Reply to: IT Contractors in Investment Banks? Outside IR35?

[Wanderer]

I wouldn't want a Director that does that anywhere near a company I was a shareholder in!

If by some act or omission by the director, the company fails the IR35 test then the shareholder isn't gonna get paid any dividends so they should be happy.

[centurian]

The big banks are a bit of a contradiction in terms of IR35.


With most industries, contractors are intended to come in, get the job done, then go. But many banks do tend to view contractors as temps, whereby extensions are a given as long as there is still "headcount" and you haven't screwed up.

On the plus side, they do exhibit a few "outside IR35" pointers as others have pointed out (enforced breaks, early terminations, rate cuts, insurance checked etc.)

[jamesbrown]

From your (or anyone's) experience, are most of these IT contractors, who appear to use Ltd companies, operating outside IR35?

I'm probably not the best person to ask, as I don't work onsite for any of my clients, but my impression is that quite a few contractors don't know (or care) enough to demonstrate that they're operating outside IR35 and, perhaps, even have the mentality of a temp. The situation with enforcement might have allowed that up until now.

[sammywammy]

IIRC, there was a change in working practices from project-based work to becoming generally available (among other things), so length of contract was not the issue, at least directly.

Well that's basically my observation with IT contractors working for banks (at least in the support-focused teams I've worked in, I'm sure it is different if you are an app developer). They are clearly just "generally available", especially if their works involves a support rota.

Yes, they're still supplying a "service" to a client but it's really hard to differentiate them from an employee.

Unfortunately, I have never really got round to asking these other contractors if they are operating outside IR35. In my current team, I am the only contractor so currently don't have anyone to ask.

From your (or anyone's) experience, are most of these IT contractors, who appear to use Ltd companies, operating outside IR35?

[cojak]

I wouldn't want a Director that does that anywhere near a company I was a shareholder in!

Good job CojakCo is not a PLC

Isn't it just! That way CojakCo can make business decisions on what benefits the company, not just the shareholders.

Since the next contract I walked into the following week was substantially better both financially and technically.

[blacjac]

The contract ends when the project ends.

It's time to terminate that contract and find a new one (and client).

As happened in Jan of this year.

I wouldn't want a Director that does that anywhere near a company I was a shareholder in!

Good job CojakCo is not a PLC

[Fred Bloggs]

My company has it's own 2 year rule. The rule is that no project needs to be longer than 2 years.

The Director permits extensions but will reject any extension beyond 2 years unless it is to sign-off the project.

And if the project gets cancelled before the contract expires I must hand in my termination.

The Director is a bit of a bitch..

I think that's a good rule to have too. Not least it means that HMRC have more contracts to consider individually if they come sniffing around about IR35. Myself, my longest role is 18 months, I've never had a job run to 24 months, though my current one might just do so, 12 months in and I reckon nearly a year more ahead looking at the workflow.

[cojak]

What does this director do if the project finishes in 18 months and they they are asked to work on another one for 6 months with extensions expected up to 18 months? Same client.

The contract ends when the project ends.

It's time to terminate that contract and find a new one (and client).

As happened in Jan of this year.

[northernladuk]

My company has it's own 2 year rule. The rule is that no project needs to be longer than 2 years.

The Director permits extensions but will reject any extension beyond 2 years unless it is to sign-off the project.

And if the project gets cancelled before the contract expires I must hand in my termination.

The Director is a bit of a bitch..

What does this director do if the project finishes in 18 months and they they are asked to work on another one for 6 months with extensions expected up to 18 months? Same client.

[cojak]

My company has it's own 2 year rule. The rule is that no project needs to be longer than 2 years.

The Director permits extensions but will reject any extension beyond 2 years unless it is to sign-off the project.

And if the project gets cancelled before the contract expires I must hand in my termination.

The Director is a bit of a bitch..

[northernladuk]

It's not a misconception. It is an indicator that people who choose to work in that way have more than a passing relationship with their one and only "client", that could amount to disguised employment when taking other factors into consideration. By contrast, it's difficult for anyone to argue that someone who works for different clients all the time (and sometimes more than one client simultaneously) can be a disguised employee of all of those different end clients.

I agree with Gentile. I see two problems wit long contracts. First, whilst on paper length of contract should not be an indicator in itself I think the mindset of many people on long term contracts makes themselves hidden permies. They often forget the relationship and slip into a dangerous routine. Luckily there are no 'tests' for this mindset but if it comes to an investigation you are immediately on the backfoot and have to defend yourself out of it rather than it being obvious if you have multiple clients. I personally don't think it will be long before length of contract does get targeted. Secondly, if they start looking at the role and then discover it is an enduring role in a team of permies you will have a hard job to prove that you are not treated as a hidden permie as well so a double edged sword.

I don't think you should sit comfortably if you are in a long contract filling an enduring role. You need to be working harder to stay out of IR35 than most IMO.

[jamesbrown]

There is a court case where a contractor ended up being inside for the latter half of a several year contract.

IIRC, there was a change in working practices from project-based work to becoming generally available (among other things), so length of contract was not the issue, at least directly.

[BlasterBates]

i think its a common misconception that length of contract is and indicator of ir35 status, projects can and do take years in some places, also you can move from project to project - its not the length of time - its the working practice whilst your there..

There is a court case where a contractor ended up being inside for the latter half of a several year contract.

The trouble is it gets harder to prove you're there for a specific project, and if you're just moving from project to project that is an indication that you're like a permie being assigned to where the work is. Generally all the permies wll be assigned to projects as well. It would be different if you were laid off from time to time. You somehow need to differentiate yourself from the permies.

[Gentile]

i think its a common misconception that length of contract is and indicator of ir35 status, projects can and do take years in some places, also you can move from project to project - its not the length of time - its the working practice whilst your there..

It's not a misconception. It is an indicator that people who choose to work in that way have more than a passing relationship with their one and only "client", that could amount to disguised employment when taking other factors into consideration. By contrast, it's difficult for anyone to argue that someone who works for different clients all the time (and sometimes more than one client simultaneously) can be a disguised employee of all of those different end clients.

[slogger]

OP, you are right. There appear to be contractors out there who work more like employees of their 'clients' than as contractors, and are engaged exclusively by one client for years at a time in some cases. I've worked for an investment bank in the past (albeit briefly), but I've never worked for any one client for more than 9 months at a time or so. And in each case I was there to deliver a project with a fixed scope and an end date that we roughly stuck to barring an extension for a month or two here and there.

I did notice when I interviewed for the one investment banking gig that I got involved in, that the ClientCo constantly confused how to go about recruiting permanent staff vs contractors. Although I only responded to a tender to contract, they still kept making the basic mistake of asking me if I wanted to join their staff permanently? That's par for the course at the end of a contract for ClientCos in some other fields, where a client for whom you've successfully delivered a project asks if you'll consider taking on a permanent position within their staff, but investment banks seem to be singularly misguided in this area and get confused from the outset about whether a contractor will be interested in permanent work. (I guess that should have been an alarm bell for me with the client I have in mind, since I only ended up working for them for a week, and the hiring manager continued to conduct telephone interviews with prospective permanent staff in the middle of a busy office within my earshot for the whole week I was there – he was a classy guy!).

Anyway, I wouldn't work for years at a time myself, and feel safe to be outside IR35. I prefer to work for ClientCos that are sure they really do need a contractor to fulfil a fixed-scope piece of work, rather than to accept the risk of working for a client that is likely to lead both you and them into trouble with the Taxman.

i think its a common misconception that length of contract is and indicator of ir35 status, projects can and do take years in some places, also you can move from project to project - its not the length of time - its the working practice whilst your there..