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Client suddenly deems you inside before April

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    Client suddenly deems you inside before April

    So I have read the last few pages of threads but can't seem to find this particular issue, have been with clientco nearly 18 months working outside IR35.

    Current contract ends September, renewal has been offered until March, so far, so good. Its likely if I renew until March this will be my last renewal for this client (24 month rule). All payments will be received before 5th April.

    However, clientco has informed that all contractors will be independently assessed in 'the coming months' using the CEST tool and 'they expect to find 95% inside'

    My questions are these, if I renew and they suddenly deem me incorrectly inside in say December by virtue of the CEST tool, what will they do with this data, and will it go against my own view of my status prior to April 2020?

    Is it better to not be assessed at all by clientco than be assessed wrongly, and risk the entire previous 18months of work also being incorrectly considered inside?


    My options therefore, are to leave the role in September and not renew, (probably) not be assessed (and therefore not incorrectly deemed inside) and either sit on the bench or find something else. I can afford to do this if that helps.

    Renew in September, work through until March, likely be incorrectly deemed inside at some point, but still consider myself outside for tax purposes until end of contract in March when I will not be renewing.

    Renew in September, when told i'm deemed inside immediately give notice as I don't agree with result. (Not sure what this achieve exactly)

    Am aware that responses may be in the vein of "if you are inside you are inside and if you're not you're not" however due to the flawed nature of the CEST tool I feel I will be incorrectly assessed.

    Any help gratefully appreciated.

    #2
    What makes you think your are outside IR35 now ? Who reviewed your contact and what does CEST say now if you enter your details honestly ?


    Sent from my iPhone using Contractor UK Forum

    Comment


      #3
      If there are any issues, just claim on your IR35 insurance.

      Opps I mean your companies IR35 insurance. Will NLUK forgive me?

      Comment


        #4
        There are two main areas for discussion here as I see it:

        1 - CEST is known to be unreliable, this is well documented and the fact that it ignores mutuality of obligations is evidence of the tools bias. That being said contractors have used the tool and gotten an outside IR35 determination, only for the results to be ignored by public sector bodies and HMRC.

        It might be an idea for you to use the tool, answering the questions honestly to see what result you get and then use this as a conversation starter with your client.

        2 - IR35 is a blind spot for a lot of end clients / hirers and their staff don't necessarily have the specialist knowledge required to fully understand the law and apply it correctly to arrive at the right determination, whether inside or outside.

        Where this is the case, end clients will need education and support, there are specialist providers who are providing services like this and it may be of interest to your client to start a conversation with one of them. Not finding 95% of their contractor workforce inside IR35 will protect their agility and ability to innovate / deliver business vital projects in the short term.

        The good news is that they are acting now and there's still time for them to get it right.

        Comment


          #5
          CEST is likely to change, maybe multiple times, between now and next April, so if the client is being proactive and trying to assess too early they risk being out of date come next April. i.e. if client looks to be putting you inside IR35 argue that they need to re-assess nearer the time when the rules are solid in terms of what HMRC are expecting clients to do.

          You will have an independent review saying your contract and working practices are currently outside IR35, and the insurance to back it up, so can tell the client you don't accept their finding and in any case their findings are irrelevant from a pure contract point of view before they come into force next April. i.e. the client can say what they like now but currently you are the one that determines status and faces the risk of getting it wrong.

          Of course to stand by that you may need to walk in good time before next April, but no reason to walk too early if you play it right.
          Maybe tomorrow, I'll want to settle down. Until tomorrow, I'll just keep moving on.

          Comment


            #6
            The new rules start for all payments made after 6th April 2020.

            Regardless of when an end client does their SDS, they cannot apply the rules before then.

            Therefore a review now that says your present or extended contract would be inside IR35 would be a fact known to you, the client and whomever you choose to share it with.

            To the best of my knowledge HMRC has no statutory power to see that SDS. They might ask the end client if they have done the exercise of course and it would be for the end client to decide if they comply voluntarily or not.
            Best Forum Adviser & Forum Personality of the Year 2018.

            (No, me neither).

            Comment


              #7
              I'd say get your renewal reviewed. If it is deemed to be inside at that point then don't accept it, unless the client are prepared to accept changes to it to get it outside.

              If you can get an outside determination for the renewal and the client then reviews your situation you'll have something in place that says you were outside based on the views of people who are experts in this field, rather than the whims of HR using a badly designed and HMRC biased system. If they insist that you are inside as part of their review, then serve notice and leave.
              Rule Number 1 - Assuming that you have a valid contract in place always try to get your poo onto your timesheet, provided that the timesheet is valid for your current contract and covers the period of time that you are billing for.

              I preferred version 1!

              Comment


                #8
                It's an interesting question and one that will affect everyone in a run up to a determination and then it hitting.

