Software developer contracts

[MoodyBlue]

Hi,

I've been reading a lot about IR35 over the last week trying to relate it to real world contracts I see in my industry, software development.

I cannot seem to fathom how any one in my industry can think a contract like "Java developer needed for 6 month project" can be outside of IR35, pretty much most contracts I see on sites like JobServe. The contract might be worded as such but the day to day work practice would not be.

These types of roles usually mean working with permanent employees so you would have to be at ClientCo's office during typical office hours, 9-5. You would take direction from the BA's on what to do, and you would most likely have your work reviewed so the how you do it isn't really fully up to you.

Because of the nature of the work it normally takes a little bit of time to get any traction, to become familiar with SystemX before you can contribute anything, so I can't see why ClientCo will allow you to substitute yourself. There are other things like, having beers in the office, using the staff canteen that all make you look like a regular employee.

How can any one in a role like that think they're ok should they happen to be investigated by HMRC, I've seen people say "don't worry just get signed up with PCG". How can PCG even defend contracts like that?

Thank you.

[northernladuk]

Welcome to the IR35 argument. What you are arguing is exactly HMRC's point. In our defense we use legal loopholes to run small companies contracting personal services and a very shoddy IR35 legislation that presently doesn't stick at all.

Just do the following
Get contracts reviewed with people like QDOS and make changes recommended by them
Take out IR35 insurance and/or get PCG+
Make sure you act like a contractor and differentiate yourself from permies.

Nail that down and you will be safe as you can be. The main point is you have to look different to permies, not be under client control, have a sub and MoO clauses and enjoy the contracting life.

If you do a search for IR35 using the search method in the welcome section of the forum you will see this debate has raged on and on and on.

[BlasterBates]

You're right in a way the main thing seems to be not staying anywhere too long. Whereas in principle nothing really changes as time goes by in a contract, being there a long time just kind of points to you being inside.

If you're there a short time that alone differentiates you from the permies and a strong pointer to bringing on board a specialist.

Of course you need to play the game and get all those clauses so if they do run a check you don't end up inside IR35 based on conditions of the contract because that is something they can easily check if they do an audit.

If you look most of the court cases are over longterm contracts.

If you make sure you are on a specific project and you leave when it's over it shouldn't be a problem.

[MoodyBlue]

Welcome to the IR35 argument. What you are arguing is exactly HMRC's point.

Maybe I should go work for the HMRC lol

Just do the following
Get contracts reviewed with people like QDOS and make changes recommended by them
Take out IR35 insurance and/or get PCG+
Make sure you act like a contractor and differentiate yourself from permies.

Is PCG+ any better than IR35 insurance, I looked at the QDos insurance and it seemed to cover everything?
That second point is what I have a hard time getting my head round in my industry (Software development). I can't see how you can really be different? Not going to the Xmas office party probably isn't enough.

The main point is you have to look different to permies, not be under client control, have a sub and MoO clauses.

I can't see how a software developer contractor can really look different. Maybe MOO but software developers on a project will be under client control, they can't realistically substitute some one in their place.

[MoodyBlue]

You're right in a way the main thing seems to be not staying anywhere too long. If you're there a short time that alone differentiates you from the permies and a strong pointer to bringing on board a specialist.

I thought contract length didn't matter, even a 3 month contract can be inside IR35? Am I wrong about that?

Of course you need to play the game and get all those clauses so if they do run a check you don't end up inside IR35 based on conditions of the contract because that is something they can easily check if they do an audit.

If the working practice is not different to permies, then the contract is basically not a defence right?

If you make sure you are on a specific project and you leave when it's over it shouldn't be a problem.

The project is specific at least.

[northernladuk]

Is PCG+ any better than IR35 insurance, I looked at the QDos insurance and it seemed to cover everything?

Honestly I don't know and am sure Malvolio will come and tell you but if you do a search on the forums there has been a lot of discussions about the two. Look in the Welcome section. There is a sticky telling you how to use google to search particular parts of the forum. Use PCG+ term in the accounts section.
Possibly wasting money but I have both. So it costs me a couple of 100 quid extra a year. I can deal with that.

