Reply to: IR35 Unfriendly

[tim123]

You are niaive beyond belief. You think you know about business - like hell you do. You know about be exploitable and niaive, but you know nothing about how business works only about how contractors behave when they feel that their choices are limited.

No. I said I know about businesses. Not the same thing at all.

You are the one living in cloud cookoo land here.

And you know what, you are going to be the first person that I have ever put in to an ignore list.

Bye bye and good luck in your endevours to change the world (you will need it and a lot more)

tim

[tim123]

I assume you are an EB representative?
?

You have made this bollux claim before.

If not, why are you sticking up for them?

I am not. I am telling you how other businesses work, as you don't seem to have worked it out for yourself yet.

Just like you are trying to operate your businees in a way that is best for you, all other businesses work in a way that is best for THEM.

None of them will work in a way that is best for YOU, unless doing so is what is also best for them. It just happens that, employing you as a sole trader, is decidely bad for them (as you admitted in your first post). Why on earth would they do this if they had a choice. Or are you suggesting that they don't have a choice?

tim

[The Lone Gunman]

To be perfectly honest, <snip>

I kind of agree with your conspiracy theory but.........

The sole trader route.
This was the start of the trouble in the first place.
(Hope I am not preaching here).
In the beginning was BT (and others). BT decided that to reduce their costs they would get rid of all their techies and take them back as self employed thus ducking their obligations towards NI, sick pay, redundancy rights etc. etc. The techies had no choice, but were pleased as they could now manage their own money and were in fact better off.
This displeased HMG. HMG then said that any "corporate body" availing themselves of the self employed would assume liability for all contributions should the SE worker fail to make them.
At this point all clients (aided and abeted by agents) decided to only employ freelance workers operating through a Ltd company. Thus once again avoiding any obligation to HMG.
The freelance workers, being of some small mental agility saw a wonderful opportunity.
They realised that, like any other business, they could pay their staff minimum wages to increase the companies profits and take large dividends at reduced taxation.
For a while all was good and peace reigned.
The NL came to power. NL was a jealous HMG. NL saw that these individuals were not paying their share. HMG imposed IR35 and the rest we know.

There is no way in this world that the body corporate will ever take on SE workers again.

Legitimate businesses
Sorry to hear your attitude on this. Even if you think it you should not say it. Gay Gordon has big ears and may hear you. He will then quote you as the voice of contractors.(It happened in the early days of Shout99).
My rate is based on my business costs. I factor in holidays, sickness and other stuff. If the rate offered does not meet my needs then I will not do the job, if needs be I will fold.

[tim123]

FREELANCE AS A SOLE TRADER.

That means we get taxed on all our income, minus allowable dispensations, but only pay NI as an employee. That seems fair enough to me - if I am in a contract for a longish continuous period and it's a model that served me well for a long time, even working through EBs.

It also means that EBs would have to take the risk of offering our services up as their own or else risk being clobbered for tax if we don't pay it ourselves.

I've doen this before Denny, but I'll do it again.

Standing on your soapbox and shouting does not make the world follow you.

EBs, as a group, will never employ you as a sole trader. If you insist that they do so, the job will disappear and be given to someone who will work in the way required by the EB.

tim

[bangface]

You know trivial things like spending a fortune on getting your EB terms checked out for IR35 exemption, signing of terms to start a role fully believing you are outside IR35 and then once the role starts realising that you are not outside IR35 at all, but inside because the working commericial relationship don't reflect the terms you signed with the EB (hence the term 'IR35 friendly, which isn't worth the paper its written on). This of course poses considerable risks to the contractor who has probably paid to set up a limited company, signed up with an expensive accountancy management serviced (like SJD or 1st Accountancy) and then finding out that all that money was in fact wasted because a limited company is an expensive and inefficient vehicle to work through as an IR35 inclusive contractor. By then, it's too late to do anything about it. To put it simply that £400 per day contract you've just been offered will be worth bugger all, once you've taken out two lots of NI contributions, paid full whack of tax on all your income (no divis allowed here) and paid for the accountacy services, solicitor checks, insurances for PII, LLI, IR35 insurance (which of course won't be valid unless you can demonstrate you were really duped by the client during interview about the commercial relationship and even then you would have to leave to make the claim valid), holiday, sick, between contract survival money. In other words the contract is worth around £100 a day if you're lucky.

