Reply to: A true B2B relationship should not touch IR35

[webberg]

There are posts elsewhere about the shift end clients and others have to make in terms of not asking for a CV for a person, but instead a set of services that can be provided by a business to a business.

The more nimble will make these changes soon whereas those who do not, will put themselves and others at risk.

I consider agencies will have a key role in this process.

I also fear that some agencies will allow their own imperatives to colour their actions with both contractor and end client.

[ComplianceLady]

I agree with the above but does it not put agencies into a difficult position?

An agency role to date has been to put PEOPLE into people shaped slots at the end client.

The agency role is not to find a set of SERVICES suitable for service shaped hole at the end client.

It may be that the end client has not yet made the mental shift required to admit a services contract into a space where formerly there was a contractor/oversight role. Some end clients may never get there.

Equally though, a PEOPLE agency moving into a SERVICE "seek and place" agency requires a number of changes, internally and externally, in order not only to do this, but importantly to be seen to be doing this.

If I were in HMRC, post 2020 I'd be selecting all those agencies that have survived the reform and asking for details of who/what they have placed where and why.

An agency that has failed to offer true, honest, genuine and actual SERVICES contracts will be on the first page of my list of ones to enquire further.

I very much get the point that agencies need to be educating individuals as to how to navigate the new landscape, but they also need to look at themselves.

Agencies will respond to client demand, the key is for them to create/influence the right demand through education.

Clients want to pay the price a limited co. charges for the skill set available but do not appreciate that comes with parameters.

In the past having the 'parameters' conversation with Clients was harder, in sectors without huge candidate shortages the Client could just find someone else and could certainly find an Agency who was happy to supply someone without bothering the Client with conversations about unfettered substitution and MOO.

Now it's the Client's problem, so we're able to legitimately say 'it's in your interests to work this way.'

There are Agencies that will struggle but it will depend on sector and experience. There are challenges. We're working on how experience should be presented (i.e. the CV), how the work should be presented and how we manage payments. We've got good processes for the assessments and recording working practices ready. I should say as well it helps if you supply in other regions as the true B2B services model is much better enshrined in other countries.

The biggest job at the moment is talking to as many clients as possible. Changing how we work is relatively straightforward, as long as we know it's not going to make the sell harder. One of the biggest challenges a compliant Agency has is a Client saying 'Agency B supply me people all the time and never ask about X or Y.'

[webberg]

Because every Client wants that. Because IR35 risk was the contractors, those that understand it ask for certain provisions to underline their outside status. It's not an Agency's role to educate those that don't understand it (though we do try). One positive about the reforms is that it forces clients to understand what a proper B2B engagement looks like.

I agree with the above but does it not put agencies into a difficult position?

An agency role to date has been to put PEOPLE into people shaped slots at the end client.

The agency role is not to find a set of SERVICES suitable for service shaped hole at the end client.

It may be that the end client has not yet made the mental shift required to admit a services contract into a space where formerly there was a contractor/oversight role. Some end clients may never get there.

Equally though, a PEOPLE agency moving into a SERVICE "seek and place" agency requires a number of changes, internally and externally, in order not only to do this, but importantly to be seen to be doing this.

If I were in HMRC, post 2020 I'd be selecting all those agencies that have survived the reform and asking for details of who/what they have placed where and why.

An agency that has failed to offer true, honest, genuine and actual SERVICES contracts will be on the first page of my list of ones to enquire further.

I very much get the point that agencies need to be educating individuals as to how to navigate the new landscape, but they also need to look at themselves.

[ComplianceLady]

ok sorry for the verbose post, I was just trying to convey the point fully which (although you claimed to not see it) is that the strict B2B relationship is very close to the standard engagement many of us experience. I know the craic with IR35 conditions and how to mitigate - that's rather my point too. Why does every agency I've ever encountered not do this and persist in allowing permitractors to exist? Why engage and contact people using terms like roles, job description, interview, etc? Are they are just thick? Like you say, this has all been around 20 years - why doesn't anyone get with the ruddy programme?

Because every Client wants that. Because IR35 risk was the contractors, those that understand it ask for certain provisions to underline their outside status. It's not an Agency's role to educate those that don't understand it (though we do try). One positive about the reforms is that it forces clients to understand what a proper B2B engagement looks like.

[webberg]

It's a very decent article and the pint about a business vs an individual is absolutely true.

However ....

It still comes down to a Tribunal starting with looking at what happens day to day, in the office, management mechanics and reporting.

Once they have that nailed, then they consider how you got there.

Yes, the sort of steps described in the article prior to getting the gig are helpful, but if they are window dressing that dissolves in the harsh light of real life, they will not add much to the equation.

There is a shift of mentality required by client and contractor, but it's one that has to happen EVERY DAY. Not just in the lead up to getting the position.

[malvolio]

Actually, i was saying exactly that at least ten years ago.

HTH...

[SimonMac]

Are you Dave or Pete:

IR35 is easily avoided, but it's time to get with the programme

[malvolio]

I put a piece on Linkedin earlier and one of the responses struck me as interesting.

The individual asked what is to stop an end client removing all their employees and re-engaging them as inside IR35 contractors?

The net cost to the end client remains much the same.

However the end client no longer has to provide employee benefits. The example he quoted was maternity leave.

My initial reaction was "the end client can't do that!"

On reflection I'm not entirely clear that this will not happen.

Probably be caught under unfair dismissal, should anyone have the nous to pursue the case.

