

My question is should I appeal the SDS for my current contract (ending in march) , so that i'm not remotely liable for any retrospective tax? On one hand i'm thinking there is no need as any future engagement will be a new SoW deemed outside IR35 (which is due to commence 1st of May and end in September 2020). But on the other hand is there any risk due to being the same client for both contracts? Any help/advise will be appreciated.

Thanks

Unfortunately the SOW will not protect you from the HMRC, because you are effectively working for the same [ultimate] client.
But SOW is the way to go for a new client. Effectively think of SOW like being milestones in a building bricks and mortar contract. "I''m John Smith, and I am more than happy to do renovate your kitchen and install it from B&Q, but gimme half the money now and then half the money at completion". The more risk you can show that PSC I think looks more like you are an IR35 Outsider.

I would double check this with Webberg or somebody else qualified in tax law and they are in very short supply. In other words, get professional assessment of the new contract. You have a good 6 weeks to go. I'm guessing you might have to an extended holiday. Perhaps, take the entire April off and then it looks like you took a break as the worst case if it is possible, but I don't know. Get pro help.

[LondonManc]

Yes, appeal...... if you've got evidence plus QDOS or equivalent has affirmed your contract and working practices as outside. This will further demonstrate that you have acted with sufficient care to ensure that you were operating outside IR35. I'd also be keen to get QDOS or equivalent to rule over the whole new engagement setup; simply giving in and declaring you as outside sounds dodgy.

[Relle05]

Unfortunately the SOW will not protect you from the HMRC, because you are effectively working for the same [ultimate] client.
But SOW is the way to go for a new client. Effectively think of SOW like being milestones in a building bricks and mortar contract. "I''m John Smith, and I am more than happy to do renovate your kitchen and install it from B&Q, but gimme half the money now and then half the money at completion". The more risk you can show that PSC I think looks more like you are an IR35 Outsider.

I would double check this with Webberg or somebody else qualified in tax law and they are in very short supply. In other words, get professional assessment of the new contract. You have a good 6 weeks to go. I'm guessing you might have to an extended holiday. Perhaps, take the entire April off and then it looks like you took a break as the worst case if it is possible, but I don't know. Get pro help.

Thanks sounds like the next step. I'll get professional advice.

[Relle05]

Yes, appeal...... if you've got evidence plus QDOS or equivalent has affirmed your contract and working practices as outside. This will further demonstrate that you have acted with sufficient care to ensure that you were operating outside IR35. I'd also be keen to get QDOS or equivalent to rule over the whole new engagement setup; simply giving in and declaring you as outside sounds dodgy.

Thanks for the advice, appeal it is!

[Andy Hallett]

It's a difficult one, appeal and lose it makes it look even worse. However, the SDS actually has no relevance anyway prior to April 6th as it is based on the future rules, not current where you are responsible for determination.

Given that you are changing fee payer it is not a slam dunk that any MI reporting will put two and two together and if the SOW is significantly different in terms of your working practices you should be fine.

I suspect HMRC will find lower hanging fruit.