Reply to: FIX AN ARGUMENT You get told on monday Your Inside IR35

[LetterBox]

ClientCo might have as much opinions as they want. As long as it's different from the opinion of the judge if it comes to a court case with HMRC and/or you have an insurance why do you care?

Because if we assume the contract is not water tight either inside or outside (even if QDOS reviewed it as outside), and that working practices carry the actual bulk of evidence. Then you'll be putting your day to day working practice against the clients opinion of what your day to day working practice is. Looking at it from a neutral POV, the contractor has a clear interest defending its position, the clients opinion of your WP is pretty neutral, HMRC are fighting your position. Not only are you fighting HMRC on the issue, you are now also having to fend off a client who also thinks in summary, you're 'one of the team'. It's really not helpful.

Or do you suggest a scenario where ClientCo/Agency withholds tax prior to April 2020 based on their opinion the contract is inside IR35? In which case I would just follow the process of recovering debt for unpaid invoices and likely terminate the contract.

No, not suggesting this.

[sal]

ClientCo might have as much opinions as they want. As long as it's different from the opinion of the judge if it comes to a court case with HMRC and/or you have an insurance why do you care?

Or do you suggest a scenario where ClientCo/Agency withholds tax prior to April 2020 based on their opinion the contract is inside IR35? In which case I would just follow the process of recovering debt for unpaid invoices and likely terminate the contract.

[LetterBox]

I don't think making up unrealistic scenarios and firing off one line questions is helpful at all. You are completely missing all the stuff going on in the background at the client and the agent and how they will deal with it. The answer is what have they done about it or told you, which we don't know because it's a made up situation.

Understand the whole situation better and using that knowledge make any scenario you want up and apply your knowledge to that.

Even posting it in the right section might have helped though.

Fear not, only another 6 weeks or so to go before clients and especially agencies have to come clean about all those inside IR35 positions. Right now there are a lot of 'what if' scenarios brought about because those clients that have yet to declare want to get the last few months of life out of productive contractors before they break the bad news, and contractors either leave or become much less productive.

Post April 6th will become easier, you'll just be viewing more posts that ask for Umbrella, FTC or employment calculators.

[northernladuk]

I don't think making up unrealistic scenarios and firing off one line questions is helpful at all. You are completely missing all the stuff going on in the background at the client and the agent and how they will deal with it. The answer is what have they done about it or told you, which we don't know because it's a made up situation.

Understand the whole situation better and using that knowledge make any scenario you want up and apply your knowledge to that.

Even posting it in the right section might have helped though.

[Lance]

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

I get that. But it's not law yet so 45 days notice and all the rest of it will be ignored by the client it it suits them.

[LetterBox]

so you're saying they can't make the declaration but they can have an opinion.
What you'll find is that an individual may have an opinion but the client (formally) will have no opinion at all.

Correct, the client can have an opinion now, and it will be a formal declaration in April, so they can officially bundle their opinion as inside IR35 in April, I guess the 45 day argument procedure on this 'opinion' can only start on the 6th of April once it all come into force.... Anyway, the OP has a highly unlikely scenario.

The reality for the OP benefit from the 'boots on the ground' is that many clients see an opinion as risk and instead of offering HMRC that opinion which they are required to after April, they have just removed the requirement that HMRC have imposed. As we are all aware...

[SimonMac]

how so?
It's not even law yet.

If the client has determined OP's contract as inside, when it's not their call, then this is at the moment simply a difference of opinion.

The client may say that they will determine it as inside, after April 5th, when it's their problem. The client does not have the right to declare it as inside right now.

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

What to do if your worker disagrees with the determination
Your worker’s client must decide your worker’s employment status and if the off-payroll working rules apply. The client must then tell your worker their determination and the reasons for it.

If your worker disagrees, they’ll need to write to the client to give reasons why.

This should include details of:

the employment status determination they disagree with
their reasons for disagreeing
Keep copies of any records about disagreements.

The client will then have 45 days from the date of receiving the worker’s disagreement to respond. During that time the client should continue to apply the rules in line with their original determination.

If the employment status determination has not changed, the client will have to tell the worker.

If the employment status determination has changed, the client will have to tell the worker and the fee-payer.

[LetterBox]

Ok quick Q

if you got told you're inside on Monday, effectively whilst they are saying it doesn't come into play till April the reality is you have now been told

So what are the implications, will an agency effectively take the next invoice and say- you should be paying TAX an NI we hear from the company you are now inside.

There's a Q&A pdf also floating around with a little disclaimer floating round that says if you're inside now then you probably should have been since the beginning of your contract HMRC may wish to claim this back through self assessment.

