IR35 reform delay - too late to help?

[mrrossi]

Had replied to eek before northernladuk. Slight difference in opinions there!!

Let me just respond to some of northernladuk's points

"No it's not. There has been a u-turn and SDS are not required" - do you mean in 12 months time a SDS isn't needed and the client can just say 'inside' or by u-turn do you mean the reform is just delayed by 12 months?

"This isn't really MoO and is not a strong argument" - I was just giving one example. There are other reasons why I believe my working practices demonstrate an 'outside' position - they're the same as my colleage, whom QDOS have determined is outside based on all HMRCs guidance.

"Why on earth would you continue outside when the client has said it's inside. That's just madness. HMRC will see that as fraud and your IR35 insurances will be invalid." - hang on. If the IR35 reform is delayed by 12 months, surely it doesn't matter what the client says now - it's not their place to. It's mine, as a PSC. I say I'm outside. I get independent verification to check that - QDOS. It's only in 12 months time that the client will be making the determination. Yes they may have made one NOW, and in 12 months they may come back to the same one, but for the next 12 months it's the PSC that determines the role status. So if I say it's outside and have QDOS backing and all other evidence, why not continue as a Ltd company?

"You are inside" - says who? Same points as I just made. It's the PSC who determines the status. Screw what the client says. The HR team are useless anyway and really don't know what they are doing. They should have determined us as outside. Yes, I know, every contractor says that... but I really think it's incorrect. Anyway...

"You won't have insurance. You've made a false declaration to them. No way will they defend you if you went outside when you know the client said inside." - not sure about that. Again, it's not the clients roles to declare it, currently. Let's see what QDOS say.

"You trying to get greedy" admittedly there's more money in the Ltd company route but that's not what this is about, greed! It's just it it was no less safe then would make more sense and a lot less faff (closing down company etc.).

[youngguy]

True but if you have a piece of paperwork recently dated showing you are outside I think that is enough due diligence at the moment to protect yourself in the short term.

And I think you would be completely mad to walk away from work at the moment - the important bit would be not extending longer than absolutely necessary...

I'm inclined to agree with this. Risk of tax issues in the future is not the nearest crocodile to the boat given covid, the economy etc.

I think if the PSC can honestly determine outside (ie the client was risk adverse and therefore erred inside) then perhaps the PSC determination (backed by WP and contract assessment) supercedes the clients thinking?

I mentioned in another thread: under the new rules the appeal goes to the decision maker. Now it reverts and would go to an independent tribunal who would consider moo and other things that HMRC ignores.

Doesn't mean there isn't risk of course and no one wants the fight.

[northernladuk]

I'm inclined to agree with this. Risk of tax issues in the future is not the nearest crocodile to the boat given covid, the economy etc.

I think if the PSC can honestly determine outside (ie the client was risk adverse and therefore erred inside) then perhaps the PSC determination (backed by WP and contract assessment) supercedes the clients thinking?

I mentioned in another thread: under the new rules the appeal goes to the decision maker. Now it reverts and would go to an independent tribunal who would consider moo and other things that HMRC ignores.

Doesn't mean there isn't risk of course and no one wants the fight.

But you do you know if the PSC can honestly determine outside bearing in mind working conditions are set and dictated by the client. We are in this mess because our contracts often have no bearing on the working conditions, RoS being one of the more obvious ones. This has been made blinding clear by the number of client determinations that have flown in the face of what the PSC 'believes'. I'm taking the properly done ones, not the blankets. There is also the number of questions we've had were people just don't understand the questions being asked in the questionnaires so how can the PSC assessment be rock solid?

I don't know why all of a sudden people suddenly thing their contract supersedes the clients thinking. The first thing HMRC do is go ask the client and when they say no RoS they throw the contract away.

Why are we suddenly willing to throw away everything we already know to try and kid ourselves we are outside?

[northernladuk]

"No it's not. There has been a u-turn and SDS are not required" - do you mean in 12 months time a SDS isn't needed and the client can just say 'inside' or by u-turn do you mean the reform is just delayed by 12 months?