These are some of the things the professional contractor has to account for when trying to work in a professional B2B like manner. There are a lot of contractors out there who are almost certainly caught by ir35 and due to their naivety and/or lack of experience/business acumen don't even realise it or even what the implications are for them should their circumstances fall foul to the scrutiny of the Revenue!

In my experience most contracts fall within ir35 (even the so called "outside ir35 contracts") and require certain tweaks to bring them in favour of being outside of ir35. Some agencies are oblivious to the ever changing tax trends and do not even entertain proposed changes to their agreements. I feel a lot of agents are too scared to upset the client to even ask for changes to their agreements. I have experienced many a scenario where the agent has said that the client won't change their contract (without even considering to present a proposal to the client even if it meant that the contract in its current format could have detrimental implications to them too), although they will be happy to change theirs??, despite for example direction, supervision and control being a clear issue within the written chain.

Of course I appreciate that it is simply not a case of ensuring that the contract is worded correctly and that the commercial reality of the situation would also be taken into account, but ensuring that the contract is as watertight as possible is a damn good starting point as far as I am concerned.

For the newbie contractors or lower earning bracket whose contracts fall within ir35 I would recommend to go umbrella, but for the more seasoned contractors particularly the high end earners who are confident that their contract is fully outside of ir35 and would stand up to the tests of self employment then limited co or managed limited is probably the best route to take.

[Denny]

I'd say that if it is purely for 'security' reasons then you have no option to be on-site....it it the only place available for you to do the work and should not affect IR35

but a word of caution - banks are strange institutions - a lot of them EXPECT you to be a bum on a seat in their office - and will only cough up the cash based upon the days/hours that you have been on site!!!

Ask yourself - if you had two days to write a test plan for example - did it off site and mailed it to PM or whatever - would there be hell on trying to get money out of them for the two days that they did not see your face on-site????

This is pure client control and implied MOO (we will only pay you when we can see you are not working and can give you some work to justify paying you for your time) - like temp employed by high street recruiters who employ temps themselves. There is no attempt to respect that the contractor may work more quickly, more efficiently and still be rewarded for getting the deliverables how and when and where they see fit.

With those kind of restrictions in place then contractors would undoubtedly be inside IR35 because their commercial relationship doesn't in any way reflect the criteria set out for exemption on the IR website.

[malvolio]

Being a newbi can you give me a pointer.

Food for thought:-
With so many others in my position, I know the tax office is getting rid of there workforce and cannot investigate all the companies out ther now. How will they ever be able to handle another 200,000 new limited companies if everyone leaves the umbrella format.

Simple. Gorgon will realise the extent of his new cockup, so will find a way (probably a very inept and amateurish way) to mark small companies and PSCs as artifical tax avoidance mechanisms and apply the same taxation rules he has just imposed on MSCs and Umbrellas.

Of they will win the S660 appeal in June and apply that to the 1.2 million small comapnies that will then fit the revised rules.

Or they will introduce taxation on dividends for small companies.

Just hope this bunch of avaricious, mendacious incompetents get kicked out of office before they do any of the above...

[Goya]

Is there a place I can find a standard out of ir35 contract to work from.

Join the PCG, they have template contracts available to members.

[mictech]

Being a newbi can you give me a pointer.

Is there a place I can find a standard out of ir35 contract to work from. As i will be caught out by the new tax rules and will probably have to go back to limited co. I would like not to have to go back to paying full taxs.

