IR35 reform delay - too late to help?

[mrrossi]

So literally 2 hours before the IR35 reform delay was announced, my client FINALLY made a decision on how they were going to proceed.

They had decided that the role was 'inside' IR35. However, they stated that they would NOT issue an SDS to the agency, they would simply say to the agency 'the role is inside IR35' and the agency was to advise contractors to engage via an Umbrella company. They still would have produced an SDS though for 'their records'.

I think the idea of them not issuing a SDS to the agency was their idea that somehow it would protect us contractors that had been working in that role and considered ourselves outside, from any retrospective HMRC investigation.

That's nonsense though, right?!? Doesn't matter if they pass SDS to an agency or not. If the taxman comes a-knocking 12 months later, they ask the CLIENT, it's then their responsibility to produce an SDS, and they will have an 'inside' one to show.

One of my colleagues has had a QDOS review of contract & working practices and they believe him to be 'outside'. I'm waiting on my review to come back and expect the same. Our working practices & the 'MOO stuff' do determine us as being outside. We've had to take days off (unpaid obviously) as there hasn't been work. In fact I faced that prospect next week, but something just came through, but believe one or two of my colleagues may have nothing next week. So we're certainly not treated like employees.

I.e. totally disagree with the clients 'inside' determination.

So, how to play it now there's the delay?

I guess we can't 'appeal' against the SDS because it's not formerly been issued and, with the delay, isn't actually the clients responsbility yet anyway, so there won't be an appeal process.

Two options:
i) carry on as a Ltd for the next 5 months extension offered and review later whether to remain Ltd to the last minutes/few months before/switch to Umbrella then?
ii) actually move to operating via an Umbrella now, a whole 12 months ahead of when I'd need to

Does the 'Umbrella now' option actually add any protection though anyway? The client seems to think it would but I don't see how.

Then in 12 months either leave or switch to Umbrella, THEN appeal the 'inside' determination (assuming QDOS did agree I was outside AND I have the insurance)?

Arrghhh. Still so complicated. When they announced the delay I thought WHAHEY we can just carry on as Ltd but I guess it's not so easy as that.

Right. I've waffled, apologies. In short, there are 3 questions here:

1) Does it make any difference whatsoever that the client WILL NOT issue a SDS to the agency?
2) Does it make any difference whatsoever going Umbrella NOW rather than 3-6 months or even last minute?
3) If the client has made an inside SDS NOW but QDOS say it's outside can we appeal now or do we have to wait 12 months until it's actually the clients responsibility to issue a SDS and hence an appeal process will be in place?

Thanks all! Hope C-19 isn't affecting anyone too badly.

Crazy times.

[eek]

If QDOS says it's outside and you paid for that review I think I would go with QDOS's argument knowing that you have to leave by March 2021 (i.e. don't accept any extension that takes you close or beyond April 2021). You can't do much more than that really.

How recent is the QDOS statement was it part of this SDS review or from a while back?

[northernladuk]

So literally 2 hours before the IR35 reform delay was announced, my client FINALLY made a decision on how they were going to proceed.

They had decided that the role was 'inside' IR35. However, they stated that they would NOT issue an SDS to the agency, they would simply say to the agency 'the role is inside IR35' and the agency was to advise contractors to engage via an Umbrella company. They still would have produced an SDS though for 'their records'.

Sounds fair enough. They don't need to any more. They will be on the hook next time it comes round so they are just protecting their backs against an unknown risk.

I think the idea of them not issuing a SDS to the agency was their idea that somehow it would protect us contractors that had been working in that role and considered ourselves outside, from any retrospective HMRC investigation.

Not at all. They just don't need to do it. So why do something they don't need to with so much unknown going on.

That's nonsense though, right?!? Doesn't matter if they pass SDS to an agency or not. If the taxman comes a-knocking 12 months later, they ask the CLIENT, it's then their responsibility to produce an SDS, and they will have an 'inside' one to show.

No it's not. There has been a u-turn and SDS are not required.

One of my colleagues has had a QDOS review of contract & working practices and they believe him to be 'outside'. I'm waiting on my review to come back and expect the same. Our working practices & the 'MOO stuff' do determine us as being outside. We've had to take days off (unpaid obviously) as there hasn't been work. In fact I faced that prospect next week, but something just came through, but believe one or two of my colleagues may have nothing next week. So we're certainly not treated like employees.

This isn't really MoO and is not a strong argument. You have to take days off on holiday which is exactly the same thing. I'd dig in to why you've no work and what you are being given when the work pops back up but that's off topic so lets leave that.

I.e. totally disagree with the clients 'inside' determination.

Doesn't everyone.

So, how to play it now there's the delay?

