Yasmin analysis

[eek]

I asked if contractor PSC could simply use fixed bid pricing to avoid falling into the "hidden employee" trap and you answered "of course".

Is it really that simple - just don't charge a day rate, if you are contracted for 3 months, lets say 60 working days you just multiply your day rate by 60 and put the total sum on the contract and the whole IR35 thing goes away?

Nope there would need to be a scope of work and a set of deliverables both defined and then delivered....

Fixed price work requires both a different methodology and a different mindset.

[rob s]

I asked if contractor PSC could simply use fixed bid pricing to avoid falling into the "hidden employee" trap and you answered "of course".

Is it really that simple - just don't charge a day rate, if you are contracted for 3 months, lets say 60 working days you just multiply your day rate by 60 and put the total sum on the contract and the whole IR35 thing goes away?

I asked a similar question about ratecards. But this seems to be contract wording sophistry, and if the actual working practices don't change (eg. if the client carries on operating the same way), some fancy wording alone won't help.

[breaktwister]

Hence while you are looking at the above as if the client is controlling the customer I'm looking at it as Jasmine correctly minimising her risk by talking to the customer at appropriate points..

I was asking for analysis of HMRCs view; none of our views matter if we don't understand HMRCs approach.

I am sure that we have clarified for some readers that meetings where the client tells you want to do (requirements gathering) are NOT supervision, direction or control by the client. As I am sure that many end-user clients BELIEVE this to be SDC.

How can we educate clients that simply providing requirements, what work they would like to be performed, and then reviewing same regularly, is not SDC?

[northernladuk]

We do understand HMRCs approach in this case. It couldn't be clearer.

It's not the client that needs educating here.

[breaktwister]

The question you should be asking is will the client engage a BoS project driven resource on that model. The answer will nearly always be no.

And no it doesn't. Working practices trump contracts.

The landscape has completely changed now. Clients who want off payroll working will be forced to accept different models. Any rearranged model for professional service companies needs to be cognisant of HMRCs view as to what constitutes, or doesn't in Yasmines case, a "hidden employee".

And I set-up this thread to analyse Yasmines example in its entirety, contract and working practice - what is it that makes her NOT a hidden employee.

[eek]

We do understand HMRCs approach in this case. It couldn't be clearer.

It's not the client that needs educating here.

+1... It's actually worth looking at the guidance in detail rather than focussing on what you hope is a get out clause to see how its structured.

And the structure is very clear HMG want all people that act like employees to be paid as employees. And no you can't just offload them to a consultancy and continue as before (which is why the consultancy logic is there).

To be fully outside the rules you cannot be under the supervision and control of the end client and the end client needs to accept that from day zero (for they are the ones who have to decide).

[eek]

The landscape has completely changed now. Clients who want off payroll working will be forced to accept different models. Any rearranged model for professional service companies needs to be cognisant of HMRCs view as to what constitutes, or doesn't in Yasmines case, a "hidden employee".

And I set-up this thread to analyse Yasmines example in its entirety, contract and working practice - what is it that makes her NOT a hidden employee.

And I covered that in my first post. The risk in the project has moved from the end client to Yasmin who is now taking all the risk within the project for a fixed fee of £200,000. You then have 2 further statements that show how she is reducing that risk but you read them as direction and control while I see them as milestones and risk mitigation exercises...

[breaktwister]

The risk in the project has moved from the end client to Yasmin who is now taking all the risk within the project for a fixed fee of £200,000. You then have 2 further statements that show how she is reducing that risk but you read them as direction and control while I see them as milestones and risk mitigation exercises...

No. It is not my view that they are direction and control. And you quite rightly state that the question of risk is at the heart of the matter, a question that HMRC does not address AT ALL in its guidance and I guess neither in its ESS tool although I have not seen the full tool question set. HMRC knows that the question about which party assumes various types of risk will lead to a large number of contracts falling outside IR35.

[northernladuk]

You have to remember that the client will have to completely change their method of engagement to get a Yasmin in. They have to use a different frame work, put it to tender, have a couple of companies in to review their offering, make a decision, get them on board with all sorts of contracts. You have to be on that framework, do the pre-work for the tender, turn up and present and then wait.

You can't just flip it to something else to avoid a new tax rule. This is another level of understanding you need to get to rather than massage the odd detail here and there.

[LondonManc]

Some key discussion points/elements:

1) This is a fixed bid contract, not a typical time & materials (day rate) contract. Can a typical PSC use a fixed bid structure rather than T&M to avoid falling into the "hidden employee" trap?

2) Yasmine works closely with the end-client to understand their requirements, technical specifications (detailed requirements) and timeline. Whoaaaaa - how da hell is this not "direction" or "control"? Did this "working closely" happen onsite? What if Yasmine had to manage some end-client resources as part of the contract?

3) Regular checkpoint meetings - this is not "supervision" or "control"?

4) If the client wanted to change a requirement I assume this would NOT be "direction" if the gathering of the original requirements was not "direction".

5) So from this example a "hidden employee" determination is not triggered by:

a) taking detailed requirements from the client as long as they don't direct you as to "how" the work is performed. Quite strange as many actual employees work like this in an age of increasing specialisation.

b) performing contracted services to a deadline

c) allowing the end-client to review the work periodically (checkpoint reviews)

1) Fixed bid is fine but you have to absolutely nail the scope with an intial day-rate analysis piece (offering to deduct that bill from your final fixed price quote). A world of hurt ensues if you don't.

2) Yasmine needs to nail the requirements and make sure that they are still valid. Having worked for digital firms, I can tell you that a week is a long time, let alone a month. While scope was signed off, there's nothing to say that this isn't still valid and expectations have shifted without a change request being submitted.

If Yasmine has to manage end-client resources, she is doing so as part of the project - part and parcel will only kick in if she is line-managing them and is any deeper involved in appraisals than how were Dave and Steve performing on your project?

3) Regular catch ups - if you've paid someone £200,000 and you have a launch date, you'd want to know that they're on track. Similarly as developer, you'd want to make sure that you're heading in the right direction for them in terms of delivering what they want. A Fiat Panda and a Porsche Panamera are both 5-door hatchbacks.

4) Correct. As above, scope creep happens. It's easily managed without it sitting under D&C

5)
a) How can they direct and control you if you're the technical expert? It's like at United under Moyes *shudders* when Phil Neville tried to tell Van Persie how to take free-kicks. Phil ->

b) I'm paying £200,000 to have something launch by such a date. Are you suggesting that all Y2k projects would be inside IR35 because they had a hard deadline?

c) Checkpoint reviews - it's providing reassurance rather than disappearing with someone's cash and they're there hoping you deliver. It's about managing business relationships and something you do with your account manager hat on, not your developer hat. If you want to, pay a friend a day's rate to go in and do the meetings/reviews and they can act as your Business Relationship Manager.