Inside IR35 not working - Scam Alert

**cojak** · 26 January 2023, 11:21

Then you're working with a dodgy umbrella.

I had a short assignment and had to sign off a few papers after I signed up on the umbrella website and I had to have a Zoom meeting where they check my passport against the real me.

And of course you have legal protection - take dunning action against the umbrella if you don't get paid.

I would look long and hard at this contract - if you don't like it don't take it.

**cojak** · 26 January 2023, 11:25

Take a look at this thread for the latest thinking on this...

Agencies more and more enforcing their own choice of Umbrellas - Contractor UK Bulletin Board

**eek** · 26 January 2023, 11:39

Originally posted by cojak View Post

Then you're working with a dodgy umbrella.

I had a short assignment and had to sign off a few papers after I signed up on the umbrella website and I had to have a Zoom meeting where they check my passport against the real me.

And of course you have legal protection - take dunning action against the umbrella if you don't get paid.

I would look long and hard at this contract - if you don't like it don't take it.

Technically it's an employment tribunal issue - because an umbrellas can't fob you off with minimum wage if every other week you were receiving a very consistent bonus.

**SichMan6570** · 26 January 2023, 11:43

Originally posted by cojak View Post

Then you're working with a dodgy umbrella.

I had a short assignment and had to sign off a few papers after I signed up on the umbrella website and I had to have a Zoom meeting where they check my passport against the real me.

And of course you have legal protection - take dunning action against the umbrella if you don't get paid.

I would look long and hard at this contract - if you don't like it don't take it.

Thanks for this and the link. Looks like a mine field.

**Chris Bryce** · 26 January 2023, 12:21

Originally posted by SichMan6570 View Post

I am a contractor of over 20 years and have always been outside IR35. I have noticed more and more inside IR35 roles so I thought why not try one of these. Well to cut a long story short I got the role. I have quickly come to the decision that being inside IR35 is a truely scary prospect for an old hand like myself. I can see the huge advantages to agency and the end client which in my view will mean more and more inside IR35 roles are going to proliferate. The structure of working inside IR35 as presented to me is as follows :-

(1) The End client has a contract with the agency for your role and other contract roles potentially.
(2) You get an email from the agency to say you got the role with the most basic information i.e start finish dates and rate and thats it.
(3) The agency gave me a list of umbrella companies you have to choose from mmm
(4) The umbrella I have chosen told me they have an agency /umbrella agreement which they sign on your behalf without counter signature from you.mmmm
(5) The umbrella has NO service agreement with me. Sign-up on the website is enough mmmm
(6) They then on their portal have a draft contract of employment which has no personal details to do with you and no signiture required by me mmmmmmmmmmmm
(7) The contract between agent and umbrella had hidden in it 30 days credit so the agency has the right to retain upwards of 2 months of fee earnings before payments start.

In this arrangement I do not sign a single thing PERIOD. I have never come across such a crock of Sh*t. This feels ALL wrong. The disadvantages of this whole thing are as follows:-

(a) No legal rghts to chase debts. If the agency or the end client refuses to pay for whatever reason I have no redress through the umbrella as they won't take legal action to chase debts when an agency delivers lots of contractor business to their organisation. This means payment is completely voluntary from the agency. In my view the compelling reason for the agency to pay is as long at the client needs me. Should that change any money in transit is at risk. Horrid
(b) The agency or the umbrella could go broke with your money inside. With no agreements it would be difficult to prove my contractual relationship with either as a bonifide creditor.

I would like your views please :-

- Is this common and if not should I dump the contract on offer
- Are the risks I see real or am I missing something
- Anyone out their bee a victim of scams in ths stack of Sh*t and what happened to you if yes
- Any other opinions on this as the internet has almost nothing on all this which is the reason for this post because I feel I might be missing somethng.

