Client suddenly deems you inside before April

[professor]

Mid-way through the term of an ongoing contract, if the client suddenly deems one 'inside' (done in preparation for April 2020 planning and therefore not particular to the ongoing contract, of course) what would be best day to leave?

The ideas so far in this great thread seems to be, with increasing element of risk
a. work notice period to termination (as normal difference of opinion)
b. work the full term of the contract (as current contract is not implicated)
c. work even the next contract offered but terminate before April 2020 (as no implication before April 2020)

However, as the LtdCo's judgement is implicated, whether there is a point in considering the following ?

1. cease work on the day one is informed of this (as there is an implication on the tax judgement by the LtdCo)
2. cease work on the day the legally allowed 'appeal process' between worker and client fails

The appeal process (2) is pointless however could this be used as a 'protected' period to minimise disruption to client's business from (1).

[jamesbrown]

Just be aware that, whatever your personal view about risk, the deemed payment applies to payments made by the fee payer, not contracts entered into or concluded. Thus, April 2020 is a red herring as a date in itself. There are several important dates or, rather, events before April 2020.

The first is the date where a client provides you with an unfavourable status determination. At that point, you’re at risk insofar as the client has gone on record with an unfavourable determination and will be arguing against you if you’re unfortunate enough to be investigated.

The second, and more important date or event, is when you decide to accept that you’re inside on an existing gig that you previously treated as outside, without a change in WP. That is a tacit admission that you were inside all along.

The third and related date is when the new rules create a formal record or hook for HMRC. This is the first period whose corresponding payment on an inside contract falls after April 2020. At that point, you’ve accepted at least one deemed payment under the new rules, for which there is a clear record for HMRC.

In short, any dates that matter will come well before April 2020.

[Blert596]

Hi, I

'm curious to what happens after April 2020 if you are deemed by the client to be inside IR35, on an existing contract. I understand, well as much as one can, the consequences of the changes from out to in etc, and the actions needed in regards to HMRC.


However, if deemed inside, and the contract you have is for a specific length of time, what happens when the termination date is reached? Does the client, if you're now deemed an employee, have the right just to finish you there and then - or as there must be a MoO then do they have to offer you further work, or give you a standard employee termination notice (3 months in my clients case for permies - one week currently on my contract).


Also, if you were brought on, for a project expected to last for 6 months/1 year, what happens if that project finishes early? Can they immediately terminate employment as the contract has finished, or would they be obliged to see the contract engagement through to the agreed end date? I presume if classed as an employee they could then give you other work relevant to your skillset that you would then be obliged to take.


Thanks for any replies

[jamesbrown]

IR35 is a law for deeming that you pay a deemed tax payment when you provide personal service to a client. It is part of a body of tax law, i.e., the ITEPA. It has nothing to do with employment law. These two things are sometimes confused because the same case law principles are used to determine whether the hypothetical contract that governs your relationship with the client looks like one of employment.

So, no, being inside IR35 confers no additional employment rights for the additional tax paid. This may seem unfair, because it is. There may come a time when employment for tax purposes is the same as employment for the purposes of employment law, but that time isn’t now.

[boxingbantz]

I work in the public sector and was deemed outside when I joined last year. I have now been told my new extension will be deemed inside IR35 even though my working practices haven't changed. Seems to be different answers to the CEST tool. I have refused to sign and have handed in my notice. Well aware of the state of the market but no chance I was going to work inside and confident something else will come up.

[MrButton]

I work in the public sector and was deemed outside when I joined last year. I have now been told my new extension will be deemed inside IR35 even though my working practices haven't changed. Seems to be different answers to the CEST tool. I have refused to sign and have handed in my notice. Well aware of the state of the market but no chance I was going to work inside and confident something else will come up.

Tbh I’ve started to see this at my public sector client. They are using their own question rating tool (not CEST)

But I’m surprised they are doing this as they are surely opening themselves up for being liable for the initial incorrect determination?

[boxingbantz]

Tbh I’ve started to see this at my public sector client. They are using their own question rating tool (not CEST)

But I’m surprised they are doing this as they are surely opening themselves up for being liable for the initial incorrect determination?

Sounds like we may work at the same public sector client.

I thought the same and have raised this.

[BABABlackSheep]

I’ve worked for my client for a number of years now, but on different contracts across multiple sites. I didn’t see an issue with that because all the contracts have been deemed to be outside IR35 and there are working practices in place that show clear lines between contractors and permies.

The client has been running down contract extensions so it doesn’t have anyone going beyond April 2020 now.

As I’ve posted elsewhere, they have drawn up a list of who they want to keep and they will specify that to stay you will need a new contract under an umbrella company.

Apologies if I’ve already asked in other threads, but a lot of people will be in this situation, my $64,000 question is..

Will the client insisting all contractors sign a new contract under an umbrella be considered the same as declaring all existing contractors are under IR35 in the clients view, even if they are doing this to not blanket?

I have the full IPSE+, but not QDOS.

Given my circumstances, and the fact I have 2 months left on my contract with a 4 week break clause, what in my situation would you be looking to do?

[Hobosapien]

I’ve worked for my client for a number of years now, ... they have drawn up a list of who they want to keep and they will specify that to stay you will need a new contract under an umbrella company.

...

Will the client insisting all contractors sign a new contract under an umbrella be considered the same as declaring all existing contractors are under IR35 in the clients view, even if they are doing this to not blanket?

...

Given my circumstances, and the fact I have 2 months left on my contract with a 4 week break clause, what in my situation would you be looking to do?

The client is only wanting to pursue contractors operating via an umbrella to avoid the risk of declaring any outside IR35, so the end is the same for them as declaring everyone inside IR35. They will still need to make that determination next April to ensure any contractors don't move from umbrella to Ltd via the agency (if these are not direct contracts) without their knowledge.

So treat it as blanket inside IR35 in that the client is unlikely to give you special treatment to try to stay outside. The outcome is the same for you regardless of how the client goes about it.

If you want to continue at the client for years to come then consider closing your Ltd to draw a line under any potential future investigation and work for them inside IR35 via a brolly as they are expecting.

If you may want to contract elsewhere you could keep your Ltd running and run down the funds then set it dormant, so less money available for any future investigation penalties. If Ltd doesn't have it they can't take it unless they try to make director(s) liable which is unlikely under normal IR35 investigations from what we have heard on here, unless I've missed something regarding specific investigation cases where director was pursued personally.

[BABABlackSheep]

If you want to continue at the client for years to come then consider closing your Ltd to draw a line under any potential future investigation and work for them inside IR35 via a brolly as they are expecting.

If you may want to contract elsewhere you could keep your Ltd running and run down the funds then set it dormant, so less money available for any future investigation penalties. If Ltd doesn't have it they can't take it unless they try to make director(s) liable which is unlikely under normal IR35 investigations from what we have heard on here, unless I've missed something regarding specific investigation cases where director was pursued personally.

Thank you.

The one point I can never understand, is if you can just run down the money in your company, and they don’t make directors liable, then what’s the problem. First sign, close company, take cash out. Sorry if an obvious answer, but how are they getting the massive sums from e.g. tv presenters ?