Reply to: Umbrella to Ltd, and IR35 Query

[swebb]

Doh you just can't win lol

[Bluebird]

It looks like I need to train to be an accountant and a lawyer

THAT will pu you inside IR35

[swebb]

Thanks for all the replies. I'll have a look into the companies you mentioned over the weekend and decide what I need to do. It looks like I need to train to be an accountant and a lawyer

[Chugnut]

Denny - "Qdos, on the other hand, don't agree with that interpretation and will argue the point that the EB to client contract does not carry any weight simply because the contractor could not view or agree these terms. Apparently, they have won cases on this point alone many times halting the IR investigation in its tracks or winning to its conclusion. "


Slightly but I think similar arguments will be used to defend any "Is my accountant an MSC Provider?" questions when we see the first cases going to court. In other words, attempting to penalise one party who has no control over a 3rd party's business practices or interpretation of them. I wonder when QDOS et others will put out an "MSC Insurance" product!

[cojak]

I'll look at Qdos next time (since you're so insistent... )

The point really was that he should get someone qualified to read it and negotiate on his behalf if necessary.

[Denny]

Some experienced contractors will always run the contract past Bauer and Cotterell(/Lawspeed etc) to check that the contract sits outside of IR35 (the terms IR35 "friendly" or "compliant" could mean that the contract sits inside IR35 and is caught).

If the contract is inside IR35, B&C will go to the agency to negotiate changes to the contract. Most of the time they are successful, sometimes they aren't. They will recommend options but then it is up to you whether you accept the contract and take the risk, or walk away.

I always use B&C.

Others will make their own decision using knowledge and experience. I would suggest that posting the odd clause out of context is not the best way to go about making that decision.

I don't use B&C instead I use Qdos. Mainly because Sarah from B&C said to me that being inside IR35 is as much to do with the EB to client contract if it explicitely states what the contractor's on site behaviours and expectations are as it is to do with the EB to contractor terms. That means that checking it over is pretty pointless money spinner for them.

Qdos, on the other hand, don't agree with that interpretation and will argue the point that the EB to client contract does not carry any weight simply because the contractor could not view or agree these terms. Apparently, they have won cases on this point alone many times halting the IR investigation in its tracks or winning to its conclusion. If B&C are not so convinced up front on this point, they are unlikely to argue that point on your behalf unless they see what the actual EB to client wording is. That puts the iR35 position completely out of your hands and into the hands of the EB and client - something I certianly don't find acceptable.

[Denny]

Some experienced contractors will always run the contract past Bauer and Cotterell(/Lawspeed etc) to check that the contract sits outside of IR35 (the terms IR35 "friendly" or "compliant" could mean that the contract sits inside IR35 and is caught).

If the contract is inside IR35, B&C will go to the agency to negotiate changes to the contract. Most of the time they are successful, sometimes they aren't. They will recommend options but then it is up to you whether you accept the contract and take the risk, or walk away.

I always use B&C.

Others will make their own decision using knowledge and experience. I would suggest that posting the odd clause out of context is not the best way to go about making that decision.

I don't use B&C instead I use Qdos. Mainly because Sarah from B&C said to me that being inside IR35 is as much to do with the EB to client contract if it explicitely states what the contractor's on site behaviours and expectations are as it is to do with the EB to contractor terms. That means that checking it over is pretty pointless money spinner for them.

Qdos, on the other hand, don't agree with that interpretation and will argue the point that the EB to client contract does not carry any weight simply because the contractor could not view or agree these terms. Apparently, they have won cases on this point alone many times halting the IR investigation in its tracks or winning to its conclusion. If B&C are not so convinced up front on this point, they are unlikely to argue that point on your behalf unless they see what the actual EB to client wording is. That puts the iR35 position completely out of your hands and into the hands of the EB and client - something I certianly don't find acceptable.

[cojak]

Some experienced contractors will always run the contract past Bauer and Cotterell(/Lawspeed etc) to check that the contract sits outside of IR35 (the terms IR35 "friendly" or "compliant" could mean that the contract sits inside IR35 and is caught).

If the contract is inside IR35, B&C will go to the agency to negotiate changes to the contract. Most of the time they are successful, sometimes they aren't. They will recommend options but then it is up to you whether you accept the contract and take the risk, or walk away.

I always use B&C.

Others will make their own decision using knowledge and experience. I would suggest that posting the odd clause out of context is not the best way to go about making that decision.

[Denny]

And

"Save as otherwise stated in this Agreement, the Consultancy shall be entitled to supply its services to any third party during the term of this Agreement provided that this in no way compromises or is to the detriment of the supply of its services to the Client."

And

"The Consultancy shall have reasonable autonomy in relation to determining the method of performance of the Consultancy Services but in doing so it shall co-operate with the Client and comply with all reasonable and lawful instructions within the scope of the Assignment made by the Client."

And

"The Consultancy shall bear the cost of any training which its Staff may require in order to perform the Consultancy Services."


I'm note clear though on how the details of termination effect IR35 because the shedule specifies a notice period of 4 weeks and the contract contains the following :-

To be honest, I am ambivalent about the top clause being necessary at all. Having rights of substitution should not be qualified at all, ideally. It goes without saying that any sub must be able to perform the services your company are there to provide. This wording implies almost of the opposite of what it claims to be saying - that they really want you to perform the services personally and don't really trust you to provide a good sub which gives the client the ready made excuse they need to refuse anyone you put forward for any old reason.