At a bare minimum you should expect to receive:-

From the agency

A Key Information Document with assignment details, assignment rate &etc (often provided to the agency by the umbrella but owned by the agency) before you start work and after any material changes such as change in NI

From the umbrella

A right to work check
An illustration document - with an assignment->gross pay->net pay calculation showing all deductions with some degree of personalisation for your tax code/student loan etc
A contract of employment containing clear details of employment conditions, holiday entitlement, grievance procedures &etc- which you will be asked to sign
Assignment schedules as appropriate
Employee manual - sometimes online
Each pay period - a payslip (also accompanied by reconciliation statement if all details are not on the payslip)*.
Consistent and frequent reminders to take your holiday entitlement

Now, most of these documents are required before you start work, however in the real world the interview to start date sometimesis so quick the paperwork trails behind, and you therefore effectively might end up starting work "at risk"

*These should cover (and indeed must cover if the umbrella is an FCSA member)

assignment rate->
employment costs (Employers NI, pension, apprenticeship levy, pension contributions, deductions for holiday pay (accrued or advanced), any agreed salary sacrifice, umbrella margin, any other agreed costs)->
gross pay (sometimes broken down into NMW+"bonus")->
Employee NI
PAYE Tax
any other deductions (e.g. student loan, court ordered deductions
Net pay - what should appear in your bank account

**hugebrain** · 26 January 2023, 14:26

Originally posted by SichMan6570 View Post

Thanks for this and the link. Looks like a mine field.

Since you are an employee and not a business you have more rights to get paid and come higher up the list if anyone goes bust.

That said, it is a total scam, the agencies should be jailed for quoting a salary that you can’t get paid and getting kickbacks from the umbrellas, it is as corrupt as hell.

**northernladuk** · 26 January 2023, 14:37

Originally posted by SichMan6570 View Post

I am a contractor of over 20 years and have always been outside IR35. I have noticed more and more inside IR35 roles so I thought why not try one of these. Well to cut a long story short I got the role. I have quickly come to the decision that being inside IR35 is a truely scary prospect for an old hand like myself. I can see the huge advantages to agency and the end client which in my view will mean more and more inside IR35 roles are going to proliferate. The structure of working inside IR35 as presented to me is as follows :-

(1) The End client has a contract with the agency for your role and other contract roles potentially.
(2) You get an email from the agency to say you got the role with the most basic information i.e start finish dates and rate and thats it.
(3) The agency gave me a list of umbrella companies you have to choose from mmm
(4) The umbrella I have chosen told me they have an agency /umbrella agreement which they sign on your behalf without counter signature from you.mmmm
(5) The umbrella has NO service agreement with me. Sign-up on the website is enough mmmm
(6) They then on their portal have a draft contract of employment which has no personal details to do with you and no signiture required by me mmmmmmmmmmmm
(7) The contract between agent and umbrella had hidden in it 30 days credit so the agency has the right to retain upwards of 2 months of fee earnings before payments start.

In this arrangement I do not sign a single thing PERIOD. I have never come across such a crock of Sh*t. This feels ALL wrong. The disadvantages of this whole thing are as follows:-

(a) No legal rghts to chase debts. If the agency or the end client refuses to pay for whatever reason I have no redress through the umbrella as they won't take legal action to chase debts when an agency delivers lots of contractor business to their organisation. This means payment is completely voluntary from the agency. In my view the compelling reason for the agency to pay is as long at the client needs me. Should that change any money in transit is at risk. Horrid
(b) The agency or the umbrella could go broke with your money inside. With no agreements it would be difficult to prove my contractual relationship with either as a bonifide creditor.

I would like your views please :-

- Is this common and if not should I dump the contract on offer
- Are the risks I see real or am I missing something
- Anyone out their bee a victim of scams in ths stack of Sh*t and what happened to you if yes
- Any other opinions on this as the internet has almost nothing on all this which is the reason for this post because I feel I might be missing somethng.