The legislation isn't happening for now so the SDS required by the legislation is no longer required. When it hits again they will be required to do another SDS. It's just delayed. So for now it's business as usual but with a client having their thoughts on a piece of paper.

"This isn't really MoO and is not a strong argument" - I was just giving one example. There are other reasons why I believe my working practices demonstrate an 'outside' position - they're the same as my colleage, whom QDOS have determined is outside based on all HMRCs guidance.

Fair enough but we've had 20 years of HMRC questioning the validity of the contracts vs reality. Recent events have shown us the clients view of that reality is very different to ours. HMRC will go straight to the client in an investigation and ask for their opinion. This will clearly be inside and that will trump the contract.

"Why on earth would you continue outside when the client has said it's inside. That's just madness. HMRC will see that as fraud and your IR35 insurances will be invalid." - hang on. If the IR35 reform is delayed by 12 months, surely it doesn't matter what the client says now - it's not their place to. It's mine, as a PSC. I say I'm outside. I get independent verification to check that - QDOS. It's only in 12 months time that the client will be making the determination. Yes they may have made one NOW, and in 12 months they may come back to the same one, but for the next 12 months it's the PSC that determines the role status. So if I say it's outside and have QDOS backing and all other evidence, why not continue as a Ltd company?

Again, in an investigation HMRC will go ask the client and the client will stuff you. Do you really think QDOS will be happy to back you when the client says clearly not? The devil will be in the details but if the client says 'nah, inside because no RoS' there is no way QDOS will cover it. They will fall back on their clause saying they won't defend cases that are likely to lose. They may even refuse to honour it at all as you've not declared you knew you couldn't RoS from the outset.

"You are inside" - says who? Same points as I just made. It's the PSC who determines the status. Screw what the client says. The HR team are useless anyway and really don't know what they are doing. They should have determined us as outside. Yes, I know, every contractor says that... but I really think it's incorrect. Anyway...

The client did. The PSC determines the situation based on it's merits including the clients expectation. If it's inside how on earth can you come to an outside determination?

"You won't have insurance. You've made a false declaration to them. No way will they defend you if you went outside when you know the client said inside." - not sure about that. Again, it's not the clients roles to declare it, currently. Let's see what QDOS say.

Again, it's yours based on the evidence of the situtation. If the situation is the client is going to say it's inside using a proper method to assess then that's part of your decision when making a determination. I am really not getting why it is so hard for contractors to understand this.

"You trying to get greedy" admittedly there's more money in the Ltd company route but that's not what this is about, greed! It's just it it was no less safe then would make more sense and a lot less faff (closing down company etc.).

Yes it is. You've a choice between inside with the client saying or outside. Difference is 30% income. The only reason you want to go against the clients determination and ignore the facts of the case for that 30% then if that's not driven by greed then what is? Strong word I admit but makes the point.

[mrrossi]

"HMRC will go straight to the client in an investigation and ask for their opinion. This will clearly be inside and that will trump the contract." - it's not just the contract, it's the QDOS review of the working practices. My contract has a RoS. My working practices are meeting the 'outside' status too. To quote from another post: "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". I really do believe that HR haven't done their due diligence.

"Do you really think QDOS will be happy to back you when the client says clearly not? The devil will be in the details but if the client says 'nah, inside because no RoS' there is no way QDOS will cover it. They will fall back on their clause saying they won't defend cases that are likely to lose. They may even refuse to honour it at all as you've not declared you knew you couldn't RoS from the outset" - I do have a RoS clause. And the discussions I've already had with QDOS seem to imply that they could still evaluate my contract + working practices as 'outside' AND defend me, regardless of what the client determines. I've just chased them up but no response (they're completely snowed under at the moment) but if, as I think they will, come back with a 'outside' status I will tell them about the client having made an 'inside' determination and see what they say about defending me.

