Reply to: IR35 "Bullying" - Being pushed inside IR35 by Agency and Client

[northernladuk]

All interesting points raised.

So I wonder if, should one accept their contract or put something around it like a Statement of Work (a good idea), that if one were caught inside IR35, would you then not have a recourse against the agency and/or client for being an employee ?

That is, is it not in the best interests of the client NOT to dictate projects on a 'BAU' basis such that they cannot have any chance of you coming back at them as an employee or seeking employee benefits ? Wonder if thats a card that can be played back at the agency and/or client ?

Your situation has nothing to do with them, it is between you and HMRC now. The client has made his position clear, you either accept or don't. Doesn't matter what little clauses you put in, you either accept and are caught or you leave. There is no getting around this if the client sees you as an employee.

[AussieDigger]

All interesting points raised.

So I wonder if, should one accept their contract or put something around it like a Statement of Work (a good idea), that if one were caught inside IR35, would you then not have a recourse against the agency and/or client for being an employee ?

That is, is it not in the best interests of the client NOT to dictate projects on a 'BAU' basis such that they cannot have any chance of you coming back at them as an employee or seeking employee benefits ? Wonder if thats a card that can be played back at the agency and/or client ?

[GB9]

Personally I would be out of this one like a scalded cat for a number of reasons...

I can't see a reason to leave that is anymore black and white than this one to be honest.

Spot on. Also make a note on any working practices document that you are moving on because the T&Cs changed so that you would no longer be operating as your own business. Always helps to have an example of where you have made a genuine business decision.

[ctdctd]

Only if your expenses are 5% or less.

What's that got to do with it?

The 5% expenses under IR35 are to cover admin costs - travel and accommodation expenses are allowed as normal.

Main point is that company contributions into a personal pension are IR35 proof.

[BolshieBastard]

Take salary just below tax threshold + expenses. Put the rest in a pension. IR35 proof

Only if your expenses are 5% or less.

[ctdctd]

Take salary just below tax threshold + expenses. Put the rest in a pension. IR35 proof

[BolshieBastard]

Have an interesting situation.

Just coming up on the 2 year mark on time with a client. Have had several extensions over that time and each one has involved specifying the project work to be done in that contract.

Now the client doesn't want to do this anymore and wants the contract to be 'generic' so that they can basically tell me what do to during the contract and change the project work as they see fit. This is despite the fact that the basis for entering into the contract is to engage on a specific project.

Now whilst that project can change, be cancelled, suspended, etc, it should be for the parties to agree on a change to the scope of work when that happens but it seems to make sense for the contract to be 'as specific' as possible for the benefit of all concerned. It also ensures from contract to contract that the work is clearly agreed upfront.

Problem is, the client is basically being lazy and doesn't want to be tied down like that. They don't care that the contractor could be caught inside IR35, and the agency is simply rolling with it, even though they know the downside for the contractor.

So, how to get the contract generic AND still keep it inside IR35 as to the work to be performed ? Anyone got any suggestions as to how to ensure the contract stays project-specific rather than 'BAU' and ensure my side is covered IR35 wise without ticking off the client who clearly wants things their own way or the highway ?

If an IR35 audit occurred, the client would definitely not say anything other than the work was BAU, which I believe it isn't. Its project work from my perspective as a supplier.

All suggestions welcomed.

Walk. Alternatively, stay and likely to be arse raped by HMRC should there ever be an IR35 enquiry.

[mudskipper]

I'd be cautious about letting the tax man drive my business.

This.

I think we're correct to be aware of IR35 and its implications, and do what we can to ensure that we're outside, but we shouldn't be so paranoid about it that we're turning down work. Do your best to remain outside in your working practices, join PCG and keep invoicing. The chances of being investigated are still small - so until that changes its just a bogeyman living under the stairs.

[SueEllen]

There are many different kinds of contracts. I work with some of my clients on a freelance basis. So I have an indefinite contract with each of these clients. Just basically says how we will work together. But doesn't mention time frames. Then for each project we agree a fixed cost and deliverables, kind of like a statement of work. I can do as many of these in parallel as I like.

So perhaps you could think outside the box and come up with another still of contract..

If you are direct you can use purchase orders and other such things if an agency is in the middle then the project needs to be defined as your contract needs to mimic the agency's one with the client.

[lithium147]

There are many different kinds of contracts. I work with some of my clients on a freelance basis. So I have an indefinite contract with each of these clients. Just basically says how we will work together. But doesn't mention time frames. Then for each project we agree a fixed cost and deliverables, kind of like a statement of work. I can do as many of these in parallel as I like.

So perhaps you could think outside the box and come up with another still of contract..

[d000hg]

Tell them you'll accept the changes if they increase your rate by 20% (or whatever it would be) and then assume you're in IR35, OR they can fix the contract at your old rate. £££ might motivate them to BE bothered,

[northernladuk]

Oh.. and this isn't bullying. It is a change in business and you have to change to match. The client wants to change his terms and you have to make a decision based on it. It's not bullying FFS.

[northernladuk]

Personally I would be out of this one like a scalded cat for a number of reasons...

1. If the client wants this it is likely his whole attitude to you all along has been the same so in an investigation he is going to shaft you royally. It is one thing having your contract outside IR35 but a whole different matter if the client has just been playing the game and won't back this up in court. He only needs to make one comment about his relationship with you to sink you. 90% correct is not enough. If his attitude is so blase you are screwed IMO.

2. The future situation puts you inside. Period. If you stay and change your status you will be raising a huge flag to HMRC to come have a sniff. Even if the numbers as you inside might be acceptable to you the risk of it coming your round your ears won't be. As already mentioned the JLJ looks like a twin of this and they partially won that so using case law this will be an easy win/part win for them.

3. You have hit the 24 month rule and I presume that you are not claiming subsistence and travelling anymore so a double hit on your rate

4. You are a contractor, not a permie. 2 years at one client is more than long enough. Suck it up and get back in to the market for a new gig.

I can't see a reason to leave that is anymore black and white than this one to be honest.

[kingcook]

This is the problem, the client won't accept the project being listed in the contract.

Yes but by offering a 0 day notice period, they are free to terminate and move you onto another project (subject to terms being agreed).

Or are the client really really stubborn?

[AussieDigger]

How about you offer to have some named project in the contract and offer to have a 0 day notice period?

Inform them that you'll be happy to look at other projects as they appear in the future, subject to terms/etc being agreed at the time? Just a thought...

This is the problem, the client won't accept the project being listed in the contract.