Reply to: Agency Opt Out lies

[tractor]

Wow. I had an agency say they would have to put me on PAYE if I didn't opt out but backed down eventually.

Report these idiots to the PCG. They are the ones who helped negotiate this huge own goal of an opt out and worse still they have their heads in the sand simply won't admit that things like this happen or that they are a problem.

Also go directly to the client and explain to them how the Agency Conduct Regulations protect both the client and the contractor in their dealings with agencies and it is in their best interests if their contractor's DO NOT opt out.

Yes, it's been an expensive couple of days!

[Wanderer]

Following a couple days negotiation over contract terms, it becomes obvious that the moron MD at the agency is so dead against me not opting out and knowing (because I hit him over the head with it several times) that he cannot force or induce me to opt out, tells the client that if they engage myco, they will be responsible for holidays and other liabilities , they believe him and change the offer to 6mths fixed term PAYE.

Wow. I had an agency say they would have to put me on PAYE if I didn't opt out but backed down eventually.

Report these idiots to the PCG. They are the ones who helped negotiate this huge own goal of an opt out and worse still they have their heads in the sand simply won't admit that things like this happen or that they are a problem.

Also go directly to the client and explain to them how the Agency Conduct Regulations protect both the client and the contractor in their dealings with agencies and it is in their best interests if their contractor's DO NOT opt out.

[tractor]

...

I assume that the agencies also like opting out because it allows them to transfer risk of non payment to the contractor.

I opt in because I don't want to be left with nobody to sue if the end client doesn't pay.

This is exactly it and not opting out stops them putting in clauses like the following which are the ones that I have had issue with over the last couple of days...

• "The Fees shall be payable on completion of performance of the Service at the end of the Project Term. However XXXXXXXXXX shall make payments on account of the Fees, in default of agreement to the contrary, at the end of each monthly accounting period against an invoice submitted by the Consultant no earlier than the last day of the calendar month. Such payments, however, shall be ‘on account’ payments"
  
• "XXXXXXXXXX may withhold payment of the Fees if the Client makes or states an intention to make any claim, against XXXXXXXXXXX in respect of the provision of the Consultancy Service."
  
• "The Consultant shall account to XXXXXXXXXXXXX for any profits received in breach of this Agreement and XXXXXXXXXXX shall be entitled to set off such profits and other losses against any Consultancy Fee owed by XXXXXXXX to the Consultant."

It was actually the worst contract that I have ever seen bar one from a contractor perspective. But transferring all financial liability is all they care about.

[tractor]

...

No, not at all. The fact that you forego the pseudo-employee protections associated with being covered by the Agency Regs implies - nothing more - that you are behaving as a business and are therefore marginally less likely to be in the scope of IR35.

You are mixing up several unrelated points here across two completely separate things. The Treasury (not HMRC) have stated several times that genuine businesses have nothing to fear from IR35 but have failed to define a genuine business. BIS have asserted several times that the Regs are not intended to apply to genuine businesses, except they worded the Regs so badly it is not clearly stated anywhere. That's why you can't find written proof anywhere; there is no definition of "a business" and no scope statement in either IR35 or the Regs.

However the agencies have created their own interpretation which is nothing to do with IR35 but all to do with saving them the several hours additional effort created by working with someone who has not opted out of the Regs (and I got that from the Operations Director of a major Agency). And the people we deal with at the coalface are so ignorant of their own business - never mind ours - that they will use any excuse to get you to opt out and to hell with the law or reality, because that's what's they've been told to do.

Excellent.

This is going to go round and round.

Why do you persist in making statements on behalf of HMRC and BIS vis " but it is totally irrelevant to IR35, a position supported by HMRC and BIS (who are the real authority in question)." and when you are challenged, you simply ignore the text that I have helpfully emboldened in this very thread several times?

HMRC do NOT support what you are saying officially or unofficially or you would be able to refer to their support unequivocally - you say they do but you have no proof. You are just adding to the mystery and this is what I have an issue with.

Either back your claims up or please stop making them.

[speling bee]

No, not at all. The fact that you forego the pseudo-employee protections associated with being covered by the Agency Regs implies - nothing more - that you are behaving as a business and are therefore marginally less likely to be in the scope of IR35.

You are mixing up several unrelated points here across two completely separate things. The Treasury (not HMRC) have stated several times that genuine businesses have nothing to fear from IR35 but have failed to define a genuine business. BIS have asserted several times that the Regs are not intended to apply to genuine businesses, except they worded the Regs so badly it is not clearly stated anywhere. That's why you can't find written proof anywhere; there is no definition of "a business" and no scope statement in either IR35 or the Regs.

