Yasmin analysis

[breaktwister]

I wanted to start this thread specifically to discuss the ONE example provided by HMRC where a PSC contractor is NOT considered to be an employee.

https://www.gov.uk/government/public...s-do-not-apply

Jasmine is a Website Designer, contracted to a large local authority to design and build a website - off-payroll working rules do not apply.

Context

Jasmine is a website designer who provides her services through her own company, Jasmine WWW Ltd. The PSC has been contracted by a local authority, Midshire CC to design and build a new website, through which local residents should be able to access and use their services.

Midshire CC has agreed to pay Jasmine WWW Ltd £200,000 for Jasmine’s services.

Do off-payroll rules apply?

Jasmine’s task is to design and build the new website. To do so, she will need to work closely with the council to understand their requirements, including technical specifications and timelines. Jasmine will have a large amount of control for how she delivers her work and other than regular checkpoint meetings and progress appraisals with the council’s Head of IT Services, her work will be largely unsupervised.

Jasmine WWW Ltd’s contract with Midshire CC means Jasmine will be expected to:
•deliver the website to an agree standard by the agreed date
•visit the council’s offices for meetings, but will mainly work from her own office
•provided her own equipment needed to do the job in hand
•employ her own staff to help deliver the contract if she needs to
•cover her own costs and expenses

Using the Employment Status Service

Midshire CC uses the online Employment Status Service to help determine whether the off-payroll rules should apply to the contract with Jasmine WWW Ltd. Given the nature of Jasmine’s work and the contract with the PSC, the service indicates that the rules do not apply in this instance.

Jasmine WWW Ltd has been contracted to provide a distinct product to the council and will bear the costs associated in delivering that. Although her work is for the public sector, Jasmine will not be performing a role which would be considered to be that of an employee.

[breaktwister]

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)

[northernladuk]

1) Of course they can. You are a business just like any other business apply for tenders or fixed price work. The only problem is you not really understanding what you are and how to run your business.

2) Requirements gathering is not D&C. She asks questions and gets answers. If you can't tell the difference you need to go permie.

3) Words fail me.

Non thread of the day.

[eek]

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 is Yasmine had to manage some end-client resources as part of the contract?

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

that just shows how little you understand about business...

1) fixed price means the risk is carried by the supplier (and also means they may need a lot of capital to pay freelancers earlier than they get paid). The important thing is that Jasmine is carrying all the risk, not the public sector client

2) meetings are not control. All she is doing there is getting a specifications. Personally there would be a payment milestone when the specifications were completed and probably a renegotiation based on the finalised spec.

3) checkpoints are designed to ensure the client and customer are happy and still expecting the same thing - this isn't direction and control its just ensuring the end client is happy with the work so far so that things can be fixed immediately. Personally I would be holding checkpoints at milestone points with payment due on completion of that piece of work.

[breaktwister]

You NL are an ignorant **** and have no idea what I do or don't understand. You are the one making yourself look stupid as you clearly don't understand that I am posing the questions, not from lack of my knowledge but to invite discuss as to HMRCs conclusions and reasonings. Once we understand their reasoning then it can be applied to our businesses.

[breaktwister]

I understand plenty about business, I am amazed that I am attacked by two forum regulars simply for wanting an analysis of why Yasmin's situation is different to others deemed "hidden employees".

[northernladuk]

Two people give the same answer and one is thrashing around like a fish out of water and we are the useless ****'s?

It's a completely different model and not commonly available to most of us. If you see the opportunity take it otherwise continue being what we are. It's not hard.

[eek]

You NL are an ignorant **** and have no idea what I do or don't understand. You are the one making yourself look stupid as you clearly don't understand that I am posing the questions, not from lack of my knowledge but to invite discuss as to HMRCs conclusions and reasonings. Once we understand their reasoning then it can be applied to our businesses.

Not quite... We both read your first and second posts and both came to an immediate believe that you don't understand how to run a business. Personally I thought as much when I read your first post the questions afterwards just confirmed it.

For background I spent most of the last year getting myself into the position where I could become a specialist consultancy doing a mixture of fixed price and time and materials work (T&M is better all round but hey if a client doesn't want it I'll happily charge them 30-50% more for risk I would then minimise using the approaches in points 2 and 3). 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..

[breaktwister]

1) Of course they can. You are a business just like any other business apply for tenders or fixed price work.

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?

[northernladuk]

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?

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.