Consultancy witholding 20% of each invoice in new contracts

[Lance]

See the CEST criteria for a contract being outside IR35 - one of the criteria is financial risk.

I finished one contract, and had to do half a day remedial work for them. Something unforeseen. Rather than saying no, or making them engage me again, I fixed at my cost. My thinking was this was a clear demonstration of financial risk (a loss in fact).

[northernladuk]

Is this not the same as a permie getting or not getting their bounus.

No.

[jamesbrown]

I've had this in fixed price contracts but never in T&M contracts for obvious reasons - performance is day-to-day, not per deliverable. As far as IR35 goes, I doubt it moves the dial much (it's motivated by commercial reasons related to IR35 rather than the nature of the work and working practices), but it certainly gives the consultancy an opportunity to claw money back.

[mallisarealperson]

Is this not the same as a permie getting or not getting their bounus.

[eek]

Same here, last 3 gigs have been SC cleared roles within government through a consultancy. This is more to do with the consultancy in this case, however I thought that the whole point of status determinations was to clarify if a role was inside or outside IR35? If a role is outside why is it necessary to withold 20% of the contract value just incase?

See the CEST criteria for a contract being outside IR35 - one of the criteria is financial risk.

[SueEllen]

Same here, last 3 gigs have been SC cleared roles within government through a consultancy. This is more to do with the consultancy in this case, however I thought that the whole point of status determinations was to clarify if a role was inside or outside IR35? If a role is outside why is it necessary to withold 20% of the contract value just incase?

Yep you just get the money back of the contractor or threaten to sue them....

[The Spartan]

To be fair I've done three public sector gigs in not too long a time, including being on one now, and I've never seen it. I'll bet this is nothing to do with the client and just the consultancy covering themselves whether their client is public or private.

Same here, last 3 gigs have been SC cleared roles within government through a consultancy. This is more to do with the consultancy in this case, however I thought that the whole point of status determinations was to clarify if a role was inside or outside IR35? If a role is outside why is it necessary to withold 20% of the contract value just incase?

[northernladuk]

I have never come across this and would turn a gig down if it had this clause in it I have not done any public sector work for years anyway that is probably why I have not seen it

To be fair I've done three public sector gigs in not too long a time, including being on one now, and I've never seen it. I'll bet this is nothing to do with the client and just the consultancy covering themselves whether their client is public or private.

[eek]

I have never come across this and would turn a gig down if it had this clause in it I have not done any public sector work for years anyway that is probably why I have not seen it

You haven't come across it because it's brand new - as companies try to work out how to keep their contracts outside IR35 given the forthcoming rules...

[JohnM]

Just been speaking with a friend who is working for a Government department via a well known consultancy. As part of the changes in response to the IR35 private sector rollout the new contracts that have been issued have a clause whereby 20% of each invoice is witheld till the end of the contract and release upon adequate performance. Has anyone else encountered this?

I have never come across this and would turn a gig down if it had this clause in it I have not done any public sector work for years anyway that is probably why I have not seen it