Inside Determination based on CEST

[thatdarnguy]

Hi all, new here so go easy! Also, apologies for the long post, this really is a minefield isn't it?

So setting the scene, I've been working on a contract for an MSP through my PSC for the last 12 months, my first foray into contracting. The route for the contract is from my PSC > Hiring Intermediary > MSP > MSP's client.

It has been a long process for the MSP I'm working for for them to figure out what's going on with IR35 - the MSP I work for believed that their client had to make the determination, but they've now realised as it's a managed service contract, the MSP themselves are my end client. This has led me down a path of getting a determination by CEST, the hiring company have performed this and come to to an Inside IR35 result. My working practices and contract are tailored to operating outside IR35, and I've run through the tool myself with an outside determination.

The answers I gave differed on two key points seemingly;

Firstly whether they have the right to refuse a substitute - the MSP's client have mentioned during this process that they reserve the right to reject a substitute, however beyond the clause which states my company can provide a substitute with sufficient skills and qualifications to carrry out the tasks, there is nothing specifically stating that they retain the right to refuse a substitute.

Secondly, for the question "Does your client have the right to move you from the task you originally agreed to do" they answered "No, I'd have to agree", whereas I believe they'd be required to issue a formal working arrangement or new contract - the current client I'm working for is specifically mentioned in my contract's schedule and I have the following clauses: "No variation or alteration to this Agreement shall be valid unless agreed between the Employment Business and the Company in writing." and "The Company shall not be obliged to accept any Assignment offered by the Employment Business.".

If either of these options are changed, the result is Outside IR35, based on this I think I have a strong case for an appeal, would you guys agree?

As this whole process is dragging on for so long, I've been looking into my options. I'd definitely prefer to stay as it's a good role that I can see continuing for at least another 6-12 months, and the job market here isn't great. I'm planning to get a qdos review and insurance in my back pocket too. So as far as I believe, I have the following options available:

There is an affiliate company that I could engage with between my PSC and the Hiring Intermediary, they're a small company and would likely be able to work out a service contract to the MSP, which would make this small company my end client, and thus allowing me to make a self determination. Seems a little contrived, but there are other contractors engaging with the MSP through this route.

The other option, as my accountants keep pointing out, is that I could engage with an umbrella (yes, my accountants have their own umbrella company) and have a new contract created for the engagement more aligned with that of an employee as has been recommended in other threads in here that I've read. Feels risky, but hopefully this would be mitigated by the insurance and qdos review.

Any other ideas, or options I should pursue or look into?

Thanks for reading guys!

[redman123]

Hi all, new here so go easy! Also, apologies for the long post, this really is a minefield isn't it?

So setting the scene, I've been working on a contract for an MSP through my PSC for the last 12 months, my first foray into contracting. The route for the contract is from my PSC > Hiring Intermediary > MSP > MSP's client.

It has been a long process for the MSP I'm working for for them to figure out what's going on with IR35 - the MSP I work for believed that their client had to make the determination, but they've now realised as it's a managed service contract, the MSP themselves are my end client. This has led me down a path of getting a determination by CEST, the hiring company have performed this and come to to an Inside IR35 result. My working practices and contract are tailored to operating outside IR35, and I've run through the tool myself with an outside determination.

The answers I gave differed on two key points seemingly;

Firstly whether they have the right to refuse a substitute - the MSP's client have mentioned during this process that they reserve the right to reject a substitute, however beyond the clause which states my company can provide a substitute with sufficient skills and qualifications to carrry out the tasks, there is nothing specifically stating that they retain the right to refuse a substitute.

Secondly, for the question "Does your client have the right to move you from the task you originally agreed to do" they answered "No, I'd have to agree", whereas I believe they'd be required to issue a formal working arrangement or new contract - the current client I'm working for is specifically mentioned in my contract's schedule and I have the following clauses: "No variation or alteration to this Agreement shall be valid unless agreed between the Employment Business and the Company in writing." and "The Company shall not be obliged to accept any Assignment offered by the Employment Business.".

