Transferring Contract to Inside IR35

[CountryGirl]

Hi Guys,
I've received a (very) short notice yesterday from my agent,
that the client's HR emailed him that as of April 6th all contractors working for them will be forced inside IR-35.
As you can imagine I was totally unprepared for it,
and now I have to give them 2 answers (if I want to stay, of course).

A. What new rate do I want.

B. An umbrella company to work under.

Your help with both of these will be greatly appreciated.
Thanks in advance to all responders.

[yorkshirespud]

Hi Guys,
I've received a (very) short notice yesterday from my agent,
that the client's HR emailed him that as of April 6th all contractors working for them will be forced inside IR-35.
As you can imagine I was totally unprepared for it,
and now I have to give them 2 answers (if I want to stay, of course).

A. What new rate do I want.

B. An umbrella company to work under.

Your help with both of these will be greatly appreciated.
Thanks in advance to all responders.

C. Neither - you ideally need to leave or put yourself in danger of retroactive action from HMRC (regardless of what they say).

If this month you are "outside", and then next month "inside" for exactly the same role, then your "outside-ness" of all the time you have so far already spent working for the client becomes hard to defend.


Even if your next role at a different client is inside IR35, that would be a better position to be in - you worked for the current client outside, you work for the next client inside - the two roles are different clients and not connected.


A lot of people will no doubt be going down this same road - better to get on the merry go round of contractors changing roles, even if they are inside.

You don't want to be at the same role next month with a switch from outside to inside.

[northernladuk]

As you can imagine I was totally unprepared for it,

We don't imagine that at all. It's been two years coming with the false start last year but guranteed to hit this year. Why are you totally unprepared for it a week before it hits? We've an entire sub form dedicated to this. You've posted in Business but IR35 is a tax legislation. In the accounting section is a whole thread for IR35 reform. Contracting is your living, surely you took some notice of what is going to massibly impact it and would prepare for it?

and now I have to give them 2 answers (if I want to stay, of course).

A. What new rate do I want.

B. An umbrella company to work under.

Your help with both of these will be greatly appreciated.
Thanks in advance to all responders.

You leave. Outside to inside is admitting to HMRC you were inside all along. Hope you've got a very short notice period and that your agency is willing to pay you before the 4th.

[zonkkk]

You shouldn't have been unprepared for it, this was a long time coming.

Best advice is that you leave if you were there for a long time "outside IR35", or negotiate an outside contract of you're in a position to do so (i.e. the client needs you and don't want to lose you).

If you were there for 6 months or less, go ahead and stay if you want. Put some money aside in case of an IR35 investigation.

[jamesbrown]

Bear in mind that a ban on PSCs is not the same as "inside IR35", although it could mean that the client thinks your working practices are inside IR35. The latter would be unfortunate in the (unlikely) event of an investigation w/r to your current contract or previous contracts, but clients are not routinely declaring contracts to be "inside IR35", rather they are routinely avoiding PSCs altogether.

[LondonManc]

OP, on what basis was the contract declared outside in the first place?

Do you have supporting evidence - agreed working practices, proof that you stuck to the statement of work, proof that you were treated differently as a contractor, exercised a right to substitute, etc?

If you have all that, ask the agent or client what will be different that will make the contract inside IR35.
If you don't, then the comments above apply.

[mwounder]

You shouldn't have been unprepared for it, this was a long time coming.

Best advice is that you leave if you were there for a long time "outside IR35", or negotiate an outside contract of you're in a position to do so (i.e. the client needs you and don't want to lose you).

If you were there for 6 months or less, go ahead and stay if you want. Put some money aside in case of an IR35 investigation.

But...I thought they can then go onto other contracts previously? I.e. in my position (luckily) my QDOS review was 'outside' (I'm still worried about staying with the same client). But yes, anyway, I thought retrospectively if you get the dreaded letter it would likely cover alllll contracts, or is it just that 'one' contract that you were outside on Friday, inside Monday?

And yes, it is confusing (some people on these forums think they know it all, maybe they do), but I've spoken with 1 of my friends who work in employment law and even his firm don't really understand it to a point where it's black or white. Accountants, insurance companies, no-one really has a clue because this is unchartered territory.

As a reminder, this is from HMRC (whether you believe them or not):

Compliance checks into your intermediary HMRC will never use information acquired from the off-payroll working rules changes to open a new compliance enquiry into returns for tax years before 2021-22, unless there is reason to suspect fraud or criminal behaviour. This includes any decisions that clients may have already made to prepare for the April 2020 changes, which have now been delayed. HMRC took the same approach when the rules changed in the public sector in 2017: HMRC didn’t open any historic off-payroll compliance enquiries for tax years before 6 April 2017 due to the decision of a public authority under those reforms.

[AnthonyQuinn]

unless there is reason to suspect fraud or criminal behaviour.

declaring yourself outside on friday and accepting inside on Monday is fraud and criminal behaviour.

[eek]

declaring yourself outside on friday and accepting inside on Monday is fraud and criminal behaviour.

Nope - it's a difference of opinion.

However, were HMRC to push the point it's going to be very hard to demonstrate that you were outside prior to April 2021 when the end client has said they regard the role is being inside IR35.

Oh and if you are going to post a quote from HMRC include a link as to where you got it from. The context is very important when dealing with HMRC.

[northernladuk]

But...I thought they can then go onto other contracts previously? I.e. in my position (luckily) my QDOS review was 'outside' (I'm still worried about staying with the same client). But yes, anyway, I thought retrospectively if you get the dreaded letter it would likely cover alllll contracts, or is it just that 'one' contract that you were outside on Friday, inside Monday?

The last contract. They don't go through other contracts as it's pointless. The evidence they have on you is for just the single situation. They'd have to open new investigation on the others as what you are doing now bears no relation to what you did at other clients. Been like that forever.

And yes, it is confusing (some people on these forums think they know it all, maybe they do), but I've spoken with 1 of my friends who work in employment law and even his firm don't really understand it to a point where it's black or white. Accountants, insurance companies, no-one really has a clue because this is unchartered territory.

Maybe because IR35 is a tax law not an employment one?