I guess we can't 'appeal' against the SDS because it's not formerly been issued and, with the delay, isn't actually the clients responsbility yet anyway, so there won't be an appeal process.

Legislation never hit so no appeal.

Two options:
i) carry on as a Ltd for the next 5 months extension offered and review later whether to remain Ltd to the last minutes/few months before/switch to Umbrella then?

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. You'll also have another period of extra interest and penalties when it does hit and you get caught.

ii) actually move to operating via an Umbrella now, a whole 12 months ahead of when I'd need to

You need to do it now. You are inside. There is no other choice.

Does the 'Umbrella now' option actually add any protection though anyway? The client seems to think it would but I don't see how.

Of course it is. You won't be commiting fraud.

Then in 12 months either leave or switch to Umbrella, THEN appeal the 'inside' determination (assuming QDOS did agree I was outside AND I have the insurance)?

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.

Arrghhh. Still so complicated. When they announced the delay I thought WHAHEY we can just carry on as Ltd but I guess it's not so easy as that.

Not at all. Absolutely crystal clear. You trying to get greedy and ignore the facts is what is making it complicated.

1) Does it make any difference whatsoever that the client WILL NOT issue a SDS to the agency?

None

2) Does it make any difference whatsoever going Umbrella NOW rather than 3-6 months or even last minute?

Yes, you won't be committing fraud and hanging yourself out to dry.

3) If the client has made an inside SDS NOW but QDOS say it's outside can we appeal now or do we have to wait 12 months until it's actually the clients responsibility to issue a SDS and hence an appeal process will be in place?

You hanging far too much on the appeal. That is just a discussion with the client. The only difference is with the appeal they have some responsibility to respond in certain times. It makes no difference to the decision they make. You can do it now and then can still tell you to F off and bin you. Nothing has changed there.

Looks as clear cut as it could possibly be.
Contractor wants to be outside but he isn't. Does he commit fraud or do it properly.

Very simple indeed.

[mrrossi]

The QDOS 'outside' for my colleague was issued about 10 days ago, I'm still waiting for mine but it's been in process for a couple of weeks. The SDS has only been issued (not TOO anyone as such) / HR (who are rubbish, by the way, they have no idea what they're doing) have made the 'inside' determination as of, what, Tuesday? The day the delay was announced?

[northernladuk]

If QDOS says it's outside and you paid for that review I think I would go with QDOS's argument knowing that you have to leave by March 2021 (i.e. don't accept any extension that takes you close or beyond April 2021). You can't do much more than that really.

How recent is the QDOS statement was it part of this SDS review or from a while back?

And does QDOS know the client has an SDS saying inside... I very much doubt they'll be happy with that fact.

[northernladuk]

I joked but......

https://www.contractoruk.com/forums/...ml#post2746237

[eek]

And does QDOS know the client has an SDS saying inside... I very much doubt they'll be happy with that fact.

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...

[northernladuk]

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.

But won't it be long term because when they get deemed inside again they will be right at the top of the tree and the investigation will go alllllll the way back.

And I think you would be completely mad to walk away from work at the moment -

He doesn't have to walk away, just has to declare inside. He's in a gig when most aren't and it's not the best paid one for awhile. The potential for an investigation and questions over insurance are just not worth it.

Treat it as a badly paid gig and move on later. We've all had them. My rates have varied between 375 and 550 in my contracting career. A gig 30% less than whatever people to believe is market is hardly going to kill us.

It's just plain greed and no way would we have told anyone with an inside gig to go for outside in the past and IMO this is a period of highlighted risk as HMRC WILL be back. No getting away from it.

But all IMO

[northernladuk]

Maybe next year Cojak can alter the don't be mean sticky to say anyone that was deemed inside but stayed outside that posts to say they are screwed what can they do, then we are allowed to take the piss and be mean because we told you so.

[eek]

But won't it be long term because when they get deemed inside again they will be right at the top of the tree and the investigation will go alllllll the way back.


He doesn't have to walk away, just has to declare inside. He's in a gig when most aren't and it's not the best paid one for awhile. The potential for an investigation and questions over insurance are just not worth it.

Treat it as a badly paid gig and move on later. We've all had them. My rates have varied between 375 and 550 in my contracting career. A gig 30% less than whatever people to believe is market is hardly going to kill us.

It's just plain greed and no way would we have told anyone with an inside gig to go for outside in the past and IMO this is a period of highlighted risk as HMRC WILL be back. No getting away from it.

But all IMO

I suspect the answer is:-

Will you be leaving well before April 2021 - then it's possible to be outside (with the caveat that it is a risk but you have (if / when it arrives) documentation to mitigate that risk)..
Are you planning to stay beyond April 2021 - then go inside now...

It's not an easy question but that would be how I was playing things if it was me...