If either of these options are changed, the result is Outside IR35, based on this I think I have a strong case for an appeal, would you guys agree?

As this whole process is dragging on for so long, I've been looking into my options. I'd definitely prefer to stay as it's a good role that I can see continuing for at least another 6-12 months, and the job market here isn't great. I'm planning to get a qdos review and insurance in my back pocket too. So as far as I believe, I have the following options available:

There is an affiliate company that I could engage with between my PSC and the Hiring Intermediary, they're a small company and would likely be able to work out a service contract to the MSP, which would make this small company my end client, and thus allowing me to make a self determination. Seems a little contrived, but there are other contractors engaging with the MSP through this route.

The other option, as my accountants keep pointing out, is that I could engage with an umbrella (yes, my accountants have their own umbrella company) and have a new contract created for the engagement more aligned with that of an employee as has been recommended in other threads in here that I've read. Feels risky, but hopefully this would be mitigated by the insurance and qdos review.

Any other ideas, or options I should pursue or look into?

Thanks for reading guys!

No. Qdos wont cover you if you take an inside role

[GhostofTarbera]

Hi all, new here so go easy! Also, apologies for the long post, this really is a minefield isn't it?

So setting the scene, I've been working on a contract for an MSP through my PSC for the last 12 months, my first foray into contracting. The route for the contract is from my PSC > Hiring Intermediary > MSP > MSP's client.

It has been a long process for the MSP I'm working for for them to figure out what's going on with IR35 - the MSP I work for believed that their client had to make the determination, but they've now realised as it's a managed service contract, the MSP themselves are my end client. This has led me down a path of getting a determination by CEST, the hiring company have performed this and come to to an Inside IR35 result. My working practices and contract are tailored to operating outside IR35, and I've run through the tool myself with an outside determination.

The answers I gave differed on two key points seemingly;

Firstly whether they have the right to refuse a substitute - the MSP's client have mentioned during this process that they reserve the right to reject a substitute, however beyond the clause which states my company can provide a substitute with sufficient skills and qualifications to carrry out the tasks, there is nothing specifically stating that they retain the right to refuse a substitute.

Secondly, for the question "Does your client have the right to move you from the task you originally agreed to do" they answered "No, I'd have to agree", whereas I believe they'd be required to issue a formal working arrangement or new contract - the current client I'm working for is specifically mentioned in my contract's schedule and I have the following clauses: "No variation or alteration to this Agreement shall be valid unless agreed between the Employment Business and the Company in writing." and "The Company shall not be obliged to accept any Assignment offered by the Employment Business.".

If either of these options are changed, the result is Outside IR35, based on this I think I have a strong case for an appeal, would you guys agree?

As this whole process is dragging on for so long, I've been looking into my options. I'd definitely prefer to stay as it's a good role that I can see continuing for at least another 6-12 months, and the job market here isn't great. I'm planning to get a qdos review and insurance in my back pocket too. So as far as I believe, I have the following options available:

There is an affiliate company that I could engage with between my PSC and the Hiring Intermediary, they're a small company and would likely be able to work out a service contract to the MSP, which would make this small company my end client, and thus allowing me to make a self determination. Seems a little contrived, but there are other contractors engaging with the MSP through this route.

The other option, as my accountants keep pointing out, is that I could engage with an umbrella (yes, my accountants have their own umbrella company) and have a new contract created for the engagement more aligned with that of an employee as has been recommended in other threads in here that I've read. Feels risky, but hopefully this would be mitigated by the insurance and qdos review.

Any other ideas, or options I should pursue or look into?

Thanks for reading guys!

No, you have the hallmarks of a permietractor to me how many other clients do you have? What are your working practices?


Sent from my iPhone using Contractor UK Forum

[mudskipper]

If the client say they won't accept a substitute, then that's probably a non-starter.

Appealing on the grounds of a new agreement being required to change task - that sounds like a better bet.

Good luck!

[Paralytic]

If the client say they won't accept a substitute, then that's probably a non-starter.

