IR35 caught contract

[craig1]

Just thought I'd share this as I've never seen it before.

I was invited to apply for a 12 month contract today, the client offered it as either proper contract or fixed term contract employee. They specifically stated that they'd added 10% to the contract day rate to reflect that it was definitely IR35 caught due to the role being available for an employee, even if FTC. No agent involved, it's a direct contract.

Has anyone seen this elsewhere? Is it companies finally understanding IR35 or just them playing completely safe?

[northernladuk]

Just thought I'd share this as I've never seen it before.

I was invited to apply for a 12 month contract today, the client offered it as either proper contract or fixed term contract employee. They specifically stated that they'd added 10% to the contract day rate to reflect that it was definitely IR35 caught due to the role being available for an employee, even if FTC. No agent involved, it's a direct contract.

Has anyone seen this elsewhere? Is it companies finally understanding IR35 or just them playing completely safe?

I don't think it is guaranteed to be a fail. If you negotiate the contract and the conditions to tick all the other boxes there is a chance you could make it IR35 friendly. Need to know more information than the above though to make call on it.

There are more than enough contractors out there that don't know or chose to ignore IR35 that would take that and still account for being outside.

[craig1]

I don't think it is guaranteed to be a fail. If you negotiate the contract and the conditions to tick all the other boxes there is a chance you could make it IR35 friendly. Need to know more information than the above though to make call on it.

There are more than enough contractors out there that don't know or chose to ignore IR35 that would take that and still account for being outside.

Fair enough, they hinted strongly that they'd put in the contract that I acknowledge IR35 caught status in return for the extra 10% rate. It takes a £600 p/d contract to £660p/d.

[northernladuk]

Fair enough, they hinted strongly that they'd put in the contract that I acknowledge IR35 caught status in return for the extra 10% rate. It takes a £600 p/d contract to £660p/d.

I guess if they are just trying a little too hard to make sure they don't get banged for any costs if you get deemed an employee further down the line. Seems a bit sledgehammer and not seen this before. Be interesting to know what our more legally knowledgeable members say about this.

Have to do your sums to make sure the extra 10% is enough by the way.

Are they a big company?

[mudskipper]

Fair enough, they hinted strongly that they'd put in the contract that I acknowledge IR35 caught status in return for the extra 10% rate. It takes a £600 p/d contract to £660p/d.

You'd be better off then on the fixed term contract (presumably on their payroll) as they'd be paying the employers NI, and you'd get paid holiday etc.

[craig1]

I guess if they are just trying a little too hard to make sure they don't get banged for any costs if you get deemed an employee further down the line. Seems a bit sledgehammer and not seen this before. Be interesting to know what our more legally knowledgeable members say about this.

Have to do your sums to make sure the extra 10% is enough by the way.

Are they a big company?

Big fish in a small niche pond (top 10 global company in their professional services niche). In the wider market scales though, they're mid-sized at best.

[craig1]

You'd be better off then on the fixed term contract (presumably on their payroll) as they'd be paying the employers NI, and you'd get paid holiday etc.

£90k FTC! Nowhere near £660p/d although it does come with 5 weeks of paid holiday and other decent benefits.

[mudskipper]

£90k FTC! Nowhere near £660p/d although it does come with 5 weeks of paid holiday and other decent benefits.

Ah, I thought the 10% was on top of the FTC rate.

[craig1]

Ah, I thought the 10% was on top of the FTC rate.

No, 10% on top of £600p/d contract rate. FTC rate is £90k.

[malvolio]

£90k pa = £90ph = £675 pd for a 7.5 hour day. Just thought I'd mention it....

What they've done is taken the cost of employment and presented it two ways. Total cost to them is exactly the same.