SDS direct from third party NOT client

[mookiemoo]

Walk away...

Why? If I have an SDS prepared by QDOS and from the agency saying its outside, the risk is theirs not mine.

The answers are truthful - I'm not making up a work of fiction - so it would stand up in court anyway

If the client (foreign) and agency (UK) are in agreement, I dont see the risk.

[WordIsBond]

Walk away...

Sorry, but I think this is horrible advice. I'm not my clients' daddy to make sure they do everything right.

The contractor has no IR35 risk from 6 April unless an inside determination has been made by the client. If there is no proper determination, the liability is entirely on the client. If they wake up and do an inside determination, then the contractor may indeed choose to walk but from 6 April forward to that point he has no liability and no risk.

If the determination comes back as outside from QDOS or similar, even if the client hasn't done things right, the contractor is probably outside and safely so, and there would be little risk anyway, but from 6 April there is none.

The contractor has exactly one risk -- that at some point, whether because of HMRC chasing or some other reason, the client wakes up and issues an inside determination or terminates the contract entirely. That means the contractor is not very secure in this relationship but the risk is all future. That means a contractor should only walk away if he has somewhere to go. The fact that his client is being an idiot is not his responsibility and he would be foolish to walk away just because of that unless he's got a better situation to go to.

Furthermore, the outside determination from QDOS and the client's willingness to view that as fulfilling their responsibility will put the client on his side in arguing this is an outside role, and will give a very strong argument against any retrospective / historical investigation.

A contractor with an outside determination from the client is in a great position. A contractor with an outside determination from QDOS/etc and a client that thinks they've done their job isn't in as good a position but it's still very strong.

What happens if HMRC comes knocking? Client has two choices: 1. Admit we messed up and pay a lot of taxes. 2. Stand behind it and say, 'Oops, doesn't have our name on it but it's ours, and it's right. And you promised a soft touch so sorry, we'll put our name on it but there's no tax due.'

Which will most clients choose, 1 or 2?

And maybe after pressure from HMRC they change it to an inside going forward, and the contractor then may decide to walk. Fair enough. And if you get a good offer of a real outside job with a real outside determination from the client yourself, great, take it. But "walk" now is cutting off your nose to spite your face.

The options now are:
1. Do nothing, the liability isn't yours, you've done what you should and tried to help your client get it right. Risk: when the client finds out they've messed up a few months or a year from now they blow up the contract at that point.
2. Go back to the client and say, "Your name is supposed to be on this." Risk: client gets scared and blows it up.
3. Walk away if you've got another role that is better / has a real outside determination by the client.
4. Walk away and wonder how long you'll be on the bench.

To me, #4 is the worst option of all. Unless you just want to take a 2 year holiday and see the world while HMG discover what a mess they've made.

[WordIsBond]

Worthless if end client not specified I would think, otherwise I could send you one over


Sent from my iPhone using Contractor UK Forum

Nope, it's golden. Liability is the client's, not his.

[CompoundOverload]

Sorry, but I think this is horrible advice. I'm not my clients' daddy to make sure they do everything right.

The contractor has no IR35 risk from 6 April unless an inside determination has been made by the client. If there is no proper determination, the liability is entirely on the client. If they wake up and do an inside determination, then the contractor may indeed choose to walk but from 6 April forward to that point he has no liability and no risk.

If the determination comes back as outside from QDOS or similar, even if the client hasn't done things right, the contractor is probably outside and safely so, and there would be little risk anyway, but from 6 April there is none.

The contractor has exactly one risk -- that at some point, whether because of HMRC chasing or some other reason, the client wakes up and issues an inside determination or terminates the contract entirely. That means the contractor is not very secure in this relationship but the risk is all future. That means a contractor should only walk away if he has somewhere to go. The fact that his client is being an idiot is not his responsibility and he would be foolish to walk away just because of that unless he's got a better situation to go to.

Furthermore, the outside determination from QDOS and the client's willingness to view that as fulfilling their responsibility will put the client on his side in arguing this is an outside role, and will give a very strong argument against any retrospective / historical investigation.

A contractor with an outside determination from the client is in a great position. A contractor with an outside determination from QDOS/etc and a client that thinks they've done their job isn't in as good a position but it's still very strong.

