PAYE/Divs

[DeludedKitten]

It’s a private sector job, although the end client is public. The agency say it’s outside and that they have circa 300 contractors at the private company who have never raised concerns. The point they miss, is the these 300 people don’t work on the account I do and don’t do they same role, therefore it’s a mute point in my opinion. I’ve put more details below.

If it's private sector, then at the moment the decision sits with you.

If you decide that the role is inside IR35 then you need to look at the impact of that for you and on your take home. If there are significant travel expenses, for example, then that might become a deal breaker since you won't be able to claim them any more. You could stick more cash in a pension plan, which is an allowable expense and therefore reduces the deemed payment somewhat, if that works for you.

Or you could listen to the advice and modify the working practices and put yourself outside IR35. That would mean that you've taken professional advice and due diligence and you are confident that you'd be able to argue that you haven't been negligent - difficult if there is a decent assessment that you are inside. If you put the role through HMRC's CEST tool, would it give you an inside or outside determination? Although CEST has many flaws, if you can get an accurate assessment that it is outside then get the client to complete it and save the judgement because HMRC will stick to that (they say).

Or you could stay outside IR35, make sure you have decent legal protection, and keep the money in a rainy day fund. If HMRC come calling then you can pay up if you lose the argument, if they don't you have the cash available. Depends on your attitude to risk - if you think of the number of contracts out there, and the number of investigations that HMRC take on, and the number that they lose each year (75%) then you could well be fine. So you've gotta ask yourself one question: "Do I feel lucky?" Well, do ya, punk?

[Craig@Clarity]

For clarity, I’m working in the private sector therefore the decision on my IR35 status is down to me. One of the top two organisations have reviewed my contract and working practices and deemed it to be inside IR35.

It is up to you but you've received a professional opinion so I would go with that. However, they can only advise on the information you've given them. If you've been "sold" an IR35 friendly contract from the agency, the contract isn't really that relevant unless it mirrors the contract between the agency and end client. It's going to be down to working practices.

I believe I have right of substitution for example. It’s in my contract but to substitute would not be straightforward. My boss agrees that a substitute would be possible if they met the criteria but my reviewer believes that it is more likely that they would decline a substitute and arrange an alternative via their normal resourcing route, which then means HMRC are likely to believe it’s not a true unfettered right of substitution.

It's words like using "My boss" that I'd avoid if speaking to HMRC on this subject If you believe you have the right to substitute, then it maybe that the top firm reviewers haven't had the right message conveyed to them to be convinced that it's genuine. If you're saying that you do have the right to sub assuming that sub has the relevant skills/criteria then you have a right. If your client is in agreement with this then great. Just because you don't have an immediate sub lined up doesn't mean you can't or won't find one.

In addition, there are permanent members of staff doing a very similar role and the argument is that I am there to bolster resources rather than provide a specific set of skills

Similar or same? If you fail direction, supervision and control then you simply fail it. Doesn't mean it's inside IR35 though.

As I say though, if the contract has been reviewed professionally based on the information you've given them, I'd personally go with them. In the mean time, take what you need out the company making allowances and provisions for taxes whether inside or outside depending on which way you go and buy a Terry's Chocolate Orange. You shouldn't need to wait for a final decision on your IR35 status before taking the cash out. Kids will starve otherwise!

[jaybro]

What do you mean as 'initially sold' as being outside? Is this a public sector job where they made an outside determination? If so, forget the contract review, you shouldn't have bothered, and go with outside, the risk isn't yours.

If you mean the agency said it was outside, well, you've learned an expensive lesson about trusting agents on something of which they probably know nothing and might lie if they did know anything.

It’s a private sector job, although the end client is public. The agency say it’s outside and that they have circa 300 contractors at the private company who have never raised concerns. The point they miss, is the these 300 people don’t work on the account I do and don’t do they same role, therefore it’s a mute point in my opinion. I’ve put more details below.

[jaybro]

Who carried out the IR35 review? Perhaps worth a second opinion but if it comes from a reputable firm then I'd be inclined to go with it. However, during their review did they make any suggestions as to how it could be taken outside?

Of course the decision is yours as to whether you declare yourself in or out, depending on your thoughts as to the risk but it appears you have a professional opinion. Have you shared the professional review with your colleagues?

You could take funds from the company on the basis of being inside IR35 in the meantime, leaving enough in to cover the tax/NI, should you decide to go with the contract review decision. Then provides the opportunity to get a second opinion or make an changes necessary.