However the agencies have created their own interpretation which is nothing to do with IR35 but all to do with saving them the several hours additional effort created by working with someone who has not opted out of the Regs (and I got that from the Operations Director of a major Agency). And the people we deal with at the coalface are so ignorant of their own business - never mind ours - that they will use any excuse to get you to opt out and to hell with the law or reality, because that's what's they've been told to do.

Excellent.

I assume that the agencies also like opting out because it allows them to transfer risk of non payment to the contractor.

I opt in because I don't want to be left with nobody to sue if the end client doesn't pay.

[malvolio]

You miss the point spectacularly This all stems from the myth that HMRC has stated that Opt Out status is neutral with regard to IR35. They have stated nothing of the sort that I can find evidence of - anywhere. I have highlighted the above post which I consider that you and others need to stop portraying as fact, a point that you contradicted in a reply in this thread 3 post or so on from the one that I quoted. It is not fact, it is hearsay and interpretation, one that I suspect both the Revenue and BIS would deny asserting in discussions with the PCG or anyone; Gawd they won't even officially support the results of their OWN BETs! If they are so not inter dependant and there is no relationship whatsover, why does the PCG advice assert that opting out can be a minor pointer in relation to IR35?

No, not at all. The fact that you forego the pseudo-employee protections associated with being covered by the Agency Regs implies - nothing more - that you are behaving as a business and are therefore marginally less likely to be in the scope of IR35.

You are mixing up several unrelated points here across two completely separate things. The Treasury (not HMRC) have stated several times that genuine businesses have nothing to fear from IR35 but have failed to define a genuine business. BIS have asserted several times that the Regs are not intended to apply to genuine businesses, except they worded the Regs so badly it is not clearly stated anywhere. That's why you can't find written proof anywhere; there is no definition of "a business" and no scope statement in either IR35 or the Regs.

However the agencies have created their own interpretation which is nothing to do with IR35 but all to do with saving them the several hours additional effort created by working with someone who has not opted out of the Regs (and I got that from the Operations Director of a major Agency). And the people we deal with at the coalface are so ignorant of their own business - never mind ours - that they will use any excuse to get you to opt out and to hell with the law or reality, because that's what's they've been told to do.

I will take this up with the PCG.

Excellent.

[tractor]

..

I have an email from the BIS which says that for business reasons, agencies can refuse to use contractors who refuse to opt-out. Sue Ellen has communications from them saying the exact opposite.

Take yer pick...

Perhaps you should both send a joint email to Vince and ask his advice. He would probably say "Use ICT, that's what it's there for"

[tractor]

..

What the others have said. Your status re the Regs is none of their concern and cannot be a condition of the contract. However the contract has to recognise your status since some clauses will be different between normal and opted-out positions.

PCG's advice is that you use the opt out to negotiate a better contract since you are saving the Agency time and money (a clue as to why they always push for you to opt out) but it is totally irrelevant to IR35, a position supported by HMRC and BIS (who are the real authority in question).

PCG's detailed guidance is here Have a careful read. If you are a member (and if not why not...) then a word with the legal helpline may be useful.

Sorry, but it is a fact. IR35 and the Agency Regulations have no connection of any kind and are not interdependent. It's in the same category as parking regulations and VAT on takeaway food.


Probably more effective if you write to PCG quoting chapter and verse and let them take it up with the agency and whatever regulatory body they are linked to. We won't stop this nonsense unless people complain to someone who has a big stick or knows a man who has one.

You miss the point spectacularly This all stems from the myth that HMRC has stated that Opt Out status is neutral with regard to IR35. They have stated nothing of the sort that I can find evidence of - anywhere. I have highlighted the above post which I consider that you and others need to stop portraying as fact, a point that you contradicted in a reply in this thread 3 post or so on from the one that I quoted. It is not fact, it is hearsay and interpretation, one that I suspect both the Revenue and BIS would deny asserting in discussions with the PCG or anyone; Gawd they won't even officially support the results of their OWN BETs! If they are so not inter dependant and there is no relationship whatsover, why does the PCG advice assert that opting out can be a minor pointer in relation to IR35?

I will take this up with the PCG.

[malvolio]

Then, with respect no one should quote it as fact.

Sorry, but it is a fact. IR35 and the Agency Regulations have no connection of any kind and are not interdependent. It's in the same category as parking regulations and VAT on takeaway food.