But it already happens. All those Social Workers, care assistants, hotel chambermaids and delivery drivers aren't company directors because they wanted to be...

[JohntheBike]

I put a piece on Linkedin earlier and one of the responses struck me as interesting.

The individual asked what is to stop an end client removing all their employees and re-engaging them as inside IR35 contractors?

The net cost to the end client remains much the same.

However the end client no longer has to provide employee benefits. The example he quoted was maternity leave.

My initial reaction was "the end client can't do that!"

On reflection I'm not entirely clear that this will not happen.

Organisations have a habit of requiring individuals to re-apply for their own jobs, in an attempt to re-structure their business. My daughter is undergoing this stressful process currently. It isn't beyond the bounds of imagination that some ill informed senior person of an organisation might hit on this idea and use it so.

[Lance]

Being pernickety, and also not really pertinent to OP's topic, ISTR it was dubbed IR35 because IR35 was the name of the section in the notes of the budget where it was first introduced. IR because it related to the Inland Revenue (HMRC hadn't consumed them at that point) and 35 because it happened to be the 35th budget note in that section. Officially it was known as the Intermediaries Legislation but we contractors needed a simple name for it.

God I'm old....seen too much of this ****

thanks. Although Webberg beat you to it.

[Snooky]

The I is for intermediary. The intermediary is your LTD. not the agency.
Although your point is fair.

Being pernickety, and also not really pertinent to OP's topic, ISTR it was dubbed IR35 because IR35 was the name of the section in the notes of the budget where it was first introduced. IR because it related to the Inland Revenue (HMRC hadn't consumed them at that point) and 35 because it happened to be the 35th budget note in that section. Officially it was known as the Intermediaries Legislation but we contractors needed a simple name for it.

God I'm old....seen too much of this ****

[WordIsBond]

Unfortunately most umbrellas continue to load their quotes with unrealistic levels of expenses and salary sacrifice just to squeeze a little more into the take home.

This is close to deception in my opinion.

Since we were talking about choice of words, I'd call that a charitable choice of words on your part.

In the context here though whilst the language needs to sharpen up and be more precise and consistent, the actions underneath it are crucial.

True. And putting the words first can be putting the cart before the horse -- but if you are running into barriers, in an imperfect world, maybe the horse can help push the cart along a bit even if you can't get him past the cart to the front yet. Which was my point that getting the words right can help change how clients think about the engagement, which helps get actions where you want them.

Either there is a true services delivery where the end client is really and actually agnostic as to who does it:

Or there is a personal component to the work being done which is required, desired or otherwise unavoidable.

In my view, the first is so far outside IR35 that an assessment is not needed.

The second is almost always inside IR35 (at least in the eyes of HMRC who will start an enquiry with that view and make the facts fit it).

You are right about substitution, but it's hardly the only factor. Many contracts are outside because of the lack of Substitution, Direction, Control. Even CEST recognises that. Fixed price contracts are virtually always outside even if there's no substitution. A basic level of Mutuality of Obligation is also necessary to be inside, though HMRC seems to choose to ignore this factor.

[webberg]

I put a piece on Linkedin earlier and one of the responses struck me as interesting.

The individual asked what is to stop an end client removing all their employees and re-engaging them as inside IR35 contractors?

The net cost to the end client remains much the same.

However the end client no longer has to provide employee benefits. The example he quoted was maternity leave.

My initial reaction was "the end client can't do that!"

On reflection I'm not entirely clear that this will not happen.

[webberg]

As has been said above and as has been said in other places, the ways of the old world of contracting are in their death throes and if - and it's a big if - end clients want to continue engaging specific individual's then they have to accept that this comes with IR35 consequences.

Those consequences are no different post April 2020 than they are now but the timing of them has accelerated such that a decision they make has immediate effect. Previously even if a contractor was within IR35, they may not have known for years and were insulated from the cost. Post April 20 that all changes.

I read and here at least 10 times a day that contracts are the ultimate defence: there are or are not precedents for particular situations; an agency posing as a services delivery outfit is not a supplier of personal services: I can't be inside IR35 without having employment rights.

In my opinion, all of the above is wrong (or more precisely will become incorrect once the first payment post April 20 is made).

Contractors and the intermediaries that operate through need to find new ways to engage. There are some good ideas above. Ultimately however, whatever the contract says, the facts have to be put first and these will be the determining factor. Clever contract wording that is not adhered to in practice is a route to disaster.

[JohntheBike]

Just a reminder - we are some way away from 2001...

If the agency are engaged to bring in service providers, they can't possibly have a contradictory contract with the end client.

For instance, if your contract and the agency/client one do not agree, that is illegal under contract law, plus you cannot be bound by a contract of which you have no knowledge.

Apart from anything else they will be dealing with Procurement, who understand things properly, and not HR, who invariably don't.

I hear what you are saying, but what if the intermediary is a software house and the contract between the software house and the end client is to provide IT services and doesn't mention individuals as such? Past experiences would indicate that this structure might be in place in relation to my contract. Is such a structure possible, or are clients obliged by contract law to have contracts in such circumstances which relate to the services of individuals?

edit
MyCo is contracted to the software house as a supplier and it receives PO's.

However, I do enter time in the Software House's time entry system, but invoice trough MyCo. The contract has been viewed by Abbey Tax and has been judged as outside of IR35. I guess there are many permutations of how individual contractors work, which will clearly have a bearing on their IR35 status.