Client Co has shown their colours...

[jamesbrown]

And of course that is assuming the PSC still exists, has assets etc.

Indeed. It also assumes that the contractual clauses hold water, given the nature of what they are trying to do, which is to pass on a risk that is clearly intended to be with the supply chain above the PSC (i.e., whether the clauses work, as a matter of contract law).

Personally, I think any supply chain taking this approach is carrying a much greater risk than a supply chain that eliminates contractors altogether.

[IRMe]

Interesting to consider whether the liability would be considered a penalty, like a fine, or just a correction of tax account. If a penalty then “ex turpi causa” would apply, you can't be indemnified against something imposed as a legal deterrent. Regardless it would get expensive in court fairly quickly.

I had a client try to have me agree to such an indemnity to me last year, and that was me personally rather than the Ltd (agent: "because your Ltd has limited liability, and it may be dissolved").

[ladymuck]

Can you explain more about "fully indemnify ClientCo. This will be pushed down to me should they decide on an outside determination"?


Do you think it's actually a possibility that the client could expect you to pay the resulting tax if they mess up the determination? I was operating under the assumption that after April, it's all on the client.

I need to read it with a calmer head on. Will share the details when I've done that.

[ladymuck]

Is the real end client going to be determining the SDS or is it someone else in the supply chain?

Real end client. It's MyCo > Consultancy > End Client.

[jk3838]

Got this in the current contract, (not sure if it will be in the revised 'after april' contract), but if it is, can the agent pass ER NI responsibility over to my ltd co on this clause after april ? Obviously I'll take advice but comments/thoughts on this please

''The Contractor is solely responsible for all taxes and National Insurance contributions payable in respect of the Fees and/or any payments due from the Contractor to the Personnel. The Contractor will duly account to the relevant government or statutory department or agency for all such taxes and contributions and shall indemnify agent name against all such taxes and contributions, expenses, fines, penalties or interest or other liability, deduction, assessment or claim made in connection with the Fee or any payment or benefit received by the Contractor and/or the Personnel as provided under these terms and conditions.''

[ladymuck]

It can be passed on contractually but not statutorily.

So an unqualified indemnity i.e. no stipulations over proof of loss, causation etc. The stuation would be:

HMRC investigate status -> HMRC declares status wrong -> Any dispute / tribunal if necessary -> liability is declared -> Fee Payer pays or passes liability to Client -> Client pays and/or Fee Payer invoices PSC for total amount ->Recovery of debt

If there are any qualifications in there i.e. in the event you misrepresent or fail to advise of a change in working practices and that results in liability you indemnify... then the client would have to demonstrate the event AND that that led to the liability (causation)

And of course that is assuming the PSC still exists, has assets etc.

That was exactly my thought. I wondered if it was compliant with the (draft) legalisation.

The director of the consultancy has sent the same document he shared with me over to his solicitor for advice. But they write rubbish contracts that I wouldn't sign in a million years so I'm sure they'd say it's fine. :

[ladymuck]

Got this in the current contract, (not sure if it will be in the revised 'after april' contract), but if it is, can the agent pass ER NI responsibility over to my ltd co on this clause after april ? Obviously I'll take advice but comments/thoughts on this please

''The Contractor is solely responsible for all taxes and National Insurance contributions payable in respect of the Fees and/or any payments due from the Contractor to the Personnel. The Contractor will duly account to the relevant government or statutory department or agency for all such taxes and contributions and shall indemnify agent name against all such taxes and contributions, expenses, fines, penalties or interest or other liability, deduction, assessment or claim made in connection with the Fee or any payment or benefit received by the Contractor and/or the Personnel as provided under these terms and conditions.''

It's fairly normal for current contracts as it's basically saying if you self determine as outside and get it wrong, you can't pass the buck up the food chain.

[ladymuck]

Aaaaaannnd....Breathe.

After the long meeting, then stewing on it all day fixing things that shouldn't need fixing, I have finally read in detail the proposed new clauses. I do hate being led to a conclusion by someone who has evidently only skim read a document.