Its certainly not ideal, but note that CEST can be given "substitute can be rejected by client" answers and still provide an outside result.

https://www.contractoruk.com/forums/...ml#post2738187

[eek]

Its certainly not ideal, but note that CEST can be given "substitute can be rejected by client" answers and still provide an outside result.

https://www.contractoruk.com/forums/...ml#post2738187

There is a whopping difference between - substitute can be rejected by client and client saying they won't accept a substitute.

One says that if I produce a substitute (that is say the ex-partner of a staff member) the client has (the quite reasonable) ability to reject, the other says the client will reject all substitutes (even one more than qualified).

Now the former is perfectly understandable and as a consultancy you would just swap them for someone else, the latter basically says they have purchased your time.

[thatdarnguy]

No, you have the hallmarks of a permietractor to me how many other clients do you have? What are your working practices?


Sent from my iPhone using Contractor UK Forum

Thanks for the replies everyone.

The contract is 40 hours a week, so they're my sole client. I generally perform my duties from home, but my client (the MSP) and their client's offices are next door to each other and I travel to their client's site on a fairly regular basis to engage for meetings with various stakeholders, there are hot desks at my client's office which I sometimes use if I'm in between meetings, I also at times need to perform work in datacentres, but this is something I schedule and control myself.

I work autonomously and my regular deliverable is to submit a weekly report of activities to my client's client as well as a quarterly service report, this has no external input from my end client (the MSP). For holidays I give prior notice in writing to the signer of my timesheets of days I'm unavailable as soon as feasible with the offer of providing a substitute, over the last year I've only taken a handful of days at a time so we've agreed this is unnecessary, the only longer period was for Christmas, at which time my end client's client was closed anyway. I use my own equipment when working from home, my client's client have a no BYOD on site policy and so have issued me a laptop to use at the datacentre and at their offices.

[northernladuk]

That's nice.. But most of that are just flags at best.

[thatdarnguy]

There is a whopping difference between - substitute can be rejected by client and client saying they won't accept a substitute.

One says that if I produce a substitute (that is say the ex-partner of a staff member) the client has (the quite reasonable) ability to reject, the other says the client will reject all substitutes (even one more than qualified).

Now the former is perfectly understandable and as a consultancy you would just swap them for someone else, the latter basically says they have purchased your time.

Yes, my contract states I can provide a substitute "of reasonable skill and relevant qualifications", so this seems to be one of the points where the CEST tool is incredibly flawed. There is obviously a large weighting placed on the determination based on this answer, but contractually there is a grey area - within the letter of the law of my contract - if I hold up my end of the bargain, i.e. provide a substitute with consummate ability and qualification, there is nothing explicitly stated that they can reject this substitute. The question is just too vague, let's face it, what contract is going to state that they'll accept any substitute?

Clause wording below:

"The Company shall be entitled to provide a Substitute provided that the Employment Business is advised, in advance in writing by the Company, of the Company’s intent to provide a Substitute, and that the Substitute has the required skills and/or qualifications and/or experience to perform the Company Services. The parties shall agree a handover period for the Substitute at no cost to either the Employment Business or the Client."

The shades of grey here are what substitute am I providing? From my reading of the clause, contractually if I provide a substitute who can demonstrate more qualifications and experience than I, they do not have the right to reject. However if I provide a sub-standard substitute, they do have the right to reject...

So the TL;DR waffle leads to;

I'm no contract lawyer, but I'd believe that my answers to CEST should be under the assumption that I'm meeting the requirements laid out in the clauses of my contract, in which case the assumption would be that I've provided a suitable substitute, and therefore there is no explicit wording allowing them to reject this?

[thatdarnguy]

If the client say they won't accept a substitute, then that's probably a non-starter.

Appealing on the grounds of a new agreement being required to change task - that sounds like a better bet.

Good luck!

Thanks for that I do think that's the stronger basis for appeal too, but I'll be raising both points in the appeal if I can.

No. Qdos wont cover you if you take an inside role

Would this also be the case if I was given a new contract from beginning April and employee-like terms and conditions going through an umbrella company? Reading through the replies in this thread suggest otherwise: https://www.contractoruk.com/forums/...-inside-3.html