Reply to: perm to contract - IR35 and stuff

[mudskipper]

I'm glad that has been pointed out because I hadn't really thought about it. But for the amount of money involved ( if I got nailed ) its not worth paying for legal advice, I'd just pay up. Its factored into the equation and the ultimate decision. 2 or 3 weeks into a contract and that potential liability is covered. The main motivation behind staying on is cushiness rather than financial.

If you're still going through the redundancy, ring ACAS. They give helpful free advice (not sure on IR35, but definitely on all matters redundancy).

[jamesbrown]

Any sources on that? Sounds interesting, as that is its actual purpose in the end.

He may have said that, although I don't recall it, but it wasn't the purpose, it was the understandable soundbite that went along with it. If the motivation were that simple, they'd simply legislate for this scenario. Rather, as HMRC argue themselves, it's the exchequer protection and deterrent effect of IR35 that matters, and this relies on the combination of a large number of tax payers within remit and FUD.

[rootsnall]

That's the bit that would worry me - how can you be redundant if the role still exists for you to do as a contractor? If that's the case, then your redundancy payment isn't valid and would need to be taxed.

I'd be very wary of this and would talk to a professional employment lawyer about your rights here.

I'm glad that has been pointed out because I hadn't really thought about it. But for the amount of money involved ( if I got nailed ) its not worth paying for legal advice, I'd just pay up. Its factored into the equation and the ultimate decision. 2 or 3 weeks into a contract and that potential liability is covered. The main motivation behind staying on is cushiness rather than financial.

[TheFaQQer]

Outsourced but no TUPE option and now your ex-employer wants to keep you on? Seems you're not the only one that doesn't follow the rules: you should have had first dibs on your role regardless of who was paying the bills: apart from anything else, any redundancy money you got will be taxed at 40% if you are still fulfilling essentially the same role.

That's the bit that would worry me - how can you be redundant if the role still exists for you to do as a contractor? If that's the case, then your redundancy payment isn't valid and would need to be taxed.

I'd be very wary of this and would talk to a professional employment lawyer about your rights here.

[Zero Liability]

As for precedent, how about Osborne saying categorically that IR35 is being retained purely in order to deter the F2M scenario and allowing permies to move to pseudo contracts to avoid taxation.

Any sources on that? Sounds interesting, as that is its actual purpose in the end.

[mudskipper]

re. my fulltime 5 day a week job disappeared due to an outsourcing deal , and the TUPE issue, what I said earlier in bold ( partly in jest ) is not strictly true, I have worked almost exclusively on projects and not on post go live support. And in theory the projects are done, that is how they got around the TUPE issue. Reality is there are lots of bits to tidy up that won't be part of the outsourcing support deal.

Thanks for all the input, I'm on dodgy ground as I suspected, but on the other hand I believe highly unlikely to get nabbed if I risk it. My previous approach to IR35 was not to get too exposed on any one contract, and I'd probably follow that rule here by not staying forever. I think my only defence if I did get investigated would be a genuine lack of MOO, which is a complete change in the working practice. I'm sure cases have been won on that point alone in the past, but I'm no expert. On googling, the rulings and explanations of cases won by HMRC seem to be old ones I'm familiar with, so it would be interesting to know how many cases HMRC have won in recent times !?

I'll see how things pan out, some juggling and negotiating to do yet. I've been doing my sums and one approach is to go lowish salary and high pension contributions and eekmad declare myself inside IR35. I can't find the 'Blow Your Brains Out' smilie, is it no longer around.

ps. what happened to Wilmslow, and the Russian bloke who's name escapes me ?

is still around. Wilmslow rebranded but doesn't post much these days, and AtW is still in his bedsit above the kebab shop waiting for his sofa to be delivered.

[rootsnall]

re. my fulltime 5 day a week job disappeared due to an outsourcing deal , and the TUPE issue, what I said earlier in bold ( partly in jest ) is not strictly true, I have worked almost exclusively on projects and not on post go live support. And in theory the projects are done, that is how they got around the TUPE issue. Reality is there are lots of bits to tidy up that won't be part of the outsourcing support deal.

Thanks for all the input, I'm on dodgy ground as I suspected, but on the other hand I believe highly unlikely to get nabbed if I risk it. My previous approach to IR35 was not to get too exposed on any one contract, and I'd probably follow that rule here by not staying forever. I think my only defence if I did get investigated would be a genuine lack of MOO, which is a complete change in the working practice. I'm sure cases have been won on that point alone in the past, but I'm no expert. On googling, the rulings and explanations of cases won by HMRC seem to be old ones I'm familiar with, so it would be interesting to know how many cases HMRC have won in recent times !?

