Is anyone using a contrived agency contract?

[TheCyclingProgrammer]

I think you'd have to pass more than one to satisfy HMRC

Nonsense. Quite the opposite in fact. Case law shows that HMRC need to show an overall picture of there being a disguised employment relationship in order to be successful in court. Failing a single test is unlikely to be enough.

Given that HMRC don't seem that convinced by RoS clauses unless you've actually invoked one then I'd put it lower down my list of priorities when making a case for being outside IR35, especially if the client was unlikely to accept a substitute anyway.

Case law seems to be on our side but personally I favour working practices, direction and control and MOO to show that I am outside of IR35. I'm happy to admit that MyCo offers my own personal services as to claim otherwise seems like a bit of a sham. But personal service does not mean there would otherwise be an employee/employee relationship (FWIW I do have relatively unfettered RoS clause in my standard contract but it's not the first thing I would point to if investigated)

[malvolio]

I think you'd have to pass more than one to satisfy HMRC

Don't care what HMRC prefer, case law has established you only need one. The BAE case can't remember the precise one) was won because he was sent home when the service failed. JLJ lost only when he moved to being under the Direction of the client, with no change in RoS and MOO.

[BlasterBates]

Effectively they are targeting agencies now, not clear whether this affects IT contractors. Time will tell if agencies stop giving "contrived contracts".

[LisaContractorUmbrella]

Nonsense. Quite the opposite in fact. Case law shows that HMRC need to show an overall picture of there being a disguised employment relationship in order to be successful in court. Failing a single test is unlikely to be enough.

Given that HMRC don't seem that convinced by RoS clauses unless you've actually invoked one then I'd put it lower down my list of priorities when making a case for being outside IR35, especially if the client was unlikely to accept a substitute anyway.

Case law seems to be on our side but personally I favour working practices, direction and control and MOO to show that I am outside of IR35. I'm happy to admit that MyCo offers my own personal services as to claim otherwise seems like a bit of a sham. But personal service does not mean there would otherwise be an employee/employee relationship (FWIW I do have relatively unfettered RoS clause in my standard contract but it's not the first thing I would point to if investigated)

What case law are you referring to? If you want to take it down to basic principals - Ready Mixed Concrete is the established authority on determining whether a contract of service or a contract for services in place:

“A contract of service exists if these three conditions are fulfilled.

(i) The servant agrees that, in consideration of a wage or other remuneration, he will provide his own work and skill in the performance of some service for his master. (ii) He agrees, expressly or impliedly, that in the performance of that service he will be subject to the other’s control in a sufficient degree to make that other master. (iii) The other provisions of the contract are consistent with its being a contract of service.

As to (i). There must be a wage or other remuneration. Otherwise there will be no consideration, and without consideration no contract of any kind. The servant must be obliged to provide his own work and skill. Freedom to do a job by one’s own hands or by another’s is inconsistent with a contract of service, though a limited or occasional power of delegation may not be….”

[TheCyclingProgrammer]

Lisa: the case you reference only backs up what I said, namely point ii) makes it clear that if there isn't a sufficient degree of control over the worker then a contract of service cannot exist.

Therefore, you can be outside of IR35 on direction and control alone.

That's not to say I'm discounting the usefulness of a strong, unfettered RoS clause (especially where it has been exercised): it seems fairly clear that if you have this and HMRC cannot show it to be a sham clause (i.e. it wouldn't have realistically been honoured by the client) then you are outside of IR35. It is therefore valuable.

All I'm saying is that it's not essential to being outside of IR35 and it is possible to be outside of IR35 without one. I reject fully the argument that having no RoS clause or a fettered/sham RoS clause would automatically put you inside IR35. On what basis do you make that claim?

The difficulty here is that we can claim as much as we want to that OurCo's are "providing a service" rather than providing our own personal skills, but as far as the client is concerned they are interested in our own personal skills. Let's be honest here...if you're a one man company, what other services could you be offering other than those of your own personal skills?

[GB9]

Lisa: the case you reference only backs up what I said, namely point ii) makes it clear that if there isn't a sufficient degree of control over the worker then a contract of service cannot exist.

Therefore, you can be outside of IR35 on direction and control alone.

WHS

You only need to prove one of the 3 in your favour.