                IMO there are a host of situations here and will rely very heavily on your current situation and some assumptions so each person will have to think on their feet. One main consideration is the difference between the contract you have now and the one the client will deem inside. If you are outside now and the client is going to deem it inside there has to be reasons and those reasons must be reflected in the contract. For example, you have RoS in your current contract and it's been properly checked. The client will deem the role inside from 2020 because they won't allow RoS. So you get a new contract with the clause removed. For all intents and purposes you have a different contract which will have no bearing on the old one. In that case there is a clear distinction between the two so you should be safe for the 24 months until the new contract hits. Just because the client deems the new one inside it's a different contract. Obviously if they deem you inside and you stay you're on shaky ground if the change attracts HMRC as you are going to have to argue the old gig. If you just leave you'll be fine.

                So the scenarios could be..

                Outside now, deemed outside.
                No brainer here. Carry on.

                Outside now, inside next gig - And you leave.
                As long as the client proves why it's inside and those changes will be reflected in the new contract you should be fine for the 24 months as it's technically a different gig. Assumption here is the old gig was truly outside and you had the contract checked, insurances bought etc.

                Outside now, inside next gig - And you stay.
                You've got a target on your back. It could be, as I say the two contracts are different so there technically shouldn't be a problem but you are inviting an investigation in to the previous 24 months and if the client hasn't made the distinction very clearly then you could have a fight on your hands. Highly likely you'll win but you could get all the hassle that comes with an investigation. Again assuming contract checked and insurances.

                Assumed outside now, inside next gig - And you stay.
                You're a tickbox contractor, you don't understand IR35 very well, your working practices are pretty much failing your assumed status already with no contract check etc and the new inside contract shores up the failings of the old one.. In that case you are on a wish and a prayer. Your 24 months is in serious jeopardy and you are inviting an investigation which you are likely to lose. You'd be truly stupid to be in this situation but I'll bet there will be plenty of people doing it.

                Assumed outside now, inside next gig - And you leave.
                As above but you are attempting to dodge a bullet. Chance of an investigation will be low as they've nothing to compare you on. You are in the same situation you are right now with the chance of a random investigation under the old rules. They happen but infrequently. You've dodged a bullet but will be looking over your shoulder for the next few years. Just don't do it. If you've already done it, don't do it again.

                So in the OP's case I'd wait for the determination, find out why they've made that decision. If it's something that reflects the current contract meaning it's a sham then I'd be leaving as soon as possible to get a break before the run up and flick over to the new contract. If it's a change and well documented you should be safe to leave at the 24 months. If you are in any of the lower level points then good luck to you.
                'CUK forum personality of 2011 - Winner - Yes really!!!!

                Comment


                  #9
                  'Coming months' being undefined here is the problem.

                  I'd just ask if they are intending to assess this contract, since it ends before April, and if so, why. If they say no, everything is great, right? If they say yes, I'd have serious doubts about accepting it, unless you have TLC35 or comparable in effect for the life of this engagement.

                  Sure, it has no legal weight. But if HMRC investigates you, and they've found you inside, you are going to lose. Because HMRC would certainly, in such a case, be asking the client lots of questions, and one would be whether the contract had been assessed as part of their preparation for IR35 reform. And they will say yes, and they will be asked what the assessment found, and you will lose your case.

                  By asking the question, you raise the issue that they really should not be assessing contracts that don't go into the next tax year.

                  That said, if you have TLC35, I wouldn't worry too much about it. Chances are you will not be investigated anyway, if you leave in March. But if you are you are covered. If they assess you as inside, you'd have to let your insurer know about the change in circumstances, and they might tell you that you won't be covered if you stay, so you might have to leave mid-contract. But you'll at least be covered, so I don't think I'd worry about it too much.

                  It's good the client is thinking about this. And by saying what they've said, you have the opportunity to run CEST yourself and to point out other factors in your situation that it isn't reflecting. So maybe you can get them to make a better decision.

                  Comment


                    #10
                    Originally posted by WordIsBond View Post
                    'Coming months' being undefined here is the problem.

                    I'd just ask if they are intending to assess this contract, since it ends before April, and if so, why. If they say no, everything is great, right? If they say yes, I'd have serious doubts about accepting it, unless you have TLC35 or comparable in effect for the life of this engagement.

                    Sure, it has no legal weight. But if HMRC investigates you, and they've found you inside, you are going to lose. Because HMRC would certainly, in such a case, be asking the client lots of questions, and one would be whether the contract had been assessed as part of their preparation for IR35 reform. And they will say yes, and they will be asked what the assessment found, and you will lose your case.

                    By asking the question, you raise the issue that they really should not be assessing contracts that don't go into the next tax year.

                    That said, if you have TLC35, I wouldn't worry too much about it. Chances are you will not be investigated anyway, if you leave in March. But if you are you are covered. If they assess you as inside, you'd have to let your insurer know about the change in circumstances, and they might tell you that you won't be covered if you stay, so you might have to leave mid-contract. But you'll at least be covered, so I don't think I'd worry about it too much.

                    It's good the client is thinking about this. And by saying what they've said, you have the opportunity to run CEST yourself and to point out other factors in your situation that it isn't reflecting. So maybe you can get them to make a better decision.

                    If the client deems you inside would that not invalidate your TLC35 insurance as the client is telling you that you don't have a right to substitution, at that point you can't honestly say you believe you have that right and your insurance becomes invalid.
                    Make Mercia Great Again!

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