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If a client will change their mind mid-way.

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  • BlasterBates
    replied
    If the client did change their mind then probably the only option would be to pay the back tax and sue the client.

    The trouble is it isn't a dispute on the contract rate, it's a dispute on the tax deducted. You can't just keep it if too little tax was paid, it will have to get paid one way or another.

    Leave a comment:


  • cojak
    replied
    Originally posted by Sub View Post
    Not yet happened really, just for the discussion sake.

    Private sector client in scope of the reform, direct contract with contractor's Ltd, usual outside T&M contract. Both contractor and client carry on after 6th of Apr 21, no determination made, client continue to pay as if contract is outside IR35. They forgot, they did not cared or client have changed their mind for example.

    In June, client client finally pulls it out and making contract determination which comes back as 'Inside'. Where it leaves contractor?

    1. I believe that client will not be able to ask contractor to repay you some money to cover their newly arisen tax liability for past 3 months as that would be breach of contract between parties, however maybe there are other thoughts.

    2. Whole contract is now Inside, so if contractor will stay on Inside basis, that will mean they exposed as their previous term was also inside, but even if he leave, that will make his previous Outside determination quite weak as client is thinking otherwise.

    What do you reckon is probability of such U-turn in a middle of a contract and it's impact on a contractor?
    It leaves the contractor handing in their notice and walking from the client before the day is out.

    Leave a comment:


  • northernladuk
    replied
    Originally posted by Sub View Post
    Not yet happened really, just for the discussion sake.
    But not worth discussing if the situation thought of is too fanciful to be able to comment and so off the rails we just don't know.
    Private sector client in scope of the reform, direct contract with contractor's Ltd, usual outside T&M contract. Both contractor and client carry on after 6th of Apr 21, no determination made, client continue to pay as if contract is outside IR35. They forgot, they did not cared or client have changed their mind for example.
    Don't let it get this far. Remind the client of their legal duty to assess the role and provide an SDS. That way you don't get in to the horrible mess that you mention below and that no one knows because it shouldn't happen. Too hypothetical, shouldn't happen and we don't know because it shouldn't happen.

    If at all possible you should already be engaging with the client to hopefully educate and lead them to an outside determination. Sitting there waiting for them to flounder will almost certainly end with an inside or PSC ban.

    Leave a comment:


  • Sub
    started a topic If a client will change their mind mid-way.

    If a client will change their mind mid-way.

    Not yet happened really, just for the discussion sake.

    Private sector client in scope of the reform, direct contract with contractor's Ltd, usual outside T&M contract. Both contractor and client carry on after 6th of Apr 21, no determination made, client continue to pay as if contract is outside IR35. They forgot, they did not cared or client have changed their mind for example.

    In June, client client finally pulls it out and making contract determination which comes back as 'Inside'. Where it leaves contractor?

    1. I believe that client will not be able to ask contractor to repay you some money to cover their newly arisen tax liability for past 3 months as that would be breach of contract between parties, however maybe there are other thoughts.

    2. Whole contract is now Inside, so if contractor will stay on Inside basis, that will mean they exposed as their previous term was also inside, but even if he leave, that will make his previous Outside determination quite weak as client is thinking otherwise.

    What do you reckon is probability of such U-turn in a middle of a contract and it's impact on a contractor?

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