Yeah, the review was from a reputable firm. I have explained this decision with other contractors I know, who have years of experience and they would consider it outside IR35. More details below.

[jaybro]

For clarity, I’m working in the private sector therefore the decision on my IR35 status is down to me. One of the top two organisations have reviewed my contract and working practices and deemed it to be inside IR35.

I believe I have right of substitution for example. It’s in my contract but to substitute would not be straightforward. My boss agrees that a substitute would be possible if they met the criteria but my reviewer believes that it is more likely that they would decline a substitute and arrange an alternative via their normal resourcing route, which then means HMRC are likely to believe it’s not a true unfettered right of substitution.

In addition, there are permanent members of staff doing a very similar role and the argument is that I am there to bolster resources rather than provide a specific set of skills, but couldn’t this be said of locum doctors? Surely there are not all classed as inside IR35.

Don’t get me wrong, I’m not looking for reasons to justify classing myself as outside IR35. I am merely trying to get some unbiased views given that the contractors I have personally asked either know me or work at the same place.

[WordIsBond]

What do you mean as 'initially sold' as being outside? Is this a public sector job where they made an outside determination? If so, forget the contract review, you shouldn't have bothered, and go with outside, the risk isn't yours.

If you mean the agency said it was outside, well, you've learned an expensive lesson about trusting agents on something of which they probably know nothing and might lie if they did know anything.

[Lance]

how about you change your working practises?

I assume your contract is outside, so work to your contract and if asked to do stuff that puts you inside (i.e. asks you to not follow the contract) say 'no'.

[ShandyDrinker]

I have had an instance whereby the two (as I see it) most well known IR35 contract review companies (QDOS and B&C) have disagreed with their status opinion, not necessarily on the working practices but more on specific clauses.

If you find yourself in that position then it's ultimately up to you to make a defensible judgement call as to whether you take the completely safe route or are prepared to defend your decision should there be an investigation.

With the changes coming in for the off-payroll rules in the private sector I think it's only ever going to be possible to take the most risk averse approach and if your contract (and practices) fail an IR35 review (in addition to CEST) then the risk of being declared outside IR35 will then just be too great.

[northernladuk]

I'd say the same as the others. You don't mention who's reviewed it which would be key to me. If it was QDOS who I've always used and what they say has always been in line with what I know the I'd go with their advice.

If the reviewer wasn't with one of the well known names like Baur & Cottrell and others then I'd be getting it reviewed again. If they also say inside then there is your answer.

I wouldn't be hunting around to try get the advice I want to hear if the big guys have reviewed it. Some contracts are just like that and you've just got to weigh up the pros and cons to make a business decision whether to take it or not.

[Alchemy Accountancy]

You have a professional opinion on this, but it is just that - an opinion. You could keep getting other opinions until you hear one that you like - but if HMRC were to look at it, their opinion might differ to the one that you like the sound of, in which case you then have a potentially expensive fight on your hands.

[taxevo]

Agree with Dom on this, if the review has been carried out by a reputable firm then you should follow their advice. If you feel so strongly that the advice you have been given doesn't reflect your interpretation of the contract and working practices then seek a second opinion.

Who sold you the contract as outside IR35? Often agencies mention that their contracts are IR35 friendly but it is always worth getting a review from an expert that factors in your working practices.

[Dom at Fox Bartfield]

IR35

Who carried out the IR35 review? Perhaps worth a second opinion but if it comes from a reputable firm then I'd be inclined to go with it. However, during their review did they make any suggestions as to how it could be taken outside?

Of course the decision is yours as to whether you declare yourself in or out, depending on your thoughts as to the risk but it appears you have a professional opinion. Have you shared the professional review with your colleagues?

You could take funds from the company on the basis of being inside IR35 in the meantime, leaving enough in to cover the tax/NI, should you decide to go with the contract review decision. Then provides the opportunity to get a second opinion or make an changes necessary.

[jaybro]

I have recently taken a contract that although initially sold as being outside IR35 has been deemed inside IR35 following professional review of working practices etc.

At present I am on the fence with this decision and can see both arguments purely due to the vagueness of IR35.

I have spoken at length to contractor colleagues and friends who believe that the contract is outside and would personally treat it as being outside if they had taken it on.

I’m at a stage now where bye I need to take some money from the business, kids need feeding these days. I would be interested in your thoughts on this dilemma.

Many thanks.