Does control influence whether an engagement is one of for service or of service ?

[Rory Dwyer]

I've never really understood why agencies get so stuck on IR35 if they plan to act ethically and morally towards the contractor in all circumstances. If a contractor gets caught out on a review by HMRC then that's the contractor's issue for the contractor to resolve. The only reason I can think any agency would want to fight and "test this point in a court of law" is if they want to do anything they can to deny contractors the protections within the Conduct Regs.

In this case, if the contractor had been able to invoke the Regulations successfully then he'd have been at least £15,000 better off, and maybe up to £54,000 better off depending on if it were the client or contractor who CNL wanted the £39,600 from.

As an aside, I wondered how that £39,600 figure could be so high and guessed that the agency cut must have been substantial to allow them to claim such a high "loss". A very quick Google search brought up this interesting snippet showing an example of CNL having a £200 per day cut from a contractor (contractor day rate £550) and using it to justify a high "buy out". It makes more sense now why the Conduct Regs would be such a nuisance.

You don't know the half of it. And currently I can't tell you

[TheFaQQer]

I am not anxious for any one to opt out.

You personally may not be, but there are certainly people who are employed by you who are.

[Rory Dwyer]

Well that won't lead to confusion at all... If the answer is "Not opting out means you are IR35 caught" then there is still the question over whether the Conduct Regs should apply at all in a B2B relationship, or in the particular circumstances of each contract. Of course, these would be glossed over and instead the message would be "You must always Opt Out."

The "Conduct Regs" work perfectly well in a B2B environment where the individual supplied is not the sole director/owner of the PSC or whichever legal entity is the work seeker and when that individual wishes to argue they are under the control of the hirer. If you do not argue that position, then there is no problem, but the Conduct Reg's will not apply for that engagement.

[Rory Dwyer]

You personally may not be, but there are certainly people who are employed by you who are.

As I have already said, they virtually all opt out and the very few that don't don't own the PSC and therefore IR35 does not matter

[Rory Dwyer]

No idea. But I've heard from BIS, three separate IR35 accountants, the PCG and REC that the Agency Regs have absolutely no bearing at all on any IR35 decisions. Clearly we're all missing something...

The BIS also told me lots of things that didn't transpire to be true, I can't comment on the others, but yes, I believe you are missing something and I am providing you with the details.

[Rory Dwyer]

I'm missing something and TBH there's far too much to bother reading.

But I'm not sure why you would need to test something in the courts which you appear to claim is 100% settled. Anyway, Rory Dwyer is a name on my 'not to do business with' list. Seems like too much hard work.

It is not 100% settled, and as I have already said, there are civil proceedings continuing which I am not at liberty to discuss yet.

The law affects all transactions, regardless of your intermediary.

[malvolio]

The BIS also told me lots of things that didn't transpire to be true, I can't comment on the others, but yes, I believe you are missing something and I am providing you with the details.

Well you're not, actually, but let's not go there.

So how about the substantive point; the Regs as originally conceived, would not have impacted us at all; we were effectively out of scope since the provisions wouldn't really apply to us The opt out was negotiated in order to allow existing business models with a dependency on retained sub-contractors to continue, since there was no exploitation risk and the relationships were all B2B (and FTOAD I was party to that discussion at the time). Then the agencies started demanding that contractors opt out, and made it increasingly difficult not to do so, usually by threatening non-IR35 compliant contracts regardless of the reality of the arrangements. Had they kept out of it, the Regs would have worked as a backstop for poor practice, instead of which they are the second biggest headache we face.

Care to explain why?

[Rory Dwyer]

Well you're not, actually, but let's not go there.

So how about the substantive point; the Regs as originally conceived, would not have impacted us at all; we were effectively out of scope since the provisions wouldn't really apply to us The opt out was negotiated in order to allow existing business models with a dependency on retained sub-contractors to continue, since there was no exploitation risk and the relationships were all B2B (and FTOAD I was party to that discussion at the time). Then the agencies started demanding that contractors opt out, and made it increasingly difficult not to do so, usually by threatening non-IR35 compliant contracts regardless of the reality of the arrangements. Had they kept out of it, the Regs would have worked as a backstop for poor practice, instead of which they are the second biggest headache we face.

Care to explain why?

I have given you the details of the case where the BIS took CNL to court on the request of a contractor whom had opted out of the "Conduct Regulations" and the hirer was aware of this opt out, but CNL was unable to prove because of activities alleged which it couldn't provide proof of, because the proof was no longer in our possession.

Additionally, the contractor in question had whilst under contract with the intermediary, set up a competing company with a sales manager of that intermediary causing substantial losses and damages in a breach of his contract and the employment contract of the employee.

If you have an issue with that, I suggest your point of address is the contractor not the intermediary.

The BIS decided to proceed with the case and failed to disclose numerous information concerning direction & control and IR35 even when ordered to do so.

The District Judge Workmen had to decide the case based on a Court Of Appeal (Administrative Court) decision regarding the level of control that is required before the Employment Agencies Act 1973 would bite.

The contractor and the hirer failed to adduce any evidence of control of either the work seeker or the individual supplied by the work seeker but adduced evidence that the contracts signed by both the hirer and the contractor specifically excluded any control (Pre dominant or otherwise)

District Judge Workmen had no choice but to rule that the engagement was not one covered by the Employment Agencies Act 1973 based off the precedent of Justice Sales in Accenture Services Ltd vs HMRC 2009 or face two sets of appeal, of which we were more than happy to do. BIS did not appeal.

Therefore, if your engagement does not have the required level of control as defined by the precedent of Justice Sales the Employment Agencies Act 1973 will not apply and as a consequence neither will the "Conduct Regulations"

Is that clear enough for you ?

Therefore, the details I have provided you are the circumstances surrounding the CNL case and the legal cases that had set the precedents.

You can make your own decisions off the back of that, just as I have.

What I can't provide details on, is the civil case that is currently on-going for obvious reasons.

Parliament passes the laws, Judges interpret them, if you don't like that process, act to change it, move or accept it.

[Rory Dwyer]

I would like to add a like to lisa, cojak and northernladuk, how do I do that ?

[Rory Dwyer]

I would like to dislike malvolio, how do I do that ?