That second point is what I have a hard time getting my head round in my industry (Software development). I can't see how you can really be different? Not going to the Xmas office party probably isn't enough.

I can't see how a software developer contractor can really look different. Maybe MOO but software developers on a project will be under client control, they can't realistically substitute some one in their place.

Substitution is a moot point and we have argued about this many times. A few people in the forums have managed to substitute but in many cases it is just a sham. The JLJ case ruled it was a sham and would never work but as long as it is your contract you have to assume it is ok. It is only a pointer as well. There is no one factor that puts you inside or out. There are many different aspects.

Differentiating yourself can be done in a whole host of ways, coming in different times and having flexibility over that, your pass is a dfferent colour, you cannot be shifted on to another job like a permie can, there is MoO so you are not given work after that assignment like a permie does, you are not registered on the training system, you do not have yearly reviews, you do not submit expenses (you invoice it), you try not to take the perks that permies have on site and so on.

Some gigs you can't get away from some of these, others you do. You can still argue you are a contractor even though you have to do some as required by policies on site, eg they don't issue different coloured passes or won't put your LTD name in email. These are all very minor points though.

Just be as diligent as you can be and you have a case.

[Gaz_M]

I too am a software developer (in Oracle) & agree with the OP - no way can you ever be outside IR35 doing this job. Quite frankly, anybody arguing with that is obviously trying to convince him/herself only.
I've been contracting for 12 years now & not once have I had a gig where I can work on my own, work whatever hours I want, use my own equipment, not attend project meetings, ever realistically provide a substitute etc etc.

However, what I do now is only take 3 or 6 month gigs & be disciplined enough to only stay for that amount of time. It does have its drawbacks, i.e. pimps get pi**ed off that I don't accept the extension but I try to weigh up the chances of being investigated for several short gigs against what they could hit a 12 or 24 monther with. I'm also spending at least an hour every night (whilst working away from home) building up Plan B - that's my only guarantee to get shot of this IR35 thing for good.

[northernladuk]

I too am a software developer (in Oracle) & agree with the OP - no way can you ever be outside IR35 doing this job. Quite frankly, anybody arguing with that is obviously trying to convince him/herself only.
I've been contracting for 12 years now & not once have I had a gig where I can work on my own, work whatever hours I want, use my own equipment, not attend project meetings, ever realistically provide a substitute etc etc.

However, what I do now is only take 3 or 6 month gigs & be disciplined enough to only stay for that amount of time. It does have its drawbacks, i.e. pimps get pi**ed off that I don't accept the extension but I try to weigh up the chances of being investigated for several short gigs against what they could hit a 12 or 24 monther with. I'm also spending at least an hour every night (whilst working away from home) building up Plan B - that's my only guarantee to get shot of this IR35 thing for good.

So how do you do your financed? Inside or outside?

[Gaz_M]

So how do you do your financed? Inside or outside?

Outside because I get my contracts reviewed. However, the wording on a contract means nothing when it comes to the real world. Then again, the IR35 rules are not in the real world either because they no longer take into account real self employment issues like sick pay, holiday pay, length of time between contracts etc. The whole thing stinks to me.

[MoodyBlue]

I too am a software developer (in Oracle) & agree with the OP - no way can you ever be outside IR35 doing this job. Quite frankly, anybody arguing with that is obviously trying to convince him/herself only.
I've been contracting for 12 years now & not once have I had a gig where I can work on my own, work whatever hours I want, use my own equipment, not attend project meetings, ever realistically provide a substitute etc etc.

However, what I do now is only take 3 or 6 month gigs & be disciplined enough to only stay for that amount of time. It does have its drawbacks, i.e. pimps get pi**ed off that I don't accept the extension but I try to weigh up the chances of being investigated for several short gigs against what they could hit a 12 or 24 monther with. I'm also spending at least an hour every night (whilst working away from home) building up Plan B - that's my only guarantee to get shot of this IR35 thing for good.

Nice to know some one agrees with me What is Plan B?

I've read that the length of contract doesn't matter. What HMRC would see is a small salary and a regular high dividend pay. I wouldn't think that they'd care if you had a 12 month contract or 4 x 3 month contracts if they thought all of them should be inside IR35?