To be fair, and I'm happy to be corrected here, but I don't see much wrong with the above. You've got a seismic shift in your situation here. The chain is now Client-Agency-Umbrella-you. You are employed by the brolly so they will deal with much of it. You have no contractual relationship with either the agency or the client. So (1) is correct, (2) seems fair enough as the contract goes to the brolly but they are informing you of details you need. (3) is common now as they ~~due diligence~~ get kickbacks from the umbrellas. (4) is correct as you have no contractual relationship with the agency although I'd be surprised if the umbrella doesn't pass the contract details on to you check and agree to. (5) possibly. You are an employer of theirs now. Not contracted to them like you would an agency/client (6) Yep because you are employed by them (7) It's not hidden if it's there some where. You should be reading it top to bottom so nothing is hidden. That said your payment terms are between you and the brolly. How the brolly is paid is of no concern to you. I must admit it's so long since I've been with a brolly I can't remember if they factor so you start getting paid from day one. You'll have to ask the brolly about that.

So from what I can see it's not a crock at all, just you not adapting to being an employee of an umbrella very well. Yes all the above can be done well or it can be done very badly but in theory it seems about right. Chris mentions loads of things that should be going on within the process you are complaining about but at a high level what you've put doesn't seem too out of the ordinary.

As to the risks about chasing and going bust. Yep, thats how it is. You are employed now. You have no contractual relationship with the agency. They pay the brolly, not you so the model says you can't do that and yes the brolly can go bump with your money. It's happened. Crystal umbrella is one that springs to mind on here. Just have to check they payment terms with the brolly to see how much you would lose if they go bump. If they factor payments it shouldn't be too much depending on agreed pay cycle with the brolly.

So, although what you've put is very high level and there is lots of discussion to be had on each point there doesn't seem to be anything untoward here. You just need to get your head around the fact you are now an employee of the brolly and no longer anything to do with client and agency.

**Protagoras** · 26 January 2023, 17:38

Originally posted by SichMan6570 View Post

(a) No legal rghts to chase debts. If the agency or the end client refuses to pay for whatever reason I have no redress through the umbrella as they won't take legal action to chase debts when an agency delivers lots of contractor business to their organisation. This means payment is completely voluntary from the agency. In my view the compelling reason for the agency to pay is as long at the client needs me. Should that change any money in transit is at risk. Horrid
(b) The agency or the umbrella could go broke with your money inside. With no agreements it would be difficult to prove my contractual relationship with either as a bonifide creditor.

+1

I concur broadly with your assessment. I have expressed similar concerns on this forum. The brolly's liability is a fraction of what may be owed since this liability excludes payment in full of bonus and salary sacrificed pension.

I don't think that this is a feature of an inferior brolly, or reasonably the 'fault' of the brolly, rather it's a feature of an engagement model which requires extended personal credit to be provided by the worker.

I'd not be certain whether an ET would award for lost bonus and pension payments, which would be very high compared with NMW payment, and not guaranteed in the employment contract. I'd be interested if anyone could quote an ET case where such losses have been recovered.

As you say, there's no contract with a supply chain body beyond the brolly, so you have no entity against which to raise an action. The model requires that you are a worker, with an employment contract, and no more.

Apart from some very limited cover available from IPSE+ membership, I've not spotted anywhere offering insurance of this risk. Personally, I think that this is a clear and credible risk.
I would buy insurance for this risk if I could, and even pay a brolly for it, if they could offer it as part of their service.

Meanwhile, the only action that one can take in mitigation is to walk away or agree very tight payment terms.

PS - It would be good if brollies were required to factor payments and pay employees as 'real' employers do, rather than pass the risk to the worker.

PPS - It is not necessary to be 'inside' off-payroll for the above to apply, only to be using the brolly supply chain model.

**eek** · 26 January 2023, 18:12

Originally posted by Protagoras View Post

I'd not be certain whether an ET would award for lost bonus and pension payments, which would be very high compared with NMW payment, and not guaranteed in the employment contract. I'd be interested if anyone could quote an ET case where such losses have been recovered.

https://assets.publishing.service.go...d_Judgment.pdf

Inside IR35 not working - Scam Alert