The second para carries the same baggage. It is unnecessary and is a disguised way of putting 'client control' in words that imply that there is no client control.

If I were an IR35 accountant I would be a bit concerned about the presence of both these clauses, even if they do seem ir35 friendly. Instead, I would be much happier to see omissions of both and instead would prefer no presence of obviously worded client control clauses or a para explicitely forbidding subs being allowed but nothing else. If something is not in a contract then it can't be argued with or interpreted. That is surely the best way of staying outside.

Usually qualified IR35 exempt clauses are merely disguised 'inside IR35 clauses'. Be aware. It is precisely this kind of wording that will prompt an IR revenue investigation if you are unlucky to be singled out, which will mean a lot of hassle for you, even if the IR do eventually lose because the judge thinks these clauses are in fact outside and not inside which they are likely to conclude. Do you need the hassle though?

By having no qualfied references and clear omissions of the obvious that can't be interpreted as meaning something other than what it was intended to say - the IR probably would realise they are onto a loser right away and not bother investigating in the first place.

I would rather have the latter than the former.

[swebb]

lol err im not sure if there was a question or not myself now I look at it again. I suppose what I was asking for is there anything obvious here that means its within IR35. If there isn't then I'll pay up and get it checked anyway. Otherwise its probably not worth it as I suspect the agency will only allow minor tweaks to the contract.

Steve

[Sockpuppet]

Is there a question in that? If you want the contract checking you're gonna have to pay for it as none of us are lawyers. It looks ok, but the rest of the contract is also important.

http://www.bauerandcottrell.co.uk/services.asp

[swebb]

Thanks for the info guys.

I got hold of the contract between the agency and the umbrella to see if I go Ltd how IR35 would effect me. I think the way it is written its actually outside IR35. The agent said they tend to write them that way.

The main points I noted in the sections of the contract were :-

The contract schedule notes the contract fee per day and says a professional working week is 37.5 hrs. Its doesn't say anything about the consultant working on site or the hours the consultant needs to work during the day.

The contract appears to include the right for subsitution with the following :-

"The Consultancy's obligation to provide the Consultancy Services shall be performed by such member or members of the Consultancy’s employees, officers, representatives, or consultants (“Staff”) as the Consultancy may consider appropriate, subject to the prior approval of the Client. The Consultancy shall be entitled to assign or sub-contract the performance of the Consultancy Services provided that the Employment Business and the Client are reasonably satisfied that the assignee or sub-contractor ........"

And

"Save as otherwise stated in this Agreement, the Consultancy shall be entitled to supply its services to any third party during the term of this Agreement provided that this in no way compromises or is to the detriment of the supply of its services to the Client."

And

"The Consultancy warrants that its Staff have the necessary skills and qualifications to perform the Consultancy Services and that it will only supply staff to perform the Consultancy Services who have opted out of the Conduct Regulations 2003"

Now as far as Direction of Control is concerned I think (but not sure) the following covers this :-

"The Consultancy shall have reasonable autonomy in relation to determining the method of performance of the Consultancy Services but in doing so it shall co-operate with the Client and comply with all reasonable and lawful instructions within the scope of the Assignment made by the Client."

And

"The Consultancy shall bear the cost of any training which its Staff may require in order to perform the Consultancy Services."


I'm note clear though on how the details of termination effect IR35 because the shedule specifies a notice period of 4 weeks and the contract contains the following :-

"This Agreement shall commence on XXXXX and shall continue until YYYYY or until completion of the Consultancy Services to the reasonable satisfaction of the Client at which time this Agreement shall expire automatically unless previously terminated by the Employment Business or the Consultancy giving the other party the period of notice specified in the schedule attached."

And

"Failure by the Consultancy to give notice of termination as required in the Schedule attached shall constitute a breach of contract and shall entitle the Employment Business to claim damages from the Consultancy for any resulting loss suffered by the Employment Business."

Sorry this was soooo long.

Steve

[swebb]

lol I'll keep that in mind

[bangface]

lol fair enough, now I know. Sorry of the comments

I must admit I thought I'd been hit by the typical flaming you get on IT news groups

I've read the thread I was pointed to and to be honest I'm still a bit unclear as there are so many damn different opinions on the subject. However my impression is that if the contract states that the consultancy will provide alternative skilled staff, pay for training of staff, supply own equipment where required ..... then there is a good chance your outside of IR.

On another matter I've been reading about MSC and its effects and how this might impact contractors when using companies such as SDJ. Am I right in thinking that any company like this that is basically an accountancy with a few bells an whistles bolted on to specialize in the management of contractor accounts does not get caught in the MSC legislation ? Again there were different opinions but it strikes me I'd be still running the company and making the decisions and a company like SDJ would just be crunching numbers to keep the tax man happy. I'd be the poor sap making all the real company decisions and taking the risks !

Thanks again

Steve

Just so you know Sock Puppet's avatar is actually his real life pic and he spends most of his time on this forum following the sad passing of his real life pals Matthew Corbett and Michael Bentine...

[Lewis]

yep think you're right there.

We hope!