Option 1 was a blanket ban on Limited Company Contractors. Basically taking the same way as the banks, nothing to see there.

Option 2 contains the clause about indemnifying the Client. It's all pretty reasonable stuff and I saw nothing frightening in there. The indemnity clause is actually very similar to what's in a lot of contracts today. It basically says the Supplier or LCC is responsible for paying the right taxes in accordance with the SDS, on the assumption that the SDS was done with reasonable care. That makes sense really. The client has made the determination and it's up to the Supplier / LCC to correctly process the payments. If the SDS had not been carried out with reasonable care then it is the Client's responsibility to pay up. I expect only HMRC can decide that.

See the clause below, my emphasis.

The Supplier shall indemnify the Company and keep the Company indemnified in full against any and all losses incurred by the Company arising out of or in connection with any breach by the Supplier of this Clause [X]. For the avoidance of doubt, the Supplier shall indemnify the Company and keep the Company indemnified in full in the event that the Company becomes liable to account for deductions of income tax, Apprenticeship Levy and/or National Insurance Contributions, or payment of employer National Insurance Contributions, in respect of any Limited Company Contractor (together with any associated interest and penalties), other than in circumstances where the Company has failed to exercise reasonable care in reaching a Status Determination Statement conclusion. The parties agree that the Company shall be deemed to have exercised reasonable care if it has reached the Status Determination Status conclusion in accordance with the provisions of this Clause.

There's a mention of CEST and "other reasonable means of assessing or categorising" for determining status. Worryingly, there is a mention of assessment on a collective basis for roles that are considered sufficiently similar or involve specific conditions that lend themselves to be considered employment. Collective assessment feels like a fancy term for a blanket assessment to me.

There's also a bit about reserving the right to change the SDS outcome in light of new information. I would hope that would have an "effective from" date to prevent it being retrospective.

So, now I'm waiting for a status determination which may / may not turn up before the end of March. I have told the consultancy that I am actively looking for work elsewhere as I don't believe that Client Co will decide anything any time soon and I'm not turning down work to wait around for them. I have also said that an inside determination will see me leaving, again as soon as possible.

I still need to get a quote for £10m PII as I would increase my rate to cover the premium. I don't expect an outside determination that would require me to buy it but it's good to have the info to hand should there be a miracle.

At the moment it's 95% towards getting the hell out.

[jamesbrown]

Option 2 contains the clause about indemnifying the Client. It's all pretty reasonable stuff and I saw nothing frightening in there. The indemnity clause is actually very similar to what's in a lot of contracts today. It basically says the Supplier or LCC is responsible for paying the right taxes in accordance with the SDS, on the assumption that the SDS was done with reasonable care. That makes sense really. The client has made the determination and it's up to the Supplier / LCC to correctly process the payments. If the SDS had not been carried out with reasonable care then it is the Client's responsibility to pay up. I expect only HMRC can decide that.

Hmmm. I think I read it differently than that. I would paraphrase as "except where we have failed to provide reasonable care in arriving at the SDS, then the supplier (YourCo, presumably) will indemnify us for all taxes etc. due in the event that the SDS is wrong". Afterall, if the SDS says that you're inside, then it's moot and, if it's outside and wrong, the Fee Payer is ordinarily responsible once the supply chain has received the SDS, compiled with reasonable care. They are attempting to shift the latter responsibility as a matter of contract law. This isn't just about protecting them from the failures of YourCo, but also their failure in supplying a correct SDS (one that said outside when it should've said inside), but with reasonable care.

Either way, the risk is principally theirs, whether they like it or not. There is no personal indemnification here, assuming the Supplier is YourCo and not you personally.

[amanwhoisquiet]

I still need to get a quote for £10m PII as I would increase my rate to cover the premium.

I used Simply Business before my current contract, but they couldn't help me at all when I was told I needed PI 5m, ELI 10m and PPLI 10m, so I had to go to QDOS.