Reply to: in or out ir35

[ASB]

It's definitely possible to be outside of IR35 while working for a previous employer, no question about that. What I dispute is the negotiation of a fixed price relationship as an attempted dodge, rather than for commercial purposes. So, I'd place strong emphasis on "genuine" in your response above. Indeed, you should read my response entirely in the context of the OP, and not in a more general context where, as I've said, a fixed price arrangement is a strong indication of a b2b relationship. A genuine fixed price arrangement involves tendering for work and competing against other contractor companies, expending time and effort (for no money) on the tendering process, finishing work early (or late) and generally making a **** load more than an equivalent daily rate (or a **** load less if you don't know what you're doing)

Having read again your response I probably didnt read it carefully enough.

certainly the keyword is genuine. If it looked like it was more a billing arrangement then it would he much more at risk of attack.

[jamesbrown]

firstly everything james says is fine. But it concentrates on the wrong angle. That is the case law in various points which has led to not personal service.

But that is only half the story. The test is the relationship would be employment were it not for the intermediary.

look in ir56, which is replaced now, as the overlying guide to employment status.

it is fairly clear that genuine fixed price work with risk of profit and loss due to defects etc would equate to self employment.

thus the relationship would not be employment, and therefore no ir35.

It is not a silver bullet. There is no such thing. But it would be a brave inspector who wanted to take it to tribunal.

It's definitely possible to be outside of IR35 while working for a previous employer, no question about that. What I dispute is the negotiation of a fixed price relationship as an attempted dodge, rather than for commercial purposes. So, I'd place strong emphasis on "genuine" in your response above. Indeed, you should read my response entirely in the context of the OP, and not in a more general context where, as I've said, a fixed price arrangement is a strong indication of a b2b relationship. A genuine fixed price arrangement involves tendering for work and competing against other contractor companies, expending time and effort (for no money) on the tendering process, finishing work early (or late) and generally making a **** load more than an equivalent daily rate (or a **** load less if you don't know what you're doing)

[ASB]

Without knowing exactly what the situation is, everything in this thread is speculation.

I'm with ASB, though - if you have quoted for the work on a fixed price basis, that would give you enough of an argument about D&C as well as lack of MoO to put up a good fight. A decent fixed price contract will also give you full rights of substitution, so you'd have a good chance of fighting any investigation.

I suspect that it's a moot point, however - I doubt that the employer would go for that model, and I doubt that there would be sufficient argument about the rest of it to fight an investigation.

firstly everything james says is fine. But it concentrates on the wrong angle. That is the case law in various points which has led to not personal service.

But that is only half the story. The test is the relationship would be employment were it not for the intermediary.

look in ir56, which is replaced now, as the overlying guide to employment status.

it is fairly clear that genuine fixed price work with risk of profit and loss due to defects etc would equate to self employment.

thus the relationship would not be employment, and therefore no ir35.

It is not a silver bullet. There is no such thing. But it would be a brave inspector who wanted to take it to tribunal.

[TheFaQQer]

Sure, I understand where you're coming from, but I disagree that a fixed price arrangement (which is mainly how I work, incidentally) will save a situation that doesn't meet one or more of the other pillars, especially in the Friday/Monday scenario described by the OP and especially if the arrangement is artificial, i.e. driven by tax considerations (in which case I would, indeed, describe this as a payment method). I wouldn't dispute that, in a non-artificial situation, a fixed price arrangement is a very strong pointer to a proper b2b arrangement, but that isn't the situation here, and there's also a difference between the appearance of a b2b relationship and the case law on which IR35 is based (the three pillars, of which none are payment method).

Without knowing exactly what the situation is, everything in this thread is speculation.

I'm with ASB, though - if you have quoted for the work on a fixed price basis, that would give you enough of an argument about D&C as well as lack of MoO to put up a good fight. A decent fixed price contract will also give you full rights of substitution, so you'd have a good chance of fighting any investigation.

I suspect that it's a moot point, however - I doubt that the employer would go for that model, and I doubt that there would be sufficient argument about the rest of it to fight an investigation.

[LisaContractorUmbrella]

Thank you all for your comments.
It is good to know your experienced opinion on the subject as I was not sure how strong of a factor my previous employment with the client is.
It is not a friday/monday situation as i still have 5 weeks before i start during which I will have another short contract with a different client, however i think ir35 applies on a contract by contract basis.

IR35 is on a contract by contract basis but going back to your previous employer would, as others have said, raise a serious red flag. The most important thing you need to consider with IR35 is your working practices; does the client supervise, direct or control you, is there mutuality of obligation and could you provide a substitute if you weren't able to fulfill part of the contract for any reason. There are guides on the site which will help you

[GillsMan]

IIRC you need 21 points to be able to tell Hector to sod off.

