IR35 deferral risk

[northernladuk]

Depends on how the client reached the SDS, and what details were given to the OP.

I know of a contractor that received an inside SDS, based on HR's analysis. They also received an internal analysis that also pointed to inside, based on answers given by the department head. Several of the questions answered in the SDS were at odds with the internal analysis, and vice versa.

The SDS is a complete sham, and much of the input given is done by people who don't even know we exist, and is based on perceptions of an employee.

And before you come back on this NLUK, yes I agree that the client is the one who will say what the working practices are, but if the contractor can prove that they are working to different practices, then that also proves the sham.

Maybe but HMRC will always ask the client and there are clauses you rely on that aren't proven like RoS. Your only defense is you were able but didn't invoke. If the client says no Ros, we said it in the SDS then you are screwed.

Remember, as it has always been, your contract is between you and the agency and often has little bearing on the upper contract between agency and client, which often doesn't reflect the reality of the WP. If the client doesn't want a true B2B engagement as dictated by the rules then dressing up the contract between agency and contractor isn't going to change that.

[simes]

The SDS certainly can't be ignored but being able to properly question how a company arrived at its SDS determinations is now on the table whereas it wasn't before. If it can be established that the method of determination didn't take into account genuine working practices then it could easily be argued due diligence wasn't applied.

On the contrary, I am not saying the SDS should be ignored. I am saying, in the large part, it should be held up on high to be presented as a document too complicated for an HR department to correctly read, much less to correctly complete.

We have seen EY's take on MoO within the Samsung and Sky thread whereby they get it completely wrong. "A contract is in place, so the client is obliged to offer work." ...completely missing the inference from the imposing of furloughs.

But even then, the whole thing is flawed because in the past when fighting contractors in court, HMRC relied on;

1. A badly worded contract to suggest being Inside
2. And/or, if the contract was correctly worded to suggest Outside, working practices to Be Reviewed to see if in fact they did not marry up to the Outside contract.

An SDS ignores the need to review anything. Working practices will not by then be a known factor. So how on God's green earth can this SDS Ever be completed?

Hence why I would like to see it held up and mocked.

[northernladuk]

On the contrary, I am not saying the SDS should be ignored. I am saying, in the large part, it should be held up on high to be presented as a document too complicated for an HR department to correctly read, much less to correctly complete.

We have seen EY's take on MoO within the Samsung and Sky thread whereby they get it completely wrong. "A contract is in place, so the client is obliged to offer work." ...completely missing the inference from the imposing of furloughs.

But even then, the whole thing is flawed because in the past when fighting contractors in court, HMRC relied on;

1. A badly worded contract to suggest being Inside
2. And/or, if the contract was correctly worded to suggest Outside, working practices to Be Reviewed to see if in fact they did not marry up to the Outside contract.

An SDS ignores the need to review anything. Working practices will not by then be a known factor. So how on God's green earth can this SDS Ever be completed?

Hence why I would like to see it held up and mocked.

You realise an SDS will state why they have come to the conclusion based on whatever method they used to asses (CEST, EY, QDOS or whatever). Three or four bullet points directly addressing individual elements of IR35 defense is in no way complicated.

[Mr.Whippy]

You realise an SDS will state why they have come to the conclusion based on whatever method they used to asses (CEST, EY, QDOS or whatever). Three or four bullet points directly addressing individual elements of IR35 defense is in no way complicated.

So I just got an IR35 update email from IPSE and their full guide says this :

What happens if your client has already issued a Status Determination Statement (SDS)?

Any SDS which has been issued is now worthless. It is of no consequence. It should be ignored. It has no bearing on your employment or tax status and HMRC has said it will not seek to find out if an SDS has been issued or what it said. Effectively, if your private sector client decided IR35 applied to your engagement, that is now no more than an opinion of a bystander. The only opinion that matters is yours (and HMRC’s of course).

So, I had an SDS that stated I would be inside because they would not accept a substitute, at all. Also they had an expectation that I would take on all work they asked me to. So to me, if I had stayed there is no way you can just say the SDS was worthless is there? And say it’s worth no more than a bystander. That reason from the clients perspective still exists regardless of the delay.