The dangerous thing is though, that agents can get away with this simply by FUDding HR depts who are usually as clueless as agents and avoiding the risks that the agent associates with not opting out. I can see this as a big issue looming for all of us - it's the second time in 2 months this has happened to me, once over an extension - I walked from that too. So, effectively there is abut £90k revenue gone, but I am not going to sign a contract that has me relinquishing rights to the extent that myco takes ALL financial risks and the agent takes none but still gets all the fees potentially.

Either PM me or search for who I have been asking about in the last week.

Probably more effective if you write to PCG quoting chapter and verse and let them take it up with the agency and whatever regulatory body they are linked to. We won't stop this nonsense unless people complain to someone who has a big stick or knows a man who has one.

[cojak]

Not even the BIS understand this

I have an email from the BIS which says that for business reasons, agencies can refuse to use contractors who refuse to opt-out. Sue Ellen has communications from them saying the exact opposite.

Take yer pick...

[tractor]

...

The polite and also blunt way to finish it is to write a nice letter to the client manager saying essentially "Sorry I didn't get the chance to work for your outstanding company as a contractor, maybe we can sort something out for a future role. Please note that I won't be coming through agency xxxx though as they do not understand the role of a contractor in the modern legislative environment and tried to get me to sign away all my rights against them."

Odds are that it'll do you no good but it might get a bit of a dialogue going about the agency/client relationship!

I fully suspect that the client knows nothing about it except the agent lies they have been told. If they are stupid enough to believe it when it is part of HRs role to be familiar with legislation then it was a lucky escape.

It is clear that there is becoming a need to educate clients en masse though.

[craig1]

The polite and also blunt way to finish it is to write a nice letter to the client manager saying essentially "Sorry I didn't get the chance to work for your outstanding company as a contractor, maybe we can sort something out for a future role. Please note that I won't be coming through agency xxxx though as they do not understand the role of a contractor in the modern legislative environment and tried to get me to sign away all my rights against them."

Odds are that it'll do you no good but it might get a bit of a dialogue going about the agency/client relationship!

[tractor]

..

Most if not all of it is in the Guide I quoted. Also I heard it originally from being in the same room as the people at PCG who were negotiating the opt out at the time, and subsequent discussions about the subject at various meetings over the years. I don't believe there is a written document of the whole intention; as I said earlier, the Regs are BIS's concern and IR35 is HMRC's: neither has to take any notice of the other. As you have now discovered, it's idiot agencies that have created the "urban myth" by being so utterly inept that they don't know the rules governing their own business.

Anyway, sounds like a lucky escape. Who are these morons anyway?

Then, with respect no one should quote it as fact.

The dangerous thing is though, that agents can get away with this simply by FUDding HR depts who are usually as clueless as agents and avoiding the risks that the agent associates with not opting out. I can see this as a big issue looming for all of us - it's the second time in 2 months this has happened to me, once over an extension - I walked from that too. So, effectively there is abut £90k revenue gone, but I am not going to sign a contract that has me relinquishing rights to the extent that myco takes ALL financial risks and the agent takes none but still gets all the fees potentially.

Either PM me or search for who I have been asking about in the last week.

[malvolio]

Unfortunately, it seems many contractors are becoming as bad as the agents for repeating this stuff from the opposite side of the fence. Which is why I don't want to quote any of it unless I've heard it from the horse's mouth.

Most if not all of it is in the Guide I quoted. Also I heard it originally from being in the same room as the people at PCG who were negotiating the opt out at the time, and subsequent discussions about the subject at various meetings over the years. I don't believe there is a written document of the whole intention; as I said earlier, the Regs are BIS's concern and IR35 is HMRC's: neither has to take any notice of the other. As you have now discovered, it's idiot agencies that have created the "urban myth" by being so utterly inept that they don't know the rules governing their own business.

Anyway, sounds like a lucky escape. Who are these morons anyway?

[tractor]

And the upshot is....

Following a couple days negotiation over contract terms, it becomes obvious that the moron MD at the agency is so dead against me not opting out and knowing (because I hit him over the head with it several times) that he cannot force or induce me to opt out, tells the client that if they engage myco, they will be responsible for holidays and other liabilities , they believe him and change the offer to 6mths fixed term PAYE.

Just LOL. I walked away from it.

Of course, I can prove none of it. Given that over the last couple of days, the guy has proven to be a lying hyena, I reckon I had a lucky escape.

Lucky I didn't cancel the other interviews really!