Contracting to a consultancy firm

[jamesbrown]

IR35 - construct a hypothetical contract between the end client and the contractor, ignoring any intermediaries. Is this hypothetical contract one of employment? Yes - IR35 caught. No - outside IR35.

So surely it doesn't matter if you're under the control of the intermediary?

Or does IR35 legislation allow for HMRC constructing a hypothetical contract between the contractor and an intermediary?

AFAIK, since it's a hypothetical contract, they may apply it to whichever part of the chain is most likely to resemble a (hypothetical) contract of employment.

[NotAllThere]

IR35 - construct a hypothetical contract between the end client and the contractor, ignoring any intermediaries. Is this hypothetical contract one of employment? Yes - IR35 caught. No - outside IR35.

So surely it doesn't matter if you're under the control of the intermediary?

Or does IR35 legislation allow for HMRC constructing a hypothetical contract between the contractor and an intermediary?

[TheFaQQer]

I agree with you there. However, I know plenty of contractors who work for the likes of IBM and who are told what to do every day and more importantly, the way in which IBM do it. They are there Monday to Friday and follow the same rules and constraints of the IBM permies. I would have thought they were bang inside.

I guess it comes down to what you interpret by direction and control.

I've contracted with IBM in the past. I had a right of substitution, I worked the hours I chose (although with some constraint because of security clearance delays), I did the work in the manner that I chose, no-onw told me how to write code.

On those grounds, I'm prepared to argue as being outside IR35.

[GB9]

The way I deal with this (and I don't like to work full time) is rather than say I'll work x days per week, I get a contract for y days over z months. Then some weeks I work full time and others part time, and I do so according to the client's needs and according to my business's other priorities. To me, that model of engagement does not feel like the model of those who lose IR35 fights.

I agree with you there. However, I know plenty of contractors who work for the likes of IBM and who are told what to do every day and more importantly, the way in which IBM do it. They are there Monday to Friday and follow the same rules and constraints of the IBM permies. I would have thought they were bang inside.

[Old Greg]

The way I deal with this (and I don't like to work full time) is rather than say I'll work x days per week, I get a contract for y days over z months. Then some weeks I work full time and others part time, and I do so according to the client's needs and according to my business's other priorities. To me, that model of engagement does not feel like the model of those who lose IR35 fights.

[GB9]

Thanks. What about the tax/NI idemnifier? Is that normal?

And again, this is where we get shafted. The consultancy will want to indemnify themselves from any employment costs, whilst at the same time wanting you to act according to their ethos.

The indemnification is good from an IR35 perspective, although HMRC will then jump on the working practices bandwagon.

These are the main reasons I have never worked for a consultancy, plus the enormous mark-up they usually make for doing naff all.

[Gavacac]

Thanks. What about the tax/NI idemnifier? Is that normal?

[GB9]

From experience, sub-contractors I have seen working for consultancies are expected to follow the rules, regs and procedures of the consultancy they are with, and follow their way of working. I would say all have been within IR35, although that doesn't mean you will get caught.

[Old Greg]

Hi

I've tried searching for this but can't quite find the right information so thought I'd seek the views of the forum.

I've been offered a 4 month contract as a subcontractor to a consultancy firm to provide services to one of their clients.

The draft contract is quite different to any contract I've signed before. It does reference my company but also specifies me as the 'Subcontractor consultant'. As it stands there is nothing about substitution or whether I can sub-sub-contract. I'm going to get the contract reviewed before I sign it to get some comfort on IR35, but the main question I have is about working practices. They have mentioned to me that they would expect me to represent myself to the client as 'part of' the consultancy, rather than presenting myself as a third party. They have said this is quite normal as small consultancy firms often use 'associates' to deliver work.

I'm wondering how this specific point would be considered in any IR35 investigation. To me, it sounds like acting as an employee, which would surely be an indicator if being inside IR35.

I'm particularly concerned as their draft contract asks for me to indemnify them against any tax/NI payments/penalties.

Any thoughts?

I work as an associate, although my contract has a RoS clause which some might say is a sham anyway.

Some questions around working practices I always ask myself:

Will you be part and parcel of the consultancy organisation?
Will you go to their team meetings?
Will you have any base in their office?
Will you have a line manager?

There is more to being in part of a consultancy than working at an end client. They take part in tender responses, pitches etc., development activities. Are you doing all of these or just clearly allocated to one project / end client?

I find it's quite easy to muddy the waters between being part of the consultancy and part of the end client, so end up as part of neither, but your own person.

Get PCG+ membership and get on with it.

[Gavacac]

Hi

I've tried searching for this but can't quite find the right information so thought I'd seek the views of the forum.

I've been offered a 4 month contract as a subcontractor to a consultancy firm to provide services to one of their clients.

The draft contract is quite different to any contract I've signed before. It does reference my company but also specifies me as the 'Subcontractor consultant'. As it stands there is nothing about substitution or whether I can sub-sub-contract. I'm going to get the contract reviewed before I sign it to get some comfort on IR35, but the main question I have is about working practices. They have mentioned to me that they would expect me to represent myself to the client as 'part of' the consultancy, rather than presenting myself as a third party. They have said this is quite normal as small consultancy firms often use 'associates' to deliver work.

I'm wondering how this specific point would be considered in any IR35 investigation. To me, it sounds like acting as an employee, which would surely be an indicator if being inside IR35.

I'm particularly concerned as their draft contract asks for me to indemnify them against any tax/NI payments/penalties.

Any thoughts?