Reply to: Agency won't change contract?

[Iain-Le-Roi]

Be careful which umbrella compay you choose. The best rate is not neccesarily the best option as you are trusting someone to may never meet to look after your money and then pay your tax for you at the end of the year. Choose one of the ones reccomended on here as if it seems to good to be true (i.e 80% return) it probably is.

[Mr.Whippy]

I know there are no hard and fast rules, but if a contractor had their contract reviewed by a well known accountant and told that it was outside IR35, would this consitute "reasonable care"?

From the HMRC website :

Under the new system we will not penalise you if you take reasonable care to get your tax right. Taking reasonable care includes:

keeping accurate records to make sure your tax returns are correct

checking what the correct position is when you don't understand something

telling HM Revenue & Customs (HMRC) promptly about any error you discover in a tax return or document after you've sent it

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So, getting a contract checked by a professional because you dont necessarily understand all the legalities would be reasonable care according to that imo.... although whether it is in eyes of HMRC is another thing.

[Wanderer]

I was just looking at that discussion thread and posted that if you are found not to have taken 'reasonable care' then HMRC can impose fines of up to 200% of any unpaid taxes.

I know there are no hard and fast rules, but if a contractor had their contract reviewed by a well known accountant and told that it was outside IR35, would this consitute "reasonable care"?

[MarillionFan]

I was just looking at that discussion thread and posted that if you are found not to have taken 'reasonable care' then HMRC can impose fines of up to 200% of any unpaid taxes.

Well that was the basis of the thread and poll. 2xpenalty versus 5 or 7 years(contracts) inside but stated outside.

It's a gamble! Depends if you like gambling!

[Bexter]

Glad you got the answer even if itsn't the one you wanted.

There is a very interesting thread going on at the moment about being in and out of IR35 and why don't you just always say you are out and suck it up if you get caught.

I don't think we ever came to a conclusion with some saying thats bad and some saying seems fair enough. Might be worth a read and then consider what action you take based on your aversion to risk.

The only thing that might be a problem is your Accountant. Ethically he won't do your accounts as outside if he knows you are inside. If he didn't know and you told him outside then thats different.

Might have a read of that. Interesting opinions on how many contracts we think really are inside but we try and convince yourselves they are out my fudging the contracts etc....

This is very interesting, I've been reading that thread too. It seems from my discussions with friends as well as agents/accountants, the general opinion is, just say you're outside it, and if you get questioned then either fess up and pay or go to court and argue. But I just don't fancy the hassle to be honest. Its tempting cause the money is signficantly differnt under each, but for the first time I do this, just gonna play it straight.

If I was feeling a little less risk averse, I would probably go with an EBT over saying I was outside when I know I'm in.
[opens big can of worms...and walks away]

[Sally BFCA]

Glad you got the answer even if itsn't the one you wanted.

There is a very interesting thread going on at the moment about being in and out of IR35 and why don't you just always say you are out and suck it up if you get caught.

I don't think we ever came to a conclusion with some saying thats bad and some saying seems fair enough. Might be worth a read and then consider what action you take based on your aversion to risk.

The only thing that might be a problem is your Accountant. Ethically he won't do your accounts as outside if he knows you are inside. If he didn't know and you told him outside then thats different.

Might have a read of that. Interesting opinions on how many contracts we think really are inside but we try and convince yourselves they are out my fudging the contracts etc....

I was just looking at that discussion thread and posted that if you are found not to have taken 'reasonable care' then HMRC can impose fines of up to 200% of any unpaid taxes.

[northernladuk]

Glad you got the answer even if itsn't the one you wanted.

There is a very interesting thread going on at the moment about being in and out of IR35 and why don't you just always say you are out and suck it up if you get caught.

I don't think we ever came to a conclusion with some saying thats bad and some saying seems fair enough. Might be worth a read and then consider what action you take based on your aversion to risk.

The only thing that might be a problem is your Accountant. Ethically he won't do your accounts as outside if he knows you are inside. If he didn't know and you told him outside then thats different.

Might have a read of that. Interesting opinions on how many contracts we think really are inside but we try and convince yourselves they are out my fudging the contracts etc....

[Sally BFCA]

hi everyone, just an update on my situation.
I sent the contract off for review with Bauer and Cotterell and it seems my contract is definately inside IR35, mainly due to just the actual realities of the work I'm doing, i.e. no point even re-writing the contract because it wouldn't reflect reality etc. My agent and my accountant gave me conflicting advice, but eventually I think I now understand what I'm doing.

A case where it proves that it pays off to use a professional company to do the contract reviews, that's what they do best.

[cojak]

Our pleasure.

Take care and don't forget to come back to visit (I'm sure that won't be your last question... )

[Bexter]

hi everyone, just an update on my situation.
I sent the contract off for review with Bauer and Cotterell and it seems my contract is definately inside IR35, mainly due to just the actual realities of the work I'm doing, i.e. no point even re-writing the contract because it wouldn't reflect reality etc. My agent and my accountant gave me conflicting advice, but eventually I think I now understand what I'm doing.

So, long and the short of it is, I've gone Umbrella!

But I just wanted to say thanks for the advice etc...this is my first contracting experience and I had no idea it would be so complicated or that there was so much stuff I'd need to consider. But this site has been really helpful and there is tons of useful info on here, so cheers!