[LisaContractorUmbrella]

[QUOTE=TheCyclingProgrammer;1853887]Lisa: the case you reference only backs up what I said, namely point ii) makes it clear that if there isn't a sufficient degree of control over the worker then a contract of service cannot exist.

Therefore, you can be outside of IR35 on direction and control alone.

The case I have referenced states quite clearly that there has to be THREE elements considered when deciding whether a not a contract is a contract of employment or not

[TheCyclingProgrammer]

The case I have referenced states quite clearly that there has to be THREE elements considered when deciding whether a not a contract is a contract of employment or not

It is quite clear, yet you do not seem to be able to comprehend it, sorry!

It says that all three elements have to apply for a contract of services (i.e. employment/inside IR35) to exist. Therefore if only one of those elements does not exist, it cannot be a contract of services (so outside of the scope of IR35).

Put it this way: HMRC have to show that all of the elements required for a contract of service exist in order to bring a contract within the scope of IR35. We however, only have to show that one does *not* exist in order to put the contract outside the scope of IR35.

Or to put it yet another way: personal service must be present for a contract to be treated as a contract of services. However, personal service does not preclude a contract from being a contract *for* services.

Example: If I engage Joe Bloggs, a self-employed gardner to come and do a specific piece of work in my garden for me I may reasonably expect him to provide his services personally. However, as I exercise no control over how he performs the services, or when (allowing for convenience), there is no employer/employee relationship between me and Joe Bloggs. He is providing a contract for services, even though there is an element of personal service.

On the other hand, if I engaged him to tend to my garden on a daily basis, specified the hours he must work and when he can take breaks, provided him with tools and could ask him to do any work in my garden with a very broad scope, then it might be argued that I was acting as his employer.

Both scenarios have an element of personal service but only one looks like an employer/employee relationship.

For the avoidance of doubt:

http://www.hmrc.gov.uk/manuals/esmmanual/ESM3345.htm

If you have established that there is a requirement for personal service you should also bear in mind that any such requirement could be present in a contract for services. As such, this requirement is at best a minor pointer to employment, and you should therefore consider whether or not that requirement is reduced in any way.

[LisaContractorUmbrella]

It is quite clear, yet you do not seem to be able to comprehend it, sorry!

It says that all three elements have to apply for a contract of services (i.e. employment/inside IR35) to exist. Therefore if only one of those elements does not exist, it cannot be a contract of services (so outside of the scope of IR35).

Put it this way: HMRC have to show that all of the elements required for a contract of service exist in order to bring a contract within the scope of IR35. We however, only have to show that one does *not* exist in order to put the contract outside the scope of IR35.

Or to put it yet another way: personal service must be present for a contract to be treated as a contract of services. However, personal service does not preclude a contract from being a contract *for* services.

Example: If I engage Joe Bloggs, a self-employed gardner to come and do a specific piece of work in my garden for me I may reasonably expect him to provide his services personally. However, as I exercise no control over how he performs the services, or when (allowing for convenience), there is no employer/employee relationship between me and Joe Bloggs. He is providing a contract for services, even though there is an element of personal service.

On the other hand, if I engaged him to tend to my garden on a daily basis, specified the hours he must work and when he can take breaks, provided him with tools and could ask him to do any work in my garden with a very broad scope, then it might be argued that I was acting as his employer.

Both scenarios have an element of personal service but only one looks like an employer/employee relationship.

For the avoidance of doubt:

ESM3345 - Considering the evidence: personal service

Sorry but I'm not sure I agree - Ready Mix is a starting point only - in HMRC v Larkstar the commissioners found that there was no control over how Mr Brill did his work yet HMRC won the case, albeit through appeal at the High Court

[TheCyclingProgrammer]

Sorry but I'm not sure I agree - Ready Mix is a starting point only - in HMRC v Larkstar the commissioners found that there was no control over how Mr Brill did his work yet HMRC won the case, albeit through appeal at the High Court

That's not my interpretation of that case. The working hours that he was required to do were used as a pointer towards control and there was also a MOO issue.

The case wasn't fought to the bitter end though so we don't know how it would have gone if it had.

You've still not shown any strong evidence of a lack of RoS being an automatic IR35 fail and if you're going to make such claims I feel you should back then up.