What (therotical) actions can contractors take where SDS is wrong

[dingdong]

So in my fun case I’ve had HR in the USA who don’t know the first thing about IR35 decide I’m inside.

This is despite….

1. Supplying four different people under my contract (including a substitute for 2 months)
2. Working practices confirmed by programme sponsor stating no control or MOO
3. CEST and IR35 shield assessment both confirming outside.

My SDS and subsequent appeal both give no reasons for their determination (so are technically invalid) but there is little value in me pushing it as HR won’t budge or respond further and are clearly risk averse.

I’m going to complete the gig as inside as there is not long left and I like the programme I am delivering (i'm confident my prior status can be defended if necessary).


However it did set me off thinking what possible recourse would contractors have where their SDS is plain wrong.

I came up with these two (not that I will pursue any of them but it is an interesting academic exercise)….

1. HRMC inquiry
Given HRMC are always very keen to open inquries where people are outside to reclassify them as inside…. Is there any reason you couldn’t ask HRMC to open an inquiry to do the reverse where you are confident the determination is clearly incorrect?

2. Employment Tribunal / Court action
Complete the gig and then take court action later against an incorrect determination

[cojak]

Does the client have a UK presence?

[eek]

So in my fun case I’ve had HR in the USA who don’t know the first thing about IR35 decide I’m inside.

This is despite….

1. Supplying four different people under my contract (including a substitute for 2 months)
2. Working practices confirmed by programme sponsor stating no control or MOO
3. CEST and IR35 shield assessment both confirming outside.

My SDS and subsequent appeal both give no reasons for their determination (so are technically invalid) but there is little value in me pushing it as HR won’t budge or respond further and are clearly risk averse.

I’m going to complete the gig as inside as there is not long left and I like the programme I am delivering (i'm confident my prior status can be defended if necessary).


However it did set me off thinking what possible recourse would contractors have where their SDS is plain wrong.

I came up with these two (not that I will pursue any of them but it is an interesting academic exercise)….

1. HRMC inquiry
Given HRMC are always very keen to open inquries where people are outside to reclassify them as inside…. Is there any reason you couldn’t ask HRMC to open an inquiry to do the reverse where you are confident the determination is clearly incorrect?

2. Employment Tribunal / Court action
Complete the gig and then take court action later against an incorrect determination

An inside determination cannot be appealed beyond the internal appeal to the person who made the determination.

There are no other legal options that I'm aware of nor anyone else as you will see all the effort is being spent in making sure the determination is correct and that there is some backup for outside determinations should a company wish to offer them.

And there was zero chance a US company would offer an outside determination - there be dragons there.

[jamesbrown]

You say "HR in the USA", but presumably this is not a fully overseas supply chain, otherwise you wouldn't have an SDS in the first place and the Chapter 8 rules of the ITEPA would apply (pre-April 6 2021 or "normal IR35"). Assuming there is a UK company somewhere in the supply chain (who is liable) then, yes, the overseas company is responsible for adhering to the OPWR (Chapter 10), which includes issuing a timely and valid SDS and running a client-led status disagreement process.

However, as you suggest, you're in a tough spot and you have my sympathies for that (because this work is almost certainly outside IR35, in reality). HMRC won't care about this (there is no tax at risk) and it's unclear what you could do, legally, to overturn the SDS and claim unlawful deductions. In theory, UK court action or an ET may be possible (for missing employment rights or unlawful deductions from wages, I suppose), but you'd have the additional complexity of the client being in a different jurisdiction. The legislated liability w/r to the UK connection in the supply chain is to HMRC (if payroll taxes were not deducted when they should've been) and not to you, so that would be interesting. What does your contract say about jurisdiction and governing law and with whom is your contract?

[jamesbrown]

Here's an amusing exchange that pretty much sums it up from HMRC's perspective. "Um, er, speak to someone else".

https://community.hmrc.gov.uk/forums...8-00155d973b50

[dingdong]

Does the client have a UK presence?

Yes - i'm contracted in the UK to the UK office so there is no overseas complexity


Its a multinational with HQ in the US. However all matters related to HR compliance are handled by the US HR team. They don't really use contractors in the UK so this is all new to them. They are unwilling to discuss any of the detail and say the matter is now closed.

[eek]

So basically the US are saying they want permanent staff rather than contractors.

And the fact HR are saying this reinforces the point - this isn't a battle you are going to win (mainly because HR are involved) and US HR are paranoid about this type of thing due to historic nightmares in the USA,