Statement of Work (SoW) being outside of IR35?

[northernladuk]

Time and materials based contracts don't automatically fall under IR35. Even the HMRC CEST tool allows T&M based contracts to pass if there is minimal direction and control or genuine right to substitute.

And going forward after April, it is the clients problem. Not mine.

It will be in there best interest to manage my working practices and make sure they reflect the outside determination they have given me, they will be on the hook for the tax.

HMRC thinks they do which is why everything is how it is. A good solid outside contract on T&M can be outside yes, but so very very few are hence the situation. No point arguing the point now, we are passed that with IR35 looming in April. Up to the client now.

If the OP want's the best defence for a gig he goes for a SoW deliverables based approach. Not some glitter sprinkled on the same stuff we are already doing.

[northernladuk]

When i used to work as a perm consultant, a lot of the projects were time and material based and most lasted several months and some multiple years.

Also a client can refuse to sign a contractors timesheet if they legit think you didn't put that much effort it in as the timesheet claims, but i have yet to see any client do this!
Because most managers don't want to rock the boat.

We already know most companies don't want to risk giving contractors outside IR35 contracts, but many will risk it and properly manage the risk by ensuring compliant working practices, because it gives them a competitive edge when looking to hire the best contracting talent.

No tulip sherlock....

[Fraidycat]

HMRC thinks they do which is why everything is how it is. A good solid outside contract on T&M can be outside yes, but so very very few are hence the situation. No point arguing the point now, we are passed that with IR35 looming in April. Up to the client now.

If the OP want's the best defence for a gig he goes for a SoW deliverables based approach. Not some glitter sprinkled on the same stuff we are already doing.

Well there are enough clients offering outside IR35 contracts post April based on what look like standard daily rates.

A good IR35 lawyer, the likes of QDos can easily beat HMRC when they had the client on side, the IR35 cases that HMRC used to win most often were the ones where the client testimony didn't support the outside IR35 contract. That isnt going to happen anymore.

A client that is sure enough to give an outside determination will be looking to defend that outside determination when HMRC come calling instead of selling the contractor quickly down the river like they often do at present, because they will on the hook for the tax now.

It is going to be a lot harder for HMRC to win any cases against Clients after April 2021, not unless the client has made no effort to ensure working practices are compliant with the outside determination they have given. I dont see that happening very often, the clients that arent willing to make the effort arent going down that route in the first place.

[malvolio]

When i used to work as a perm consultant, a lot of the projects were time and material based and most lasted several months and some multiple years.

Also a client can refuse to sign a contractors timesheet if they legit think you didn't put that much effort it in as the timesheet claims, but i have yet to see any client do this!
Because most managers don't want to rock the boat.

We already know most companies don't want to risk giving contractors outside IR35 contracts, but many will risk it and properly manage the risk by ensuring compliant working practices, because it gives them a competitive edge when looking to hire the best contracting talent.

Urban myth 201...

90% of contracts are manpower replacements or short-term additions. There is no shortage of candidates, and they are easily replaced if they are sub par. so where is the commercial advantage in paying higher rates for a consumable resource?

[malvolio]

Well there are enough clients offering outside IR35 contracts post April based on what look like standard daily rates.

A good IR35 lawyer, the likes of QDos can easily beat HMRC when they had the client on side, the IR35 cases that HMRC used to win most often were the ones where the client testimony didn't support the outside IR35 contract. That isnt going to happen anymore.

A client that is sure enough to give an outside determination will be looking to defend that outside determination when HMRC come calling instead of selling the contractor quickly down the river like they often do at present, because they will on the hook for the tax now.

It is going to be a lot harder for HMRC to win any cases against Clients after April 2021, not unless the client has made no effort to ensure working practices are compliant with the outside determination they have given. I dont see that happening very often, the clients that arent willing to make the effort arent going down that route in the first place.

HMRC haven't lost that may cases. Most people claiming a victory turn out to have had the investigation halted, not abandoned. The high profiles cases have been from courts above the original tribunal.

Outside IR35 roles in the public sector seem mainly to be for specific skills, and often for specific people. Or don't you believe that clients can game competency-based hiring processes?

[Fraidycat]

Urban myth 201...

90% of contracts are manpower replacements or short-term additions. There is no shortage of candidates, and they are easily replaced if they are sub par. so where is the commercial advantage in paying higher rates for a consumable resource?

Every client i ever worked for wants to always hire the best, or at least highly competent people. In reality most settle for what they can get, unless they can afford to pay top whack.

When they do luck out and find an exceptional contractor they tend to keep giving them repeat business even after all the other contractors have been let go.

[malvolio]

Every client i ever worked for wants to always hire the best, or at least highly competent people. In reality most settle for what they can get, unless they can afford to pay top whack.

When they do luck out and find an exceptional contractor they tend to keep giving them repeat business even after all the other contractors have been let go.

Well, it's a nice dream. The world has changed though. Some clients will pay over the odds for "the best", but they will become both increasingly rare and increasingly picky. The commercial risks of outside IR35 contracts are simply too great.

If you have a very specific technical skill or business speciality you may be OK. Most current contractors don't.

[eek]

Well, it's a nice dream. The world has changed though. Some clients will pay over the odds for "the best", but they will become both increasingly rare and increasingly picky. The commercial risks of outside IR35 contracts are simply too great.

If you have a very specific technical skill or business speciality you may be OK. Most current contractors don't.

The commercial risk of having 1000 outside IR35 contractors on site is too great.

The commercial risk of having 10 specialist workers outside IR35 isn't going to be that bad.

However companies can't do what they've been doing for the past 10 years and use contractors as a replacement for what should be permanent employees.

[Fraidycat]

The commercial risks of outside IR35 contracts are simply too great.

This may change as companies find it harder and harder to fill inside IR35 roles while competitors are offering outside roles.

What happned last year was companies introduced blanket bans and most contractors at those places simply rolled over and accepted it.

Some did quit, but had there been a larger revolt, with vast majority of contractors quitting, perhaps those clients might not have been so quick to introduce blanket bans.

Covid didnt help either, perhaps many more would have quit after finding something outside, but covid put an end to that.

[Paralytic]

This may change as companies find it harder and harder to fill inside IR35 roles while competitors are offering outside roles.

Do you know if any any evidence (or even real expectation) that that will actually happen?

Yes, most companies want the best contractors, but will take someone adequate if it removes a big risk.