Starting contract after 6th April

[koopa]

Hi everyone,

I'd really appreciate someone sanity checking my logic as I am new to contracting (and most of the threads here are related to existing public sector contracts).

I am due to start contracting (CL1 via capita) with a public sector body after 6th April. The setup is that the PSB will use Capita to engage an agency who pay my Ltd company. The PSB offer letter stipulates:

"At all times during the assignment period you will be providing your services as an independent contractor, nothing in this letter or otherwise should be construed as creating an employment relationship between yourself and <PSB>."

I assume this means the PSB, as the client, are declaring my contract outside IR35.

My understanding is that the agency, being the body that pays my Ltd company, will hold liability for paying tax and employer/employee NICs should HMRC come knocking and determine the contract to actually be inside IR35.

As such I do not see the value in IR35 insurance (either enquiry or full liability) as it will be the agency who will have to foot the bill.

Is my logic correct or have I made a newbie blunder and missed the point completely?


Thanks in advance!

[mudskipper]

Hi everyone,

I'd really appreciate someone sanity checking my logic as I am new to contracting (and most of the threads here are related to existing public sector contracts).

I am due to start contracting (CL1 via capita) with a public sector body after 6th April. The setup is that the PSB will use Capita to engage an agency who pay my Ltd company. The PSB offer letter stipulates:

"At all times during the assignment period you will be providing your services as an independent contractor, nothing in this letter or otherwise should be construed as creating an employment relationship between yourself and <PSB>."

I assume this means the PSB, as the client, are declaring my contract outside IR35.

My understanding is that the agency, being the body that pays my Ltd company, will hold liability for paying tax and employer/employee NICs should HMRC come knocking and determine the contract to actually be inside IR35.

As such I do not see the value in IR35 insurance (either enquiry or full liability) as it will be the agency who will have to foot the bill.

Is my logic correct or have I made a newbie blunder and missed the point completely?


Thanks in advance!

Yes, I fear you have missed the point

They are spelling out that you are not an employee of the client - i.e. you will get no sick pay, holiday, training, redundancy etc, etc. No employment rights.

However, employment status for employment purposes != employment status for tax purposes.

You need to specifically ask about the IR35 status of the engagement, and get it in writing.

However, you are right about IR35 insurance - you won't need it, as you will either be inside (taxes deducted) or outside with the client bearing the liability.

Good luck!

[John Lane]

Cl1

You may wish to search previous posts on cl1 contracts and IR35 - most likely to be inside? Manpower substitution?

[malvolio]

You may wish to search previous posts on cl1 contracts and IR35 - most likely to be inside? Manpower substitution?

Absolutely bloody certain to be. If not, you're on the wrong framework...

[LondonManc]

Absolutely bloody certain to be. If not, you're on the wrong framework...

The general consensus being that CL1 = Inside IR35 from April then?

[polagon]

Absolutely bloody certain to be. If not, you're on the wrong framework...

Why is that? I.e. wrong framework?

My client has deemed my role to be outside, and it is Capita CL1 contract role.

[LondonManc]

Why is that? I.e. wrong framework?

My client has deemed my role to be outside, and it is Capita CL1 contract role.

Have you had an official confirmation of determination or is it just the agency telling you?

[polagon]

Have you had an official confirmation of determination or is it just the agency telling you?

Not sure how official it is, but got sent it over from the client who used the new beta tool. "HMRC will stand by the result given unless a compliance check finds the information provided isn’t accurate.". So unless that happens it should be fine.

[LondonManc]

Not sure how official it is, but got sent it over from the client who used the new beta tool. "HMRC will stand by the result given unless a compliance check finds the information provided isn’t accurate.". So unless that happens it should be fine.

Happy days then. Make sure you get a correctly worded confirmation together with the signed contract and away you go.

[koopa]

Yes, I fear you have missed the point

They are spelling out that you are not an employee of the client - i.e. you will get no sick pay, holiday, training, redundancy etc, etc. No employment rights.

However, employment status for employment purposes != employment status for tax purposes.

You need to specifically ask about the IR35 status of the engagement, and get it in writing.

However, you are right about IR35 insurance - you won't need it, as you will either be inside (taxes deducted) or outside with the client bearing the liability.

Good luck!

Thanks Mudskipper - that's really helpful. I've since clarified and the client has confirmed that they consider the contract to be outside IR35 so happy days!

And as it seems with Polagon's contract, CL1 does not necessarily equate to inside IR35, but perhaps only strongly suggests it.