Reply to: Right to substitution vs. Bum-on-seat

[meanttobeworking]

Perhaps because it's more clear cut. You either have a reasonably unfettered right of substitution, or you don't. If you've actually used your RoS then it's even more clear cut.

D&S is far more open to interpretation, there are different degrees of D&S and the whole thing is more subjective.

That makes a lot of sense.

[vwdan]

We had this very conversation in the pub last night - if I go out of my way to hire the best builder to work on my house, I'm not going to be happy if his wifes brother rolls up. Even in the 'real' consulting world (I.e., firms with multiple staff) there's a lot of politics about switching people out randomly. I had a customer kick and scream when it was rumored I was going to be taken off the account - formal complaint made and everything, so I ended up staying with them. Does that mean the multi million pound firm was under IR35...

But, 1) We're preaching to the choir 2) HMRC/Politicians don't give a tulip - they don't care about defining us in reality because that's not the end game

I can hand on heart say that I operate in exactly the same way as a one man consultancy as I did as a member of a larger consultancy. My expenses are similar (Except lunch, I do take that one as a contracting perk), the way I operate with customers is similar and the way I live is similar. Except because there's no one else creaming profit for my work I'm now in the cross-hairs.*

*Sort of, because I genuinely believe I'm outside and always have been - but that's besides the point because HMRC would cream themselves at the chance to get us all inside.

[TheCyclingProgrammer]

I agree - but the weighting towards RoS in the new PS IR35 tool (say your client will accept a sub that you pay and it's an immediate "outside" result without even asking about MOO or D&C) says to me that HMRC think differently. And we may not agree but that rarely matters.

Perhaps because it's more clear cut. You either have a reasonably unfettered right of substitution, or you don't. If you've actually used your RoS then it's even more clear cut.

D&S is far more open to interpretation, there are different degrees of D&S and the whole thing is more subjective.

[FarmerPalmer]

I don't think IR35 will exist.

I don't think contracting will exist as it does now if there is much less advantage - I think the government has always wanted all contractors to move into perm positions. That's what it will drive towards and implement.

I think IR35 can be easily scrapped. Just make the dividend tax the same rate as national insurance. Scrap IR35. Job done.

[malvolio]

I agree - but the weighting towards RoS in the new PS IR35 tool (say your client will accept a sub that you pay and it's an immediate "outside" result without even asking about MOO or D&C) says to me that HMRC think differently. And we may not agree but that rarely matters.

Not that strange. An unfettered RoS that the client will honour is a sure fire outside IR35 condition: it was one of the key elements of the original RMC decision.

The confusion comes because various clients, when challenged, have said they wouldn't actually honour such clauses (including one in court, so ignoring the basics of contract law...) so some have seen that to diminish its importance. If it's the client saying it, then it must be true.

[meanttobeworking]

I've always viewed MOO and D&C as far more important factors when it comes to IR35 and being perceived as a proper business.

I agree - but the weighting towards RoS in the new PS IR35 tool (say your client will accept a sub that you pay and it's an immediate "outside" result without even asking about MOO or D&C) says to me that HMRC think differently. And we may not agree but that rarely matters.

[TheCyclingProgrammer]

I agree. Whilst I do have an unfettered RoS clause in my contracts and if I really needed to use it, I would, I'm well aware that having to use it would probably not make my clients happy. I'm far more likely to sub-contract work than outright substitute myself. As you say, I'm not a bum on seat, I offer specific expertise to my clients and they have engaged MyCo because they want *me*.

I've always viewed MOO and D&C as far more important factors when it comes to IR35 and being perceived as a proper business.

[RonBW]

It strikes me that as freelancers, we do a lot to avoid being classed as a bum-on-seat resource - instead bringing expertise and special skills not present (to one degree or another) at the end client.

I guess it depends on what you mean to be a bum on seat resource. An interim manager, for example, brought in for their expertise and special skills not present at the end client is the perfect definition of being a bum on seat resource - the two are not mutually exclusive.

What's the difference between BoS, interim, and single serial client contractor? Nothing as far as I can see - yet some people will look down their nose at some terms and think "well that doesn't apply to me" when it really does.

[radish2008]

No, that's not the reason. This attack is being driven by a political agenda not IR35 enforcement.

And which is more successful ?

9 years of insanely complicated legislation ?

Or a direct cash grab ?

It doesn't matter what motivates it the end result will be the same.

[malvolio]

Of course.

But it's very difficult to enforce and very few successful prosecutions.

What I'm saying is that it's not their main forma of attach any more. When I started contracting 9 years ago it was, PCG was rampant. Nowadays they are hitting contractors in their pockets, which is far more effective. Far fewer contractors will mean that IR35 is pointless.

No, that's not the reason. This attack is being driven by a political agenda not IR35 enforcement.

[radish2008]

Do you really understand why IR35 exists in its current form and why it won't be repealed?

Of course.

But it's very difficult to enforce and very few successful prosecutions.

What I'm saying is that it's not their main forma of attach any more. When I started contracting 9 years ago it was, PCG was rampant. Nowadays they are hitting contractors in their pockets, which is far more effective. Far fewer contractors will mean that IR35 is pointless.

[malvolio]

I don't think IR35 will exist.

I don't think contracting will exist as it does now if there is much less advantage - I think the government has always wanted all contractors to move into perm positions. That's what it will drive towards and implement.

Do you really understand why IR35 exists in its current form and why it won't be repealed?

[LondonManc]

I don't think IR35 will exist.

I don't think contracting will exist as it does now if there is much less advantage - I think the government has always wanted all contractors to move into perm positions. That's what it will drive towards and implement.

In reality, they know it cannot happen completely. That will leave the contract market to the contractors who aren't FTC candidates. The biggest problem with their plan is the expenses - you'll end up having to take local contracts if you cannot afford to live away from home.

What is worse is that there will be proportionately more sales drones to contracts and people asking for two references and other tedious garbage.

[radish2008]

Is it wasted if contracting is left to the contractors rather than the bum-on-seaters?

The bum-on-seaters shouldn't be pushed into IR35 - the employers should be engaging them in FTCs, so that they stump up the employer NICs as HMRC want.

I don't think IR35 will exist.

I don't think contracting will exist as it does now if there is much less advantage - I think the government has always wanted all contractors to move into perm positions. That's what it will drive towards and implement.

[LondonManc]

To be frank I fear all of these conversations are likely to be irrelevant in a year or so.

IR35 is a state of fear. It keeps people worried and for a few it puts them off. They go back to being perm because it scares them.

The government is quietly destroying contracting through the back door - by reducing tax benefits, increasing direct taxation and decreasing the margin that contractors 'make' through increased rates vs permies. The incentive to contract becomes less each year as we earn less but still have the issues of pensions, sick pay and business costs etc etc.

They have been doing this for a decade and IPSE is now plainly part of the problem, not any kind of solution I can recognise.

So the energy and knowledge and sometime outright IR35 fanaticism displayed on this site is all wasted. In 5 years contracting as we know it won't exist.

Is it wasted if contracting is left to the contractors rather than the bum-on-seaters?

The bum-on-seaters shouldn't be pushed into IR35 - the employers should be engaging them in FTCs, so that they stump up the employer NICs as HMRC want.