Many here where I am think they are just going to carry on invoicing as they do today (whilst they are outside) once they have been told they are inside??

what do you think?

Yeah, the risk is the client has now shared its opinion on your PSCs position with HMRC for the work you do for the client, very dangerous IF it goes to court, could also get squeaky for the client but ultimately, this is bad for the PSC.

The above scenario looks unlikely though, if they state an opinion (as after April they need an opinion) then coupled with making that, they will also have plans to re-position pre-April. That'll mean Monday they have an opinion, Tuesday they send out comms saying all contracts terminated in 1 week. New contracts offered through Umbrella etc, no more PSCs, no more PSCs mean they no longer need to hold an opinion, and the reason opinions are dangerous is because they are open to discussion / disagreements, that creates client risk.

That 'Monday opinion' can vary from opinions on individual PSCs, all the way through to, no risk, no opinion, policy change, no more PSCs = no risk of discussion / disagreements (taken to court etc).

[Lance]

Well, they can, it's just not in those formal terms. The client is allowed to have an opinion at any time, that client tells the contractor what the client's opinion is. The contractor will respond to say that if the client has that opinion then it puts the contractor 'inside IR35'. Client does not declare you're inside IR35, they just tell you how they see it based on your current contract/WP. Up until now the client has never had to offer an opinion, they may have had one but why rock the boat? and the contractors never want the opinion of the client as if they have an opinion that puts the contractor as a bum on a seat it has a very strong weighting in IR35 court cases.

so you're saying they can't make the declaration but they can have an opinion.
What you'll find is that an individual may have an opinion but the client (formally) will have no opinion at all.

[LetterBox]

I very much doubt you'll find a client who'd say thay they always knew a contract was inside even though the contractor wasn't treating it as such.
That would open up the client to all sorts of problems.

Starting with whether they are involved in a conspiracy to defraud the treasury.
And could well also be accused of entering into a contract that they knew was not in good faith.
I'm not a lawyer but I doubt any client would want to be getting into those arguments when it's not their liability.

Hence the banks have cut and run.

[LetterBox]

how so?
It's not even law yet.

If the client has determined OP's contract as inside, when it's not their call, then this is at the moment simply a difference of opinion.

The client may say that they will determine it as inside, after April 5th, when it's their problem. The client does not have the right to declare it as inside right now.

Well, they can, it's just not in those formal terms. The client is allowed to have an opinion at any time, that client tells the contractor what the client's opinion is. The contractor will respond to say that if the client has that opinion then it puts the contractor 'inside IR35'. Client does not declare you're inside IR35, they just tell you how they see it based on your current contract/WP. Up until now the client has never had to offer an opinion, they may have had one but why rock the boat? and the contractors never want the opinion of the client as if they have an opinion that puts the contractor as a bum on a seat it has a very strong weighting in IR35 court cases.

[Lance]

On the off chance that HMRC open an enquiry on the contract prior to April, the client's view of things is very much relevant. Though I think the chances of an enquiry happening are very low. Depends if you stay on there April onwards.

I very much doubt you'll find a client who'd say thay they always knew a contract was inside even though the contractor wasn't treating it as such.
That would open up the client to all sorts of problems.

Starting with whether they are involved in a conspiracy to defraud the treasury.
And could well also be accused of entering into a contract that they knew was not in good faith.
I'm not a lawyer but I doubt any client would want to be getting into those arguments when it's not their liability.

[NeedTheSunshine]

how so?
It's not even law yet.

If the client has determined OP's contract as inside, when it's not their call, then this is at the moment simply a difference of opinion.

The client may say that they will determine it as inside, after April 5th, when it's their problem. The client does not have the right to declare it as inside right now.

On the off chance that HMRC open an enquiry on the contract prior to April, the client's view of things is very much relevant. Though I think the chances of an enquiry happening are very low. Depends if you stay on there April onwards.

[Lance]

If you are declared inside you have 45 days to challenge their determination and find out why they think you are now inside which may help with the above

how so?
It's not even law yet.

If the client has determined OP's contract as inside, when it's not their call, then this is at the moment simply a difference of opinion.

The client may say that they will determine it as inside, after April 5th, when it's their problem. The client does not have the right to declare it as inside right now.

[SimonMac]

Long story short, no body knows.

HMRC have said they won't apply retrospective action if you are declared inside on an existing contract, it's up to you as to how much risk you are willing to take to believe them.

If you are declared inside you have 45 days to challenge their determination and find out why they think you are now inside which may help with the above