I got 88 points on that test. I must be able to get really creative with how I tell Hector to do one!

[Contreras]

Test 3: Efficiency test – plus 10 points

Has your business had the opportunity in the last 24 months to increase your business income by working more efficiently? e.g. Fixed-price contract

Test 6: Previous PAYE test – minus 15 points

Has the current end client engaged you:

on PAYE employment terms
within the 12 months which ended on the last 31 March
with no major changes to your working arrangements?

Test 8: Repair At Own Expense test – plus 4 points

Would your business have to bear the cost of having to put right any mistakes?

Total = 10 - 15 + 4 = -1

I know it's not case law but this is how HMRC see it. IIRC you need 21 points to be able to tell Hector to sod off.

[hasks]

Thank you all for your comments.
It is good to know your experienced opinion on the subject as I was not sure how strong of a factor my previous employment with the client is.
It is not a friday/monday situation as i still have 5 weeks before i start during which I will have another short contract with a different client, however i think ir35 applies on a contract by contract basis.

[jamesbrown]

Fixed price is rather more than just a change of payment method. It is a totally different way of working. Though whether the op is prepared to do it and whether it is acceptable to the client are of course unknown.

If you are asserting that fixed price could be caught then that is certainly true. In actuality anything could be caught. Case law changes and evolves over time.

If you are azserting that it is likely to be caught I disagree. Fixed price immediate puts you into the "likely to be self employed" cqmp in the employment status manuals. And that is what needs to be passex for an ir35 pass.

Sure, I understand where you're coming from, but I disagree that a fixed price arrangement (which is mainly how I work, incidentally) will save a situation that doesn't meet one or more of the other pillars, especially in the Friday/Monday scenario described by the OP and especially if the arrangement is artificial, i.e. driven by tax considerations (in which case I would, indeed, describe this as a payment method). I wouldn't dispute that, in a non-artificial situation, a fixed price arrangement is a very strong pointer to a proper b2b arrangement, but that isn't the situation here, and there's also a difference between the appearance of a b2b relationship and the case law on which IR35 is based (the three pillars, of which none are payment method).

[ASB]

It's impossible for us to give you a definitive answer, but it's unlikely that you can justify this as being outside of IR35 unless your working practices have substantially changed. I disagree with the comment above about payment method being a decisive factor. The sensible advice would be to: go umbrella; find a contract with another company; and read more on IR35 and other aspects of running a company before you transition. At the very least, get a professional review of your contract and working practices, rather than relying on our non-expert opinions of your partially recounted situation (but it's likely to confirm the circumstantial evidence that this would be inside).

Fixed price is rather more than just a change of payment method. It is a totally different way of working. Though whether the op is prepared to do it and whether it is acceptable to the client are of course unknown.

If you are asserting that fixed price could be caught then that is certainly true. In actuality anything could be caught. Case law changes and evolves over time.

If you are azserting that it is likely to be caught I disagree. Fixed price immediate puts you into the "likely to be self employed" cqmp in the employment status manuals. And that is what needs to be passex for an ir35 pass.

[jamesbrown]

It's impossible for us to give you a definitive answer, but it's unlikely that you can justify this as being outside of IR35 unless your working practices have substantially changed. I disagree with the comment above about payment method being a decisive factor. The sensible advice would be to: go umbrella; find a contract with another company; and read more on IR35 and other aspects of running a company before you transition. At the very least, get a professional review of your contract and working practices, rather than relying on our non-expert opinions of your partially recounted situation (but it's likely to confirm the circumstantial evidence that this would be inside).

[ASB]

What do you mean by "Fixed price" that would get me out?
Sorry, I am very new to all that....
Got a 450 rate so an ltd would be ideal from what i understood so far.

"Yep, I will develop that. 25k guvnor". Produce report or whatever.

this puts you at financial risk, and also able to profit.

This should be difficult to attack from an ir35 standpoint. But there is no certainty of course.

[northernladuk]

Working for your old client under a different financial arrangement isn't contracting.

[malvolio]

What do you mean by "Fixed price" that would get me out?
Sorry, I am very new to all that....
Got a 450 rate so an ltd would be ideal from what i understood so far.

Go for the umbrella. You don't know enough to make an informed decision, and continuing to work for the same people that previously employed you makes it a racing certainty you will be caught.

Get the gig running, then start reading the guides we keep telling people to read. Then you may be ready to start contracting. Right now, all you're doing is saving your ex-employer some serious money and risk, and giving away your various employment rights.

When you know what you're doing, then consider switching to a Ltd Co.

[SpontaneousOrder]

What do you mean by "Fixed price" that would get me out?

I think ABS is probably referring to the fact that working to a fixed price for some deliverable puts your company at financial risk, like a real business. Something employees & temps don't have to worry about.