Stupid Question - Outside Roles

[eek]

Yeah, but if you have one of those nasty clauses in your contract that say your company is liable for any losses that the agency suffer due to IR35 determinations, then you don’t want an SDS since it could move the liability from the client to the agency to you.

Go and read Late IR35 status determination - Contractor UK Bulletin Board to see how not having 1 before you begin working plays out...

[hugebrain]

Go and read Late IR35 status determination - Contractor UK Bulletin Board to see how not having 1 before you begin working plays out...

So he got a nice contract but it might end after ten months? Sounds OK to me.

Client might be upset at having to pay some extra tax, but they can hardly blame him for that.

[eek]

So he got a nice contract but it might end after ten months? Sounds OK to me.

Client might be upset at having to pay some extra tax, but they can hardly blame him for that.

Contract has a claw back clause within it….

and the thing is that this has gone on stupidly long - given how the law is set if a client is playing games the SDS would appear in month 3 or 4 and you would see the unpaid payments in month 3 and 4 disappear into the now required deemed payments.

[hugebrain]

Contract has a claw back clause within it….

and the thing is that this has gone on stupidly long - given how the law is set if a client is playing games the SDS would appear in month 3 or 4 and you would see the unpaid payments in month 3 and 4 disappear into the now required deemed payments.

But the thing above from Guy Incognito says that since the client has (I assume) paid the agency before issuing the SDS the Client is on the hook for any taxes and the agency won’t be able to claw anything back. So no problemo.

[eek]

But the thing above from Guy Incognito says that since the client has (I assume) paid the agency before issuing the SDS the Client is on the hook for any taxes and the agency won’t be able to claw anything back. So no problemo.

Go and read the full thread...

The whole point of a clawback clause is that it allows them to legally go back (via a court if necessary) and ask you to repay everything that should have been paid in tax to HMRC - regardless of when it was paid... The reason a clawback clause exists isn't even for this type of scenario its for when HMRC visits an end client - finds a problem with a few workers and asks for all 1,000+ others to be treated the same way....

And the reason why an agency will want to collect the money off you is that if they recover the money they are paying tax using the money they paid you (50% goes to HMRC, 50% is paid back to you). Without that clawback the agency needs to pay HMRC roughly what it paid to you in the first place...

[TheGreenBastard]

Go and read the full thread...

The whole point of a clawback clause is that it allows them to legally go back (via a court if necessary) and ask you to repay everything that should have been paid in tax to HMRC - regardless of when it was paid... The reason a clawback clause exists isn't even for this type of scenario its for when HMRC visits an end client - finds a problem with a few workers and asks for all 1,000+ others to be treated the same way....

And the reason why an agency will want to collect the money off you is that if they recover the money they are paying tax using the money they paid you (50% goes to HMRC, 50% is paid back to you). Without that clawback the agency needs to pay HMRC roughly what it paid to you in the first place...

I'm still struggling to see how you see this so clearly, that the claw back clause would even stand up in court, there's literally zero legal precedence.

[eek]

I'm still struggling to see how you see this so clearly, that the claw back clause would even stand up in court, there's literally zero legal precedence.

Because there is zero legal precedence no one has a clue whether it will stand up in court.

However it's a B2B contract so I reckon it's at least a 60/40 chance that it would stand up in court....

What we do know is HMRC's advice is to inflect the pain back to the contractor even when it isn't their fault.

[TheGreenBastard]

Because there is zero legal precedence no one has a clue whether it will stand up in court.

However it's a B2B contract so I reckon it's at least a 60/40 chance that it would stand up in court....

What we do know is HMRC's advice is to inflect the pain back to the contractor even when it isn't their fault.

In light of the clauses hugebrain highlighted, I'd see HMRC having some trouble on their hands - orgs like IPSE should be chopping at the bit to represent such a case.

[eek]

In light of the clauses hugebrain highlighted, I'd see HMRC having some trouble on their hands - orgs like IPSE should be chopping at the bit to represent such a case.

These clauses have nothing to do with HMRC - it's a commercial agreement between the agency and the contractor's limited company.

Whether IPSE has a large another fund to actually support a case is an interesting and separate question....

[TheGreenBastard]

These clauses have nothing to do with HMRC - it's a commercial agreement between the agency and the contractor's limited company.

Whether IPSE has a large another fund to actually support a case is an interesting and separate question....

A case would have HMRC involvement without doubt, if there is legislation regarding SDS issuing and a meager "claw-back clause" undermining it.

Think about it in the context of business tax capture, you can't litigate yourself out of obligations, no matter what clause you put in a B2B contract.