Food for thought:-
With so many others in my position, I know the tax office is getting rid of there workforce and cannot investigate all the companies out ther now. How will they ever be able to handle another 200,000 new limited companies if everyone leaves the umbrella format.

[realityhack]

Ask yourself - if you had two days to write a test plan for example - did it off site and mailed it to PM or whatever - would there be hell on trying to get money out of them for the two days that they did not see your face on-site????

Heh, no, I'd like to see them try! Not that kind of relationship - they wouldn't balk at a bum-not-on-seat, thankfully.

[Prodigy]

Sorry to hi-jack the thread again, but any thoughts about my situation a few posts ago ??

[Billy Pilgrim]

I'd say that if it is purely for 'security' reasons then you have no option to be on-site....it it the only place available for you to do the work and should not affect IR35

but a word of caution - banks are strange institutions - a lot of them EXPECT you to be a bum on a seat in their office - and will only cough up the cash based upon the days/hours that you have been on site!!!

Ask yourself - if you had two days to write a test plan for example - did it off site and mailed it to PM or whatever - would there be hell on trying to get money out of them for the two days that they did not see your face on-site????

[malvolio]

Hmm... the VPN issue is: IT Security will not allow VPN from non-bank hardware. Bank laptops are understandably only issued to payroll staff, therefore no VPN for me.

The other issue is working on systems which are only accessible from inside our building and through the intranet/internal CMS/DBs. Again restricted to mac address, and bank only.

When I started here I brought my own gear which was unwelcome. I do work at home whenever I can - any documentation or reports, stuff like that, but i'd say 85% of the time is on site. Qdos reviewed my contract as exempt, but this on-site malarkey worries me.

The courts, if asked to make a ruling, will go with the test of "reasonableness" (which is a well understood legal concept BTW). The reasons you have given for not having VPN access are entirely reasonable and would not IMVHO constitute an IR35 fail all by themselves. That you can work form home when possible also points away from this being a major concern.

Stop worrying. The test for D&C is that you can choose to work onsite to get the job done or not (although the latter is rather counter-productive!) for valid reasons: if the contract stated baldly that you will sit here 24x7, then you would have a problem.

[realityhack]

Hmm... the VPN issue is: IT Security will not allow VPN from non-bank hardware. Bank laptops are understandably only issued to payroll staff, therefore no VPN for me.

The other issue is working on systems which are only accessible from inside our building and through the intranet/internal CMS/DBs. Again restricted to mac address, and bank only.

When I started here I brought my own gear which was unwelcome. I do work at home whenever I can - any documentation or reports, stuff like that, but i'd say 85% of the time is on site. Qdos reviewed my contract as exempt, but this on-site malarkey worries me.

[Denny]

Denny - thanks for this - regards VMs on-site statements, My client is a bank and I spend most of the time working on their servers, from inside a physical firewall. The client will not allow me the VPN access that 2 other permies enjoy - so I can't work from the desk at home. This absolutely necessitates my being on site and using client equipment. IR35 risk?

If two other permies enjoy access then you need to ask your contract lawyer what this signifies for you as a contractor who is disallowed the same. To me, I would suggest that there is still no physical necessity for you to be on site despite this restriction. This is borne out by the privileges given to the permie staff who are allowed to access the VPN from home if they are doing similar work to what you are doing.

It appears to me that security is being used as a convenient excuse to ensure your hours are being clocked from the site and that you are indeed under client control, albeit unstated. This means that you would indeed be in danger of being IR35 included as a result. Unless you could demonstrate convincingly why contractors are not allowed VPN access for security reasons, I don't think your IR35 exempt status is safe.

It is not enough to distinguish yourself from the permies if the distinction means you are less free to work how, where and when you like (within the parameters of getting the deliverables out on time to the right standard). The distinction only really matters if you are more free to make the choice yourself based on your own discretion even if the permies are also allowed to work from home. Look at the IR35 criteria listings for what they constitute being in business on your own account.