Contract has been retrospectively declared inside IR35

[eek]

At this point, it has probably been flagged as a flustercluck and, assuming they have legal staff (it can't be a small company, afterall), those staff are probably involved by now. The balance of power is firmly with the supply chain above the PSC in these situations, I'm afraid.

And as I've now pointed out twice I don't think the PSC has any court in which they could resolve the issue as it's on a hideous intersection of 3 different types of court). As I said before it's a pity the OP doesn't have IPSE membership as without it the costs are going to be so high the only sane choice is to swallow the mistake and avoid doing it again.

The problem is that the OP won't be the only person in this mess as I suspect like Agency Regulations no court cases will ever appear to fix the issue - it will allows be a game of chicken with someone giving in well before it goes to court.

[jamesbrown]

And as I've now pointed out twice I don't think the PSC has any court in which they could resolve the issue as it's on a hideous intersection of 3 different types of court).

Indeed, the absence of a clear, independent mechanism for dispute resolution is one of the main reasons that the balance of power is not with the PSC. Had the OP been a member of IPSE, there might have been a (slim chance) of some assistance, but I'm not sure what their fighting fund looks like right now (based on the last set of accounts, probably not too healthy).

[eek]

Indeed, the absence of a clear, independent mechanism for dispute resolution is one of the main reasons that the balance of power is not with the PSC. Had the OP been a member of IPSE, there might have been a (slim chance) of some assistance, but I'm not sure what their fighting fund looks like right now (based on the last set of accounts, probably not too healthy).

I seem to think there are some campaign funds available to fund some test cases but beyond that IPSE is completely irrelevant in this new world.

[ComplianceLady]

What version of Chapter 10 of ITEPA are you using? As the current version is not available online and the only version I can find is the 2017 version where IR35 status had to be determined prior to work beginning rather than the new 2021 when status can be determined up to the moment the end client makes their first payment.

Put it this way - the only person out of the IR35 experts on this forum that seems to think a law has been broken is you - my viewpoint is that I cannot see if the law has been broken as the go to version of the legislation Income Tax (Earnings and Pensions) Act 2003 (legislation.gov.uk) is telling me that it's out of date and it's this exact area where the changes are being made.

And again how do you use the claims court for what is actually an employment issue? We both know that the end client / agency should be paying the difference for the period where the OP thought he was outside but the reality is no court is going to go near it as it immediately crossing into another courts remit (which I suspect was HMRC's entire aim here).

The new version is not available online. But doesn't change the underlying principle. Other primary legislation governs deductions on secondary NIC's. The consultancy is entitled to deduct the costs from the chain payment but not the deemed employment earnings. So if they pay it across to the worker without ER NIC's without changing the rate they will be breaching this. The law hasn't been broken - it might be - so it's worth pointing it out to the client. The contract is still B2B so the contractor is entitled to raise a claim for non-payment and see what the courts decide - if the client can't point to where it is made legal why wouldn't the court rule? Anyway, I wasn't actually suggesting going to court in reality - just that the contractor points out to the client they're on dodgy ground.

I'm not sure how many IR35 experts we have in our presence so I'm not sure how much I draw from the fact we disagree on a fairly niche part of the law that's yet to really be played out. In my experience inside IR35 is a minefield, most clients won't touch it, most payroll companies won't run it for you - the client will either feel as confident as you that the contractor has nowhere to go or not. It's worth rattling their cage IMO.

[ComplianceLady]

Did you make it clear to them all the time they've spent at the client will now be considered inside and they are at risk of retro inspection?

I shared the benefit of my experience with them. Very few changed course.

[eek]

The new version is not available online. But doesn't change the underlying principle. Other primary legislation governs deductions on secondary NIC's. The consultancy is entitled to deduct the costs from the chain payment but not the deemed employment earnings. So if they pay it across to the worker without ER NIC's without changing the rate they will be breaching this. The law hasn't been broken - it might be - so it's worth pointing it out to the client. The contract is still B2B so the contractor is entitled to raise a claim for non-payment and see what the courts decide - if the client can't point to where it is made legal why wouldn't the court rule? Anyway, I wasn't actually suggesting going to court in reality - just that the contractor points out to the client they're on dodgy ground.

I'm not sure how many IR35 experts we have in our presence so I'm not sure how much I draw from the fact we disagree on a fairly niche part of the law that's yet to really be played out. In my experience inside IR35 is a minefield, most clients won't touch it, most payroll companies won't run it for you - the client will either feel as confident as you that the contractor has nowhere to go or not. It's worth rattling their cage IMO.

How would we know if the new version has changed the general principle because the general principle has changed - remember

2017 - status needs to be determined before work begins,
2021 - status can be determined until the end client makes their first payment. Appeals should be allowed but the rules aren't listed anywhere and their is no external appeal mechanism or supplier.

And yes what we are arguing over is minor in the scheme of things but it's very important when it's the entire basis of the post April 2021 (new) way of working

[jamesbrown]

If you want to piece together the latest version of the legislation, I'm afraid you have to do some legwork and take the current version and add in all the outstanding changes listed at the top of the page. I have no idea why they make it this hard, but they do. You might get lucky and find someone else that has already done this. Anyway, there were a bunch of changes (to ch 10 and 11) in recent FAs, including some consequential changes to the PAYE regs, I believe.

https://www.legislation.gov.uk/ukpga...t/4/chapter/10

[eek]

If you want to piece together the latest version of the legislation, I'm afraid you have to do some legwork and take the current version and add in all the outstanding changes listed at the top of the page. I have no idea why they make it this hard, but they do. You might get lucky and find someone else that has already done this. Anyway, there were a bunch of changes (to ch 10 and 11) in recent FAs, including some consequential changes to the PAYE regs, I believe.

https://www.legislation.gov.uk/ukpga...t/4/chapter/10

Again, my point was that ComplianceLady is using the old version of the act as if it is the current law.

Given how many changes to that act are hidden within the last 2 finance acts alone and the fundamental change in how things worked I personally wouldn't be quoting the 2017 version as gospel (mind you I'm not the person doing so) and nor would I be rushing to create a definitive new version of the act as it would be way too easy to miss (a seemingly minor) bit out.

[jamesbrown]

Right, just making a separate point for anyone reading that might be interested in how to arrive at the current legislation. In short, it's hard.

[consultMe]

I think the only option for recourse might be on rate - if the contract is inside IR35 the rate quoted has to be exclusive of ERNI & ERPEN. So it's going to cost the consultancy / end client a fair whack to retrospectively make you inside IR35 - have they mentioned that?

I'm not sure how that works but I'm not on a 'rate' as such. The end client may be paying a daily rate to the consultancy but the consultancy pays my company lump sums based on deliverables.