Is it just me that thinks IPSE are talking absolute garbage and could lead people into putting themselves in a very awkward position should HMRC ever come knocking?

[northernladuk]

So I just got an IR35 update email from IPSE and their full guide says this :

What happens if your client has already issued a Status Determination Statement (SDS)?

Any SDS which has been issued is now worthless. It is of no consequence. It should be ignored. It has no bearing on your employment or tax status and HMRC has said it will not seek to find out if an SDS has been issued or what it said. Effectively, if your private sector client decided IR35 applied to your engagement, that is now no more than an opinion of a bystander. The only opinion that matters is yours (and HMRC’s of course).

So, I had an SDS that stated I would be inside because they would not accept a substitute, at all. Also they had an expectation that I would take on all work they asked me to. So to me, if I had stayed there is no way you can just say the SDS was worthless is there? And say it’s worth no more than a bystander. That reason from the clients perspective still exists regardless of the delay.

Is it just me that thinks IPSE are talking absolute garbage and could lead people into putting themselves in a very awkward position should HMRC ever come knocking?

Is that what they put in the email verbaitim or you summarising it for us? That's just disgraceful. The client who controls the engagement has the opinion of a bystander? Wow. It's never been like that and even more now you have to listen to what they say. I'd like to see this email.

That said I'm a little worried I'm the only one banging on about this outside/inside/outside situation. Got a nagging feeling I've got it wrong or the only one that thinks this

[eek]

Is that what they put in the email verbaitim or you summarising it for us? That's just disgraceful. The client who controls the engagement has the opinion of a bystander? Wow. It's never been like that and even more now you have to listen to what they say. I'd like to see this email.

That said I'm a little worried I'm the only one banging on about this outside/inside/outside situation. Got a nagging feeling I've got it wrong or the only one that thinks this

Nope - you haven't got it wrong, I just think it's slightly more nuanced.

In our previous conversation we hadn't seen the SDS determination and the OP was getting a check - if the check said outside I think you can argue the point as you haven't seen the end clients desires.

In this case the OP has seen the SDS determination and if you know the client is expecting to give you work to do and won't accept a substitute I think you have to accept that any future work is inside.

[northernladuk]

Nope - you haven't got it wrong, I just think it's slightly more nuanced.

But as I have no idea what that last word means or how to say it I'll keep going at the topic with my sledgehammer.

[Mr.Whippy]

Is that what they put in the email verbaitim or you summarising it for us? That's just disgraceful. The client who controls the engagement has the opinion of a bystander? Wow. It's never been like that and even more now you have to listen to what they say. I'd like to see this email.

That said I'm a little worried I'm the only one banging on about this outside/inside/outside situation. Got a nagging feeling I've got it wrong or the only one that thinks this

It’s here Private sector IR35 delay – what you need to know | IPSE

No I’m with you. If you’ve been told they wouldn’t accept a sub for whatever reason. Then that reason is still there regardless of the contact terms and you as a director have to take that into consideration when you make your own decision. Surely?

[youngguy]

That said I'm a little worried I'm the only one banging on about this outside/inside/outside situation. Got a nagging feeling I've got it wrong or the only one that thinks this

I don't think you have got it wrong. I think it would be madness to completely ignore a determination as it clearly shows what the client thinks (we previously were able to assume WP aligned to the contract). But I don't think a determination is necessarily accurate in all cases, likely as a result of the HMRC approach and how some orgs might have reached that determination.

[eek]

I don't think you have got it wrong. I think it would be madness to completely ignore a determination as it clearly shows what the client thinks (we previously were able to assume WP aligned to the contract). But I don't think a determination is necessarily accurate in all cases, likely as a result of the HMRC approach and how some orgs might have reached that determination.

If an SDS says no substitution how could you stand up in a tax tribunal and argue that you could use a substitute.
If an SDS says we give you whatever work needs to be done to keep you busy how does that work out for MoO and SDC.

While it may not be accurate you really would be fighting an uphill battle to justify being outside.