"The PSC determines the situation based on it's merits including the clients expectation. If it's inside how on earth can you come to an outside determination?" - the answer to the second half of your statement is the first half I've come to the outside determination based on my contract, the CEST tool, working practices and MOO - basically every tool possible, provided by HMRC, following their guidelines, being honest with my answers etc... and believe QDOS will come to the same conclusion. So, the question really to ask is 'how on earth can the client come to an inside determination?'. Haven't seen their SDS as they're not issuing one. Have only 'heard' that that's what HR planned to do, before this delay was announced.

"Difference is 30% income" - ish. More for people with lots of expenses and dependant on how they 'share' any dividends etc. Less for others. I don't claim many expenses/don't have to travel, just claim for lots of things and don't have a split % of dividends with anyone else etc. Online calculators in my scenario are suggesting it's more like 13%, but I'm taking that with a pinch of salt!! Anyway, what if the client offered an uplift in rate to assist? Not saying they have or will. Yes, I'd like more money if I can get it, but I'm happy to take a bit of a cut for the 'safety'.

What I'm not convinced about is that it's any safer to go Umbrella vs Ltd now. In fact, if I go Umbrella, aren't I then 'admitting' that I'm inside / agreeing with the clients SDS (even though one hasn't been officially issued), rather than opposing (and appealing against, even though I can't appeal now) the decision? Whereas if I carry on with the Ltd company, and then in a years time it DOES become the clients job to issue the SDS, and they say 'inside', I say "noooo noooo nooooo" , look, I've been outside, operating in that way, QDOS agree, I have insurance, I'm leaving / appealing as I don't think you've done your due diligence and you're wrong.

Wouldn't that lend a stronger argument than going Umbrella now?? I don't know!!!

Oh, and back on the RoS. I reckon 'the boss' would accept a substitute. What if I get one in the next year? That strengthens my case being 'outside', surely?

I believe you can't use a substitute if you go via an Umbrella. So again, another reason to possible stay with a Ltd/PSC for now...?

[youngguy]

But you do you know if the PSC can honestly determine outside bearing in mind working conditions are set and dictated by the client. We are in this mess because our contracts often have no bearing on the working conditions, RoS being one of the more obvious ones. This has been made blinding clear by the number of client determinations that have flown in the face of what the PSC 'believes'. I'm taking the properly done ones, not the blankets. There is also the number of questions we've had were people just don't understand the questions being asked in the questionnaires so how can the PSC assessment be rock solid?

I don't know why all of a sudden people suddenly thing their contract supersedes the clients thinking. The first thing HMRC do is go ask the client and when they say no RoS they throw the contract away.

Why are we suddenly willing to throw away everything we already know to try and kid ourselves we are outside?

But you do you know if the PSC can honestly determine outside bearing in mind working conditions are set and dictated by the client. We are in this mess because our contracts often have no bearing on the working conditions, RoS being one of the more obvious ones.

I hear you and I agree. I do think there might be some circumstances where a PSC could possibly prove their working conditions differ from how the client answered CEST. And of course many of those CEST Q's are open to interpretation and phrased in a particular way.

how can the PSC assessment be rock solid?

I don't know why all of a sudden people suddenly thing their contract supersedes the clients thinking. The first thing HMRC do is go ask the client and when they say no RoS they throw the contract away.

Why are we suddenly willing to throw away everything we already know to try and kid ourselves we are outside?

It can't be rock solid and I don't think the contract supercedes. But truthful answers might. PSCs will likely be a bit more risky due to the benefit they seek to gain. Clients likely cautious due to the risk liability and no benefit. The truth might well be somewhere inbetween.

For argument's sake, let's say a client looked at the Q about choosing where the PSC worked and determined they had control,but the PSC had proven history of working in multiple places and never having to ask permission. Or the client determined the PS didn't incurr costs,but that was a guess as they never asked the PSC.

I'm not saying a PSC is now outside by default, but I think it might be worth a PSC honestly answering CEST and seeing of the outcome differs ,so long as they can back those answers with evidence.