I'll see how things pan out, some juggling and negotiating to do yet. I've been doing my sums and one approach is to go lowish salary and high pension contributions and eekmad declare myself inside IR35. I can't find the 'Blow Your Brains Out' smilie, is it no longer around.

ps. what happened to Wilmslow, and the Russian bloke who's name escapes me ?

[tractor]

....

What if you're doing the "same things" but with different working practices? I.e different contract and (demonstrably) different working practices ?

When deciding IR35 status against F2M (See Malvolio's post where he quoted Osborne) it is quite simply a question of 'were you a programmer last week and are you a programmer this week?'

HMRC would not care whether you walked to work last week and drove this week, worked in Salford last week and Bolton this week or whether you used left handed spanners last week and right handed spanners this week.

Google up on F2M and you will find lots of answers.

I can't believe I forgot it but Malvolio is absolutely right about TUPE.

[jamesbrown]

So... Maybe, the OP could "go for it". Hope for the best bur make provisions for the worst and take appropriate steps to ensure the best outcome should Hector "scratch and sniff"

The only circumstances under which I would advise the OP to proceed would be to have a professional review of the contract, together with an explanation of how their working practices will change. Most likely, this review will indicate that the contract is caught (based on the information provided here), in which case they would be risking tax, interest, and penalties in proceeding.

[TheCoconutDog]

Certainly, there could be a difference between what HMRC argues initially and what the case law supports following investigation. The real question is whether the previous working relationship undermines the reality of all three of MoO, unfettered RoS and lack of D&C as being a sham. If one or more of these things are demonstrably not a sham because the working relationship changed materially and for legitimate reasons (i.e. the change was not motivated by tax), then the working practices are not indicative of disguised employment. Again, there's nothing within the legislation that specifically points to this scenario as being caught, but the context will make it more difficult to argue the case (which is why it's perceived as a good risk indicator). If the contract and working practices are reviewed and perceived to be outside, then it's fine to work on that basis (and collate supporting evidence).

So... Maybe, the OP could "go for it". Hope for the best bur make provisions for the worst and take appropriate steps to ensure the best outcome should Hector "scratch and sniff"

[jamesbrown]

What if you're doing the "same things" but with different working practices? I.e different contract and (demonstrably) different working practices ?

Certainly, there could be a difference between what HMRC argues initially and what the case law supports following investigation. The real question is whether the previous working relationship undermines the reality of all three of MoO, unfettered RoS and lack of D&C as being a sham. If one or more of these things are demonstrably not a sham because the working relationship changed materially and for legitimate reasons (i.e. the change was not motivated by tax), then the working practices are not indicative of disguised employment. Again, there's nothing within the legislation that specifically points to this scenario as being caught, but the context will make it more difficult to argue the case (which is why it's perceived as a good risk indicator). If the contract and working practices are reviewed and perceived to be outside, then it's fine to work on that basis (and collate supporting evidence).

[malvolio]

I think I agree with you BUT has there ever been any rulings to confirm that. I don't remember any specific rulings to that effect when I used to follow these things. I could put in a decent argument to say I'm not doing the same role, my fulltime 5 day a week job disappeared due to an outsourcing deal

If it was only one lot of 12% then I wouldn't be that fussed, but 2 lots

Outsourced but no TUPE option and now your ex-employer wants to keep you on? Seems you're not the only one that doesn't follow the rules: you should have had first dibs on your role regardless of who was paying the bills: apart from anything else, any redundancy money you got will be taxed at 40% if you are still fulfilling essentially the same role.

As for precedent, how about Osborne saying categorically that IR35 is being retained purely in order to deter the F2M scenario and allowing permies to move to pseudo contracts to avoid taxation. Not saying that's where you are, but the same rule will apply.

[TheCoconutDog]

You only have to ask yourself one question....Are you going to be doing the same things next week as last?

It matters not if you will be doing some other things as well or you will be doing less of those things. If they are the same things, HMRC will say you are caught. You could chance it, you may never get investigated, but if you do, it is not about 'decent arguments' it is about facts.

What if you're doing the "same things" but with different working practices? I.e different contract and (demonstrably) different working practices ?

[tractor]

....

I think I agree with you BUT has there ever been any rulings to confirm that. I don't remember any specific rulings to that effect when I used to follow these things. I could put in a decent argument to say I'm not doing the same role, my fulltime 5 day a week job disappeared due to an outsourcing deal

If it was only one lot of 12% then I wouldn't be that fussed, but 2 lots

You only have to ask yourself one question....Are you going to be doing the same things next week as last?

It matters not if you will be doing some other things as well or you will be doing less of those things. If they are the same things, HMRC will say you are caught. You could chance it, you may never get investigated, but if you do, it is not about 'decent arguments' it is about facts.

[PerfectStorm]

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