Offered a 1 year extension...

[man]

I've just worked a short initial contract with a large private client via a large agency, and they've offered me a year extension, which I very much want. I was hoping some of you had some ideas for reducing the risk of a later HMRC-greed induced tax grab?

Obviously this takes us beyond the IR35 reform date, and I know the client hasn't done its assessments yet. I definitely in reality work outside (No SDC) but it's the kind of client that might put me inside at the same time as everyone else using some kind of general blanket rule or role based assessment.

B&C have advised me that there's an increased risk to the entire contract if the client later decides I'm inside, but I'm not planning on turning a 1 year extension onto a 6 month extension to ensure all the payments are paid out before Apr 5 (it doesn't make sense to let IR35 decide this sort of thing). I'm expecting difficulties negotiating contract changes as the client and the agent admin teams are both resistant to anything unusual.

[northernladuk]

I'd go back to the agent and point out the contract spans April 2020 and what are they doing about mitigating this, defining the status and why they are even going down the 1 year route with this coming up.

Hopefully they will give you a detailed explanation showing they've done their diligence and thought about the risks.

If they can't then you've got a problem.

Speak to the agent first to see how the land lies.

[jbond007]

I've just worked a short initial contract with a large private client via a large agency, and they've offered me a year extension, which I very much want. I was hoping some of you had some ideas for reducing the risk of a later HMRC-greed induced tax grab?

Obviously this takes us beyond the IR35 reform date, and I know the client hasn't done its assessments yet. I definitely in reality work outside (No SDC) but it's the kind of client that might put me inside at the same time as everyone else using some kind of general blanket rule or role based assessment.

B&C have advised me that there's an increased risk to the entire contract if the client later decides I'm inside, but I'm not planning on turning a 1 year extension onto a 6 month extension to ensure all the payments are paid out before Apr 5 (it doesn't make sense to let IR35 decide this sort of thing). I'm expecting difficulties negotiating contract changes as the client and the agent admin teams are both resistant to anything unusual.

If you want to take the one year extension, this is how I would play it:

• Let your clientco manager know that you will need to know their assessment by Jan 2020
• Also, let them know if the assessment is inside, you will serve your notice period (or negotiate?, but probably better to serve notice depending on how long you've been contracting with them)
• Make sure your last invoice is processed and payed before 05 April 2020. Work the dates backwards to ensure when you need to serve notice and have your last invoice paid
• Being upfront could go two ways, they rescind the offer or happy with your approach
• There is ofcourse an option of renewing the contract (ensuring you've got a proper termination clause), don't say anything and invoke your notice period in Jan if there is an inside determination

This approach is based on you get on well with the clienco manager and can have a proper business conversation with them.

[WordIsBond]

Three questions:

1. Are you replaceable? If you end up leaving in February, after giving notice, does it really leave the client in a bad way or will you be able to reasonably hand over to someone else?
2. Does the contract have a reasonable provision for giving notice?
3. Do you want to keep contracting if this IR35 'reform' goes through?

If the answers are yes you can be replaced, yes the contract allows you to give notice, and yes you want to keep contracting, then I'd probably just accept it and not rock the boat right now.

If you don't want to keep contracting you'll want to be looking for a perm job rather than take this.

But if you do want to carry on, there is a chance we get a chancellor with a brain who will zap this mess, and you'd rather not mess up a good opportunity over something that may not come about.

And even if it all goes ahead, you can still, come the beginning of January, tell them your contract and working practices are outside IR35, but you'll need to get an outside determination from them by 15 February, or you'll need to turn in notice. You can say there are significant risks and complications in carrying contracts over 6 April without an outside determination, and you aren't going to be prepared to do that.

[Lockhouse]

I've just accepted a year's extension () but if nothing changes I'll move on 5th April.

[northernladuk]

I've just accepted a year's extension () but if nothing changes I'll move on 5th April.

You know it will have to be before that don't you?

[cojak]

31st December 2019 or 24th February 2020 or not bothering at all and sailing through 6th April 2020.

It’s all about your appetite for risk.

I’ll do a sticky about it in October, that ought to give people something to think about over winter...

[Hobosapien]

Simple approach:

Get an independent contract review to obtain documented evidence you are currently operating outside IR35.

When legislation coming into effect April 2020 is confirmed check what it says about existing contracts and extensions. It may be that the new approach of client determining status only applies to new contracts or at renewal time for existing contracts, giving you a clear red line if client says they are going to determine 'inside IR35' status. There may also be an amnesty on existing contracts where client deems inside IR35 when previously this was not the case, due to the rule changes meaning a prior determination cannot be used so retrospectively applying the new rules would be unfair. I think I've read that HMRC are not looking to investigate contracts that move to inside IR35 next April, instead concentrating on those deemed outside IR35 after that date.

You can argue with client if they are looking to deem your contract inside IR35 by showing the independent review evidence that says otherwise, though the rules the client is basing their decision on may be different to those currently used to determine status (e.g. updated CEST tool that will behave differently to now), but ultimately you want to know where the red lines are so you can avoid crossing them. As Cojak says this also includes payment scheduling for work conducted before the red line, that may cross that line if client delays payment.

If client looks to deem your contract outside IR35 then nothing to worry about, carry on invoicing. So between now and then do what you can to position yourself outside IR35 and convince the client you are, so even if they look to blanket determine others inside you can argue your case to be an exception.

[northernladuk]

Simple approach:

Get an independent contract review to obtain documented evidence you are currently operating outside IR35.

If people haven't been doing this up to now then it's a bit late and they want shooting.

When legislation coming into effect April 2020 is confirmed check what it says about existing contracts and extensions. It may be that the new approach of client determining status only applies to new contracts or at renewal time for existing contracts, giving you a clear red line if client says they are going to determine 'inside IR35' status.

Completely wrong.

There may also be an amnesty on existing contracts where client deems inside IR35 when previously this was not the case,

Not a chance. Where did this idea come from? HMRC giving amnestys? They are driving people to suicide over the loan charges so why would they give amnestys to a bunch of people who they believe have been paying the wrong tax for decades?

due to the rule changes meaning a prior determination cannot be used so retrospectively applying the new rules would be unfair.

What's fair got to do with it?

I think I've read that HMRC are not looking to investigate contracts that move to inside IR35 next April, instead concentrating on those deemed outside IR35 after that date.

Nope. I'm highly skeptical of the detail but Compliance Lady indicated HMRC have sent letters to some PS contractors. Even if they haven't yet it's still always hanging over us.

You can argue with client if they are looking to deem your contract inside IR35 by showing the independent review evidence that says otherwise

Not sure that's going to make a difference. The goal posts have change and the clients are at risk. I very much doubt any client is going to use contractor supplied information to base their decision.

though the rules the client is basing their decision on may be different to those currently used to determine status (e.g. updated CEST tool that will behave differently to now)

Oh, something that's right'ish.

If client looks to deem your contract outside IR35 then nothing to worry about, carry on invoicing. So between now and then do what you can to position yourself outside IR35 and convince the client you are, so even if they look to blanket determine others inside you can argue your case to be an exception.

They can't do blanket determinations and if they've done such a poor job of understanding the legislation that they've applied it then they've even less chance of listening to a single contractor.

[CanPayButWouldRatherNot]

31st December 2019 or 24th February 2020 or not bothering at all and sailing through 6th April 2020.

It’s all about your appetite for risk.

I’ll do a sticky about it in October, that ought to give people something to think about over winter...

can I just ask where 24th feb comes from ?

I am on two week notice and get paid weekly (if I do the timesheets) so was following the advice below and working back from april 2020 was hoping to give notice say 8th march and get the work and payment done in time.