[NotAllThere]

It would be interesting to know what your accountant failed the contract on. While no replacement for a qualified legal opinion, there's enough experience here to tell you whether your accountant is being really dumb or not.

Even if you are in IR35, a ltdco is still a better option - you control your money, rather than a 3rd party.

[Clare@InTouch]

Thank you for the constructive comments. Yes my accountant did provide details on a couple of the clauses which are not right, which I did send to my agent. However thats not really that important here as I'm not asking for advice on whether I'm inside or outside, hence why I didn't include those details.

What I really wanted to know is, is it common to have to argue with your agency? I don't understand why they are telling me they've never had any problems before....I mean, how can I be the first person that has mentioned this to them?? They claim none of the contractors have ever questioned their contract, or even asked about IR35? Am I missing something?

And yeah I am beginning to wonder if contracting is right for me. I really want the flexibility of the work, but I'm really put off by the complexity of legal arrangements, and all the decisions that have to be made in terms of umbrellas/ltd co/EBT's etc, given that I know absolutely nothing about it! Its also quite daunting to wonder if HMRC are going to come knocking on my door one day at some point down the line cause I did it wrong! this is then made worse by the masses of contradictory information and advice I have received from several people and the internet!
Apologies for the rant, but I feel like I'm going in circles!!!

Agencies are sometimes very much under the wrong impression when it comes to IR35 - they tell contractors that the contract is IR35 proof (which there is no such thing as IR35 is determined by working conditions not the contract) and that's often the reason no one complains. Because they trust the agent.

Does your accountant genuinely think you're outside of IR35 based on your working conditions? And the contract doesn't match those conditions?

I've dealt with many agencies who absolutely would not budge on a contract, and my advice in those situations is to get a Confirmation of Agreement letter signed by your actual client. Set out the situation as you understand it and ask them to sign it. You'll need to have a good chat to your accountant and ask him to maybe summarise the points you should mention in the letter. This gives you proof to rely on in any investigation that should mean more than a standard agency contract (keep any emails you send asking for it to be changed too, so you can show you tried to negotiate it and only signed it because they refused outright to correct it).

[SueEllen]

Thank you for the constructive comments. Yes my accountant did provide details on a couple of the clauses which are not right, which I did send to my agent. However thats not really that important here as I'm not asking for advice on whether I'm inside or outside, hence why I didn't include those details.

Accountants, while they know the law, cannot give you legally binding advice on contract terms.

What I really wanted to know is, is it common to have to argue with your agency? I don't understand why they are telling me they've never had any problems before....I mean, how can I be the first person that has mentioned this to them?? They claim none of the contractors have ever questioned their contract, or even asked about IR35? Am I missing something?

Yes it's common to argue with your agency.

Though some agencies are good with contracts and write IR35 friendly contracts from the beginning.

And yeah I am beginning to wonder if contracting is right for me. I really want the flexibility of the work, but I'm really put off by the complexity of legal arrangements, and all the decisions that have to be made in terms of umbrellas/ltd co/EBT's etc, given that I know absolutely nothing about it!

Then start doing some reading.

All the information is out there. Look at the First Timers guide here, go to the PGC website and search the forums if you have a question as it's likely to be asked and answered before.

Its also quite daunting to wonder if HMRC are going to come knocking on my door one day at some point down the line cause I did it wrong! this is then made worse by the masses of contradictory information and advice I have received from several people and the internet!
Apologies for the rant, but I feel like I'm going in circles!!!

HMRC are unlikely to come knocking on your door in any format if:
1. You don't muck around with your VAT payments
2. You don't spend a long time in one particular contract

The reason why the advice is contradictory is because laws in the UK are not generally set in stone. Things tend to be shades of grey which is why people end up dragging things to Higher Courts or Europe to get decisions made.

[The Wikir Man]

What I really wanted to know is, is it common to have to argue with your agency? I don't understand why they are telling me they've never had any problems before....I mean, how can I be the first person that has mentioned this to them?? They claim none of the contractors have ever questioned their contract, or even asked about IR35? Am I missing something?

Well, you could be the first person to question it because your accountant is wrong and isn't a lawyer familiar with writing contracts. (S)He is an accountant, so it might be best to see what a lawyer says - or people that have been through a number of reviews, which is why people are asking.

I don't for one second believe that any agency that deals with IT contractors has never had anyone ask about IR35. Unless they only take on either incredibly experienced or the incredibly naive.

[rpgpgmr1]

Agents always tell you that you are the first/only contractor ever to have a problem with their contract.
If you are unhappy with any clauses its up to you to get them changed. Its a game of who blinks first on each clause , sometimes the Agency will agree changes other times they wont. It depends if they think they can walk over you or not.
As you mentioned you are a newbie they are taking advantage of your inexperience in dealing with them
Regards IR35 if they think contract is OK tell them to give you in writing that they will indemnify you for any monetary penalties you may be subject to ( dont worry , they wont ever give you this but they will come up with a million reasons why they cannot) . When they say they cannot guarantee their contract is sound you say " thats why I need the changes". Whoever did the review should/can provide examples of suitable clauses but as mentioned it has to be combined with working practice.
You have learned lesson 1 - Agents are not your friend and you should never rely on them for any info to be "impartial" !