Reply to: Convince Client NOT to use CEST

[JohntheBike]

You are probably right. My case is, in a way, a warning call to other contractors, that we need to stand up and fight IR35.

On the other hand, I am not giving up on this; I didn't understand it but neither did my client. They thought they "controlled" what i do because they provide me with requirements. The project manager thought I was "controlled" because, in her words, "I never decided on the technology stack. I made suggestions to the IT manager who had final approval." That never happened. And on location and time they assumed I was "controlled" because I came into the office during the day, and work (roughly) 7 hours each day, despite me explaining that I work my own hours, don't always work 7 hours if a task dictates differently, and sometimes work in the evening remotely when I have a task I need to finish.

They appear to now be admitting it was an incorrect judgement.

I am not giving up. I am hoping with the help of the IPSE, to claim back the tax from HMRC since April 2017, as my contract never changed, my working practices never changed, but my clients interpretation was wrong; I just wanted to get on with the project (at the time), and have been trying to get my message to the right people for almost 2 years.

Happy days. Perhaps if more people challenge HMRC in this, it will cause more headache than it is worth.

"help of the IPSE"

good luck!

"Perhaps if more people challenge HMRC in this, it will cause more headache than it is worth."

given HMRC's flat refusal to accept facts which counter their position at every turn, I wouldn't bank on it.

It's like this, many clients and contractors will roll over and accept the regulations. I know of two who did so, right from the outset, well before these new rules were published. HMRC will walk away from anyone who has a strong case to challenge them, in order to avoid having case law being set against their position. So clearly there would be a nett increase in taxation.

Don't forget, it's a two fold approach, it's political and economic, "we can't have these overpaid contractors avoiding tax", despite the fact that it's the clients who are also avoiding tax by not having to pay the employer's NIC.

There's also the situation where representatives of the big software houses are lobbying HMG to effectively freeze out independent contractors. I can't remember his name, but one prominent Labour MP who supported IR35 when Labour were in power (was it Timms the one who was stabbed by a constituent?), had strong links with one large software house.

[IAmContractor]

"I accepted IR35 because I actually didn't know much about it"

without appearing to be critical, I guess this might have been the case for many IT contractors, which may be the reason why HMRC has been able to gain so much traction for their campaign against IT contractors, and despite what many claim, we were always the target for the legislation, although there has been some collateral damage e.g. BBC presenters.

You are probably right. My case is, in a way, a warning call to other contractors, that we need to stand up and fight IR35.

On the other hand, I am not giving up on this; I didn't understand it but neither did my client. They thought they "controlled" what i do because they provide me with requirements. The project manager thought I was "controlled" because, in her words, "I never decided on the technology stack. I made suggestions to the IT manager who had final approval." That never happened. And on location and time they assumed I was "controlled" because I came into the office during the day, and work (roughly) 7 hours each day, despite me explaining that I work my own hours, don't always work 7 hours if a task dictates differently, and sometimes work in the evening remotely when I have a task I need to finish.

They appear to now be admitting it was an incorrect judgement.

I am not giving up. I am hoping with the help of the IPSE, to claim back the tax from HMRC since April 2017, as my contract never changed, my working practices never changed, but my clients interpretation was wrong; I just wanted to get on with the project (at the time), and have been trying to get my message to the right people for almost 2 years.

Happy days. Perhaps if more people challenge HMRC in this, it will cause more headache than it is worth.

[JohntheBike]

IR35

Not true. I certainly didn't want to abandon the project as I was (and still am) the primary (currently only) consultant. I accepted IR35 because I actually didn't know much about it. I had no idea how intrusive and destructive it was, because I had never come across it in all my years contracting. I thought the contract would be over in 6 months so it would be short lived. Then i got extended and thought it would just be a little longer.

Then I got my taxes done and got the true effects thrown in my face. Unfortunately, through fault of my own, my taxes where only recently completed.

But my god! if you could be a fly on the wall in an office somewhere today! - The day I told them how I see my working practices, and they disagreed with me. And I made it clear that I was only willing to continue on the project under terms which they accepted me as an independent business. Otherwise, I have 2 days remaining on the project.

I even offered to take less money; They actually offered more money. I declined, because I am not willing to continue especially knowing they consider me their employee. I have tried to explain, that moving forward under the correct terms of the contract, is in the best interest of the project and will see it move along quicker and more efficiently.

Why are company management so misguided. They have been locked in a room all afternoon.

You couldn't make this stuff up.

"I accepted IR35 because I actually didn't know much about it"

without appearing to be critical, I guess this might have been the case for many IT contractors, which may be the reason why HMRC has been able to gain so much traction for their campaign against IT contractors, and despite what many claim, we were always the target for the legislation, although there has been some collateral damage e.g. BBC presenters.

[IAmContractor]

Well. Good news!

The client is relenting; they misinterpreted the IR35 question regarding control.

They will inform the agency that my contract should actually be outside IR35.

Now the fun begins; to claim back 2 years of unlawfully deducted tax. I expect I'm not the only one.

Sent from my SM-N950F using Contractor UK Forum mobile app

[ShandyDrinker]

Nobody knows how CEST is weighted. HMRC refuse to disclose that.

Is this true? The source code is freely available online and spreadsheet containing the scoring matrix is available there.

[IAmContractor]

Some years from now when HMRC comes round to it and apply inside IR35 taxation to the full length of your contract based on documented work practices, keep calm and consider it payment for a taxation/being a contractor how-to course .
Ref. Loan charge tax.

P.S. keep all your correspondence re: this after you leave.

I know I shouldn't, but I cant seem to help myself.