What happens if HMRC comes knocking? Client has two choices: 1. Admit we messed up and pay a lot of taxes. 2. Stand behind it and say, 'Oops, doesn't have our name on it but it's ours, and it's right. And you promised a soft touch so sorry, we'll put our name on it but there's no tax due.'

Which will most clients choose, 1 or 2?

And maybe after pressure from HMRC they change it to an inside going forward, and the contractor then may decide to walk. Fair enough. And if you get a good offer of a real outside job with a real outside determination from the client yourself, great, take it. But "walk" now is cutting off your nose to spite your face.

The options now are:
1. Do nothing, the liability isn't yours, you've done what you should and tried to help your client get it right. Risk: when the client finds out they've messed up a few months or a year from now they blow up the contract at that point.
2. Go back to the client and say, "Your name is supposed to be on this." Risk: client gets scared and blows it up.
3. Walk away if you've got another role that is better / has a real outside determination by the client.
4. Walk away and wonder how long you'll be on the bench.

To me, #4 is the worst option of all. Unless you just want to take a 2 year holiday and see the world while HMG discover what a mess they've made.

I can personally think of at least 12 people who would rip an outside determination engagement post April out of the OP's hands in an second. These seem to be like gold dust in the current climate. So anyone that has a strong case for one (client written SDS and an outside contract review by an IR35 specialist) you are in the 10% population of contractors. The rest are either on the bench waiting it out, having to go inside with the same client (risking a massive tax grab by HMG) or umbrella / perm against their will with reduced income.

OP - I'd take your chances with what you have and be thankful and think of others who might not be as fortunate as you (a client that has a bit of sense about them).

[northernladuk]

Well that will teach me not to be faceicious and maybe completely the wrong point to do at. Everyone is correct in saying rip it out of their hands and get on with it it but I do think the contractor filling out the determination themselves could have implications down the line.

I assume this was an exercise on existing contractors. How is this going to work for new contractors. Are they going to fill it in themselves as well?

Probably hypothetical and a long way down the line but just seems to not sit right.

[mookiemoo]

TO be fair to the agency, I think this is unique for them as I'm the only one at the moment with the convoluted contract chain

Not sure they have this as a repeatable plan!

[CompoundOverload]

Well that will teach me not to be faceicious and maybe completely the wrong point to do at. Everyone is correct in saying rip it out of their hands and get on with it it but I do think the contractor filling out the determination themselves could have implications down the line.

I assume this was an exercise on existing contractors. How is this going to work for new contractors. Are they going to fill it in themselves as well?

Probably hypothetical and a long way down the line but just seems to not sit right.

I personally think the individual hiring the contractor should be the one that completes it, as they will ultimately know what is expected of said contractor, and what they need them to do etc, especially where they are new to the business and have only recently been drafted in.

[WordIsBond]

but I do think the contractor filling out the determination themselves could have implications down the line.

Implications for the client, very possibly. Implications for the contractor, only if his answers were fraudulent.

But he didn't actually write the determination, that would be more dubious. Still, if he was honest, there's no comeback on him.

....but just seems to not sit right.

Of course not. Your instincts are right. The client is messing up badly, from what we've been told.

But the risk is theirs, and the risk to the contractor is only that his contract may blow up on him sometime if they wake up.

That's a real risk but it just may mean he has to go on the bench, and there's no point in rushing to get there.

We as contractors (the responsible ones anyway) have the tendency to want to make sure everything is clean for outside roles. Now, the only thing that matters (for med/large UK clients) is that they haven't issued an inside SDS. That's it. Outside, or no proper SDS, we're in the clear, inside and we're looking for more money. That's the new world.

For our own protection and as professionals, we do well to help our clients navigate this but there are a lot of things we used to be paranoid about that we can now not care about if our clients don't.

[mookiemoo]

Can I ask for general neutral terminology - He is not a HE but a SHE

[jamesbrown]

Don't forget that none of this nonsense changes the facts surrounding responsibility (to provide a timely SDS, with reasonable care) and liability.

Providing you didn't supply fraudulent information as input to the SDS (and you may not have provided any at all), then you're never on the hook. It's their problem, not yours.

( But I think it's also perfectly reasonable to do your due diligence and follow up, asking for confirmation from a client rep - such as an e-mail - indicating the process that was followed )