Outsourcing advice

[riskycl]

Hi, hoping for some advice from folk who are much more well-versed in this than myself! Apologies if this has been covered before but I couldn't find any similar scenarios.

I am a hiring manager at a large company. We use contract resources a bit but they have now been blanket banned. Some resources have been converted to FTEs but I have one who is a sticking point.

His cost is too high to put on payroll, it would be political suicide in our department and we don't want the ongoing burden. However, we expect to need these (software development) services for another year. He currently works through a recruitment agency and his own PSC and is adamant he won't work within IR35.

His contract expires at the end of March, just before the changes come into effect.

Our rough plan is as follows, our contract with the agency and his PSC will terminate and will not be renewed, thus removing our need to assess this contract for IR35.

We would outsource this service to our existing offshore development company based in the Ukraine. We have an existing master services agreement with them and use them for a small amount of ad-hoc project work and sometimes people on a time and materials basis.

At the same time this individual will forge his own independent contract with the Ukraine software company who may assign him to our projects but not exclusively.

At no point would our statements of work name any individual and we would not have exclusive access to this individual.

Would this work? It seems outsourcing pushes the liability onto the outsourcing provider, and given they are overseas, this pushes the assessment back onto the contractors PSC? This will keep the contractor happy and remove IR35 risk from our company?

If this doesn't work, does this mean we can't use any outsourcing companies without investigating every individual who does work for us for IR35?!

Thanks

[northernladuk]

You need to understand the difference between doing work for you or working on a product you buy and use. In one case its still you doing a determination, the other isn't.

Is one guy worth all this hassle? Gonna be crap load of good contractors on the market very soon.

[eek]

You need to understand the difference between doing work for you or working on a product you buy and use. In one case its still you doing a determination, the other isn't.

Is one guy worth all this hassle? Gonna be crap load of good contractors on the market very soon.

+1 - and that out sourcing doesn't work anyway - the end client (you) and the contractor are still in the UK so the overseas company would be ignored were HMRC to come calling.

[riskycl]

Thanks for the replies.

I understand that the contractor's tax obligations will not change as he is still based in the UK and his tax is his own concern. I'm just looking for a legitimate way to remove the burden of the IR35 assessment from my company.

If we can't do anything with this particular individual we will still need those skills (he works on a very niche product), so we'd probably end up having to buy them from an outsource provider anyway, the outsourcer might as well take him on?



"You need to understand the difference between doing work for you or working on a product you buy and use. In one case its still you doing a determination, the other isn't."
Thanks, do you have an example of each please?


"Is one guy worth all this hassle? Gonna be crap load of good contractors on the market very soon."
Seems a bit irrelevant as contractors have been blanket banned in my org, I think our only option would be outsourcing?

Thanks again

[ChimpMaster]

It's actually nice to see you coming out to try and make this work.

Take a step back. The problem is the blanket ban. Now this is where it gets interesting, because just last week HMRC released draft legislation that could mean your company's blanket ban is no longer legal. You'll have to read into the detail but do take a look: ESM10014 - Employment Status Manual - HMRC internal manual - GOV.UK

This is just draft but it shows the lines along what HMRC are thinking.

Now you need this guy for another year - so you know it's a temporary role, so why not just put in the effort to ensure that his contract is genuinely outside IR35 from April onwards? Surely this would be far easier than the roundabout route with the offshore supplier.

[GhostofTarbera]

Outsourcing advice

It's actually nice to see you coming out to try and make this work.

.

?????? It could take a hiring manager about 30 mins to ensure a contractor was outside IR35 and not blanket ban

I see no effort here whatsoever


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[riskycl]

"I see no effort here whatsoever"

If you read my post, I'm trying to retain the contractor at considerable effort and stress. I have no control over the policy implemented by our HR department and I'm trying to challenge their actions and find a solution which keeps my contractor happy.


"Now you need this guy for another year - so you know it's a temporary role, so why not just put in the effort to ensure that his contract is genuinely outside IR35 from April onwards? Surely this would be far easier than the roundabout route with the offshore supplier."

I do agree with you, but sadly I cannot change the company policy, it's simply out of my control. The joy of a big corporate machine. They simply refer to the CEST tool and say we'd never accept a substitute, which puts the contractor inside IR35.

Whilst I say it's a blanket ban, I suspect that's unofficial policy. They have at least run the CEST tool against all of our contractors and conveniently all of them happen to be inside IR35.

[eek]

"I see no effort here whatsoever"

If you read my post, I'm trying to retain the contractor at considerable effort and stress. I have no control over the policy implemented by our HR department and I'm trying to challenge their actions and find a solution which keeps my contractor happy.


"Now you need this guy for another year - so you know it's a temporary role, so why not just put in the effort to ensure that his contract is genuinely outside IR35 from April onwards? Surely this would be far easier than the roundabout route with the offshore supplier."

I do agree with you, but sadly I cannot change the company policy, it's simply out of my control. The joy of a big corporate machine. They simply refer to the CEST tool and say we'd never accept a substitute, which puts the contractor inside IR35.

Whilst I say it's a blanket ban, I suspect that's unofficial policy. They have at least run the CEST tool against all of our contractors and conveniently all of them happen to be inside IR35.

A SDS that says they are inside to isn’t a blanket ban.

[GhostofTarbera]

"I see no effort here whatsoever"

If you read my post, I'm trying to retain the contractor at considerable effort and stress. I have no control over the policy implemented by our HR department and I'm trying to challenge their actions and find a solution which keeps my contractor happy.


"Now you need this guy for another year - so you know it's a temporary role, so why not just put in the effort to ensure that his contract is genuinely outside IR35 from April onwards? Surely this would be far easier than the roundabout route with the offshore supplier."

I do agree with you, but sadly I cannot change the company policy, it's simply out of my control. The joy of a big corporate machine. They simply refer to the CEST tool and say we'd never accept a substitute, which puts the contractor inside IR35.

Whilst I say it's a blanket ban, I suspect that's unofficial policy. They have at least run the CEST tool against all of our contractors and conveniently all of them happen to be inside IR35.

Do the CEST test with the contractor next to you then and your understanding will change from your imagined answers to reality


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[riskycl]

I don't want to derail the thread, but to clarify the company have done the CEST scores whilst separately unofficially blanket banned contractors going forwards.

Not sure why there's a slightly hostile response!

I'd just like some advice whether going through an existing outsourcing company shifts the responsibility of IR35 determination and if this is above board.