I am willing to bet you have been a contractor for all of 5 minutes.

For starters, if HMRC attack my contract, I will gladly defend it as being outside for the full length of the contract. In fact the client will either come back agreeing they misunderstood our relationship, and advise the agency I am outside, or accept I am leaving. Either way, if inside I will put a claim in for holiday pay and get them to admit posthumously that I was not an employee, or I'll get some nice holiday pay. If outside, I will consider if it is possible to claim I was never inside and put in a claim for unlawful deduction of taxes over the past 2 years. I will cross that bridge when i get to it.

My contract is very clear in putting me outside. My working practices are very clear in putting me outside. The client is misinterpreting the expectations, however now that they have made their understanding clear, I can either accept I am their employee or not. I choose not. I never was.

Thanks for your input. You can go back to your lego.

[pscont]

You couldn't make this stuff up.

Some years from now when HMRC comes round to it and apply inside IR35 taxation to the full length of your contract based on documented work practices, keep calm and consider it payment for a taxation/being a contractor how-to course .
Ref. Loan charge tax.

P.S. keep all your correspondence re: this after you leave.

[IAmContractor]

There was absolutely no point accepting being inside IR35 from the beginning. Should have screwed them long time ago.
Now it is more like the very infamous band 'past redemption' and their only album 'useless amputation'

Not true. I certainly didn't want to abandon the project as I was (and still am) the primary (currently only) consultant. I accepted IR35 because I actually didn't know much about it. I had no idea how intrusive and destructive it was, because I had never come across it in all my years contracting. I thought the contract would be over in 6 months so it would be short lived. Then i got extended and thought it would just be a little longer.

Then I got my taxes done and got the true effects thrown in my face. Unfortunately, through fault of my own, my taxes where only recently completed.

But my god! if you could be a fly on the wall in an office somewhere today! - The day I told them how I see my working practices, and they disagreed with me. And I made it clear that I was only willing to continue on the project under terms which they accepted me as an independent business. Otherwise, I have 2 days remaining on the project.

I even offered to take less money; They actually offered more money. I declined, because I am not willing to continue especially knowing they consider me their employee. I have tried to explain, that moving forward under the correct terms of the contract, is in the best interest of the project and will see it move along quicker and more efficiently.

Why are company management so misguided. They have been locked in a room all afternoon.

You couldn't make this stuff up.

[northernladuk]

Thanks for the thanks and you're welcome.

199

[pscont]

Thanks for that.

Thanks for the thanks and you're welcome.

[northernladuk]

There was absolutely no point accepting being inside IR35 from the beginning. Should have screwed them long time ago.
Now it is more like the very infamous band 'past redemption' and their only album 'useless amputation'

Thanks for that.

[pscont]

I am in a contract working for a public sector client.

I have been contracting for 16 years and on this project for 4.

When the Public Sector Changes came about my client determined the contract was inside IR35. At the time, I put my rate up and accepted it; thinking it would only be short term anyway. However the project has had some changes and been extended several times.

There was absolutely no point accepting being inside IR35 from the beginning. Should have screwed them long time ago.
Now it is more like the very infamous band 'past redemption' and their only album 'useless amputation'

[IAmContractor]

If you are an IPSE member get in touch with them. They have just settled a case very similar to this and are looking for others to take on.

I have been in the past but am not at present. However as I am getting out of IR35 one way or the other, I will be rejoining. Anyone have a discount code?

[DaveB]

Lots of great answers, and deffo something to think about.

The comment that their answer to the substitution clause is wrong is an interesting one. It is so correct. The problem here is clients don't understand, and my problem is the people making these decisions are unapproachable by me.

Final answer; I've told them my take on this. I've given them advice on each answer withing CEST that truly reflects the contract and the way we work, and while CEST is biased, an absolute lack of control without substitution still returns an outside result. Biased because in the plumber example, I think I gave, he couldn't choose where he works but is still not an employee.

Bottom line, I've given them an ultimatum; declare the contract out as it should be or I'm leaving the project in 4 days time. They will have no choice but to accept a "substitute" then.

I did find a document on the company servers that, by the person in HR who told me unequivocally that I am inside, that casually "employees" are entitled to holiday pay. In theory could I put in a claim for holiday pay? How would I need to do that? And if they didn't agree could I then take them to a tribunal with a view to prove I'm not an employee? I've seen loads of info on this but nothing conclusive.

Cheers

Sent from my SM-N950F using Contractor UK Forum mobile app

If you are an IPSE member get in touch with them. They have just settled a case very similar to this and are looking for others to take on.

[IAmContractor]

Lots of great answers, and deffo something to think about.

The comment that their answer to the substitution clause is wrong is an interesting one. It is so correct. The problem here is clients don't understand, and my problem is the people making these decisions are unapproachable by me.

Final answer; I've told them my take on this. I've given them advice on each answer withing CEST that truly reflects the contract and the way we work, and while CEST is biased, an absolute lack of control without substitution still returns an outside result. Biased because in the plumber example, I think I gave, he couldn't choose where he works but is still not an employee.

Bottom line, I've given them an ultimatum; declare the contract out as it should be or I'm leaving the project in 4 days time. They will have no choice but to accept a "substitute" then.

I did find a document on the company servers that, by the person in HR who told me unequivocally that I am inside, that casually "employees" are entitled to holiday pay. In theory could I put in a claim for holiday pay? How would I need to do that? And if they didn't agree could I then take them to a tribunal with a view to prove I'm not an employee? I've seen loads of info on this but nothing conclusive.

Cheers

Sent from my SM-N950F using Contractor UK Forum mobile app