IR35 and your clients client.

[LisaContractorUmbrella]

I'm not sure that they would go to the client without the client telling them that it is nothing to do with them - how the client views you is irrelevant because they have no influence over you. There is no pseudo-employment relationship between you and the end-client, no matter how they think of you - the only relationship that matters is the contract (and working practices) between you and the consultancy.

In the past, I've not worried about whether the end-client sees me as a permanent employee of the consultancy or not - no-one at the consultancy thinks of me as a permie, which is what matters. One of my early contracts had a clause in the contract which said that I should present myself to the client as if I were an employee of the consultancy - it had nothing to do with the relationship between me and the consultancy, but everything to do with the client not realising that the "expert consultancy" didn't have the requisite skills to fulfil the contract.

In the DragonFly case the AA were brought in specifically as witnesses to confirm how they viewed the contractor and their opinion contributed towards HMR&C's victory

[TheFaQQer]

In the DragonFly case the AA were brought in specifically as witnesses to confirm how they viewed the contractor and their opinion contributed towards HMR&C's victory

Dragonfly was Dragonfly > Agency > AA

What NLUK is asking about is ContractorCo > Agency > Consultancy > Client where the contractual relationship would be contractor to agency; agency to consultancy; consultancy to client without naming (or possibly even detailing how many) "staff" are used.

In the Dragonfly case (and most, if not all other IR35 cases), then I would expect HMRC to talk to the client. In the case of contractor to consultancy, I wouldn't expect HMRC to talk to the end-client because they aren't relevant in the contractual relationship pertaining to the contractor.

[northernladuk]

Let's assume there is no agent here to help simplify.

[Support Monkey]

Now you have got me thinking (i know; there is always a first time for everything) I have always thought i was way outside IR35 but am i ??

Ltd - Agency 1 - Agency 2 - Consultancy - end client

[TheFaQQer]

Let's assume there is no agent here to help simplify.

I don't think that there is any difference between

you > agency > consultancy > client

and

you > consultancy > client

There won't be a contractual relationship between you and the client, whereas there will be between you and the consultancy (whether or not there is an agent in the mix).

If the relationship between you and the consultancy is IR35 friendly (in terms of working conditions) then you should be safe, regardless of whether the client sees you as an employee or not.

If the relationship between you and the consultancy is not IR35 friendly (in terms of working conditions) then you are not safe, regardless of whether the client sees you as an employee or not.

[LisaContractorUmbrella]

Dragonfly was Dragonfly > Agency > AA

What NLUK is asking about is ContractorCo > Agency > Consultancy > Client where the contractual relationship would be contractor to agency; agency to consultancy; consultancy to client without naming (or possibly even detailing how many) "staff" are used.

In the Dragonfly case (and most, if not all other IR35 cases), then I would expect HMRC to talk to the client. In the case of contractor to consultancy, I wouldn't expect HMRC to talk to the end-client because they aren't relevant in the contractual relationship pertaining to the contractor.

I don't see why. Surely the whole point of IR35 is that it identifies disguised employment; if you worked for client co 5 days a week, 7 hours a day, alongside permies doing the same job, no ROS, don't need to use own equipment etc then I would have thought that any contractual arrangements you have in place would be superseded by the fact that you would, in reality, be, to all intents and purposes, an employee.

[northernladuk]

Now you have got me thinking (i know; there is always a first time for everything) I have always thought i was way outside IR35 but am i ??

Ltd - Agency 1 - Agency 2 - Consultancy - end client

I don't think the 2 agencies make a difference but it is the term 'end client'. He is not your end client though is he. Consultants Client is a better term. This is where my confusion lies.

[northernladuk]

I don't see why. Surely the whole point of IR35 is that it identifies disguised employment; if you worked for client co 5 days a week, 7 hours a day, alongside permies doing the same job, no ROS, don't need to use own equipment etc then I would have thought that any contractual arrangements you have in place would be superseded by the fact that you would, in reality, be, to all intents and purposes, an employee.

But we are drafted in by the consultancy to provide skills in to the project they do not have. Need to be careful with the client word. There is client of my LTD and client of the consultancy.

I am a specialised resource providing a service to the consultancy they do not have or cater for with permie staff so I am happy I am outside IR35. The next step is to be offered to their client as a permie of the consultancy. This is the bit that worries me... but I cannot be seen as a permie of the Consultancies Client cause I do work on behalf of the consultancy.

I guess the question is, can I be seen as a hidden employee of a company I have no contract or contractual/financial relationship to?

[TheFaQQer]

I don't think the 2 agencies make a difference but it is the term 'end client'. He is not your end client though is he. Consultants Client is a better term. This is where my confusion lies.

Exactly - they aren't the end-client, they are the customer of your client.

If you weren't working at the customer premises, and there was an IR35 investigation, do you think that HMRC would talk to the customer of your client to find out what they think of you? Of course they wouldn't.

The contract is between your company (any intermediaries) and the consultancy. The fact that they then ask you to perform services for them to a particular client of theirs and based at a different location is irrelevant.

[jamesbrown]

I don't see why. Surely the whole point of IR35 is that it identifies disguised employment; if you worked for client co 5 days a week, 7 hours a day, alongside permies doing the same job, no ROS, don't need to use own equipment etc then I would have thought that any contractual arrangements you have in place would be superseded by the fact that you would, in reality, be, to all intents and purposes, an employee.

It's an interesting question and I have an opinion (I'm not saying I'm certain). The point of IR35 was that HMRC could "look through" an intermediary arrangement and ask whether the contractor was a disguised employee and thus liable, as an individual contractor, for greater tax. If the working practices with the end client point to a relationship of employment, I think the contractor would be a disguised employee of the end client (disguised via the consultancy and contractor Ltd. Co. together). How many intermediaries are needed and how complex does the relationship need to be? One can think of many scenarios.

The basic question is whether a contract is needed as a prerequisite for disguised employment and what that contractual relationship must be. I don't think disguised employment relies on this. HMRC can cast aside a contract if it doesn't reflect working practices. One could also have a situation where the end client expects a particular contractor to do the work in a particular way (in the contract between them and the consultancy) even if the contract between the consultancy and the contractor Ltd. Co. is IR35 friendly.