Contractual Status and IR35 Change

[PerfectStorm]

I had exactly this problem with a public sector client (DM me and I can furnish you with details/compare notes)

I was able to convince them that they couldn't change status quite so quickly, and also made the point that I wasn't comfortable with going from outside to inside on the same contract, as I felt it would give rise to questions about the work to-date if I kept on going. I left, outside status intact.

[jamesbrown]

I didn't read it like that. I read he's started under outside, within the first payment cycle they've switched to inside. He's asking if it can be honoured because he's not understood they are within their rights to change it. He's hanging on to the outside contract but that's now gone as part of the SDS process, not through contractual clasuses and processes.

IR35 status can switch from outside to inside at any moment (i.e., at any moment their judgement of the facts changes), assuming this is Chapter 10 (which it is, if there's an SDS), including within the first payment cycle. They do need to issue an SDS before the first payment is made. The SDS can change. The rest is a contractual issue, i.e., termination clauses, timeframes etc. Another legal requirement is that the client has a formal status disagreement process in case you disagree with the SDS, but that is pretty worthless because it is, er, client-led.

[Ketto]

Out of interest, in a long multi-extension gig how often do people prompt the client to reassess the SDS if the client aren’t initiating it themselves? Every extension, annually, never?

[Protagoras]

Out of interest, in a long multi-extension gig how often do people prompt the client to reassess the SDS if the client aren’t initiating it themselves? Every extension, annually, never?

For a Ch.10 engagement it's the client's responsibility. Unless there's a liability transfer clause, I can't see why a contractor would raise the matter.

[ensignia]

I had this happen with a client recently, had to leave to make a point, but it was one of my best contracts going on 20 months and was guaranteed for at least another 9 months.

Their reasons were completely spurious for wanting to switch from Outside to Inside and that combined with "possibly" a 10% rate uplift meant it was no longer tenable. Shame because it was a great gig.

[Ketto]

I had this happen with a client recently, had to leave to make a point, but it was one of my best contracts going on 20 months and was guaranteed for at least another 9 months.

Their reasons were completely spurious for wanting to switch from Outside to Inside and that combined with "possibly" a 10% rate uplift meant it was no longer tenable. Shame because it was a great gig.

Right move, if they flip from outside to inside mid-engagement no option but to go in my view.

[Protagoras]

Right move, if they flip from outside to inside mid-engagement no option but to go in my view.

The prevailing view at the introduction of off-payroll was that it was a bad idea to transition from contractor-determined 'outside' to client-determined 'inside'. It was certainly my view. That didn't stop lots of people from doing it!

But now, a few years down the road, if a post Ch.10 contract was client-assessed as 'outside' and is re-assessed on extension as 'inside' then, absent any liability transfer clauses, is this necessarily still in the 'no-option' category?

One could agree the appropriate rate rise for 'inside' and carry on; the risk that the earlier part of the engagement is established as 'inside' is the surely the client's risk ...

[Ketto]

Personally i’d be off.