Reply to: Recruitment Agencies and QDOS?

[ladymuck]

Agency are saying the contractor needs to complete the QDOS questionnaire. Bit that confuses me ?

It's difficult to fill those in before your bum is on the seat. At present, it's not quite the done thing to have that conversation at interview.

Maybe one day, when I run out of friends to blag work from, I'll whip out the questionnaire and ask the interviewing manager to fill it in with me at the end of the interview

[Qdos Contractor]

Agency are saying the contractor needs to complete the QDOS questionnaire. Bit that confuses me ?

We position questions at the contractor to ensure we are getting a detailed and specific picture of both the working and business practices. We then review the contractor's submission and send it to the client for them to approve.

In many cases we are conducting a comprehensive audit of the client's organisation before the individual assessments are undertaken. As part of an audit we'll look at the situation at role level and make recommendations for how things can be improved in advance of the individual determination process.

[BABABlackSheep]

How can the contractor be found wanting? They have no input any more so surely they can never be held liable.

Agency are saying the contractor needs to complete the QDOS questionnaire. Bit that confuses me ?

[Paralytic]

How can the contractor be found wanting? They have no input any more so surely they can never be held liable.

Exactly. So if the client has taken reasonable care, but HMRC want their money, who pays. Are agencies really signing up to that liability?

[ladymuck]

So if the client gets the determination wrong (in the eyes of HMRC), so long as they have taken reasonable care, the fee payer is held liable?

I wonder if we'll see agencies being nervous about accepting contractors on outside IR35 determined contracts. After all, working practices are a large part of HMRCs investigation and the agency will have limited input to that.

Or is it the case that so long as the agency has also taken reasonable care, it gets passed up again, to the PSC?

And then the contractor is found to not have taken reasonable care, since they're last in line and HMRC have said so?

How can the contractor be found wanting? They have no input any more so surely they can never be held liable.

[Paralytic]

This is correct. As soon as the client passes the Status Determination Statement to the next party in the chain, the liability moves too.

Assuming the determination has been communicated correctly and the client has taken reasonable care in making the status decision, the default liability will rest with the fee payer.

So if the client gets the determination wrong (in the eyes of HMRC), so long as they have taken reasonable care, the fee payer is held liable?

I wonder if we'll see agencies being nervous about accepting contractors on outside IR35 determined contracts. After all, working practices are a large part of HMRCs investigation and the agency will have limited input to that.

Or is it the case that so long as the agency has also taken reasonable care, it gets passed up again, to the PSC?

And then the contractor is found to not have taken reasonable care, since they're last in line and HMRC have said so?

[Qdos Contractor]

I was reading something interesting about the effect of off-payroll on agencies and clients. Apparently if the client gets the determination wrong (e.g. should be inside IR35) the unpaid tax liability will initially sit with the agency as they are the 'fee payer'. The agency would then need to prove that the client didn't take reasonable care in the determination to be able to pass the liability over to the client.

If that is still true, its no wonder the agents are having to taking a lead here.

This is correct. As soon as the client passes the Status Determination Statement to the next party in the chain, the liability moves too.

Assuming the determination has been communicated correctly and the client has taken reasonable care in making the status decision, the default liability will rest with the fee payer.

[CheeseSlice]

"Still true"? Was it ever true? Where did you read that?

I think this article was the one, but I'm sure I've seen something similar elsewhere:

Fact or Myth?
Agencies can leave decisions on IR35 solely to their clients without risk.

Myth. It is true that the end client is responsible for making IR35 decisions under the off-payroll legislation coming into force in April. However agencies (as the payers of PSCs) are liable for deducting tax due to HMRC.

If HMRC believes there is any tax due it will look first to the agencies for the tax. This liability may pass to the end client in certain circumstances (see below) but agencies would have to point HMRC to their clients to avoid liability which commercially may be an issue.

What if the client gets the IR35 decision wrong?

As things stand the legislation doesn’t say that a client will be liable if it gets a decision wrong. It will however be liable if it hasn’t taken reasonable care.

There is no statutory definition of ‘reasonable care’, although HMRC has released guidance on this topic in the past. If the client has taken external advice or used HMRC’s tool then it will be very difficult for HMRC to prove lack of care.

This leaves the agency (as the fee payer) as the obvious target for HMRC.

[Paralytic]

I was reading something interesting about the effect of off-payroll on agencies and clients. Apparently if the client gets the determination wrong (e.g. should be inside IR35) the unpaid tax liability will initially sit with the agency as they are the 'fee payer'. The agency would then need to prove that the client didn't take reasonable care in the determination to be able to pass the liability over to the client.

If that is still true, its no wonder the agents are having to taking a lead here.

"Still true"? Was it ever true? Where did you read that?

I think its the client that holds the liability. Read this:

April 2020 changes to off-payroll working for clients - GOV.UK

Taking reasonable care when making a determination

You must take reasonable care when you make a determination about the employment status of a worker.

Failure to do so will result in the worker’s tax and National Insurance contributions becoming your responsibility.

I believe the fee payer (agency) will only hold the liability if the contract is determined inside by the client but the fee payer does not withhold the taxes.

The unanswered question is what if the client has taken reasonable care, but HMRC disagree. Who owes the taxes? I suspect I know who HMRC will chase...

[CheeseSlice]

I was reading something interesting about the effect of off-payroll on agencies and clients. Apparently if the client gets the determination wrong (e.g. should be inside IR35) the unpaid tax liability will initially sit with the agency as they are the 'fee payer'. The agency would then need to prove that the client didn't take reasonable care in the determination to be able to pass the liability over to the client.

If that is still true, its no wonder the agents are having to taking a lead here.

[Qdos Contractor]

Yes - we are working with numerous recruitment agencies, consultancies and clients to assist them with the assessment process. We've been providing this service in the public sector since 2017.

There are some more details here but feel free to ask me any questions.

Seb

[adubya]

I know someone who's been asked to complete an online QDOS IR35 assessment form by the consultancy they're engaged through. They've not yet completed it so I'm not party to the detail.

[BABABlackSheep]

I would have thought the engagement is a little different than that? Wouldn't the agent be supplying QDOS's service to the client to help the client with their determination rather than the agent?

Doesn't seem unreasonable.

Almost I think.

The way I heard it was the contractor completes a QDOS questionnaire, the agency tells the client that a contractor is inside or outside.

Needs clarification, hence why I asked, because I’m confused when this happens. How does the contractor know until they have been at a client for a while what the working practices are.

This is happening though in some form.

[northernladuk]

I would have thought the engagement is a little different than that? Wouldn't the agent be supplying QDOS's service to the client to help the client with their determination rather than the agent?

Doesn't seem unreasonable.

[malvolio]

No idea, although it would seem a liitle odd. Arse about face is perhaps a better phrase...

OTOH there must be some agencies out there with enough intelligence to work out that they need help in evaluating the IR35 status of a given engagement. Using a bona fide expert would appear to make sense.