Reply to: IR35 and moving to fixed deliverable

[CheeseSlice]

What size is the UK operation. I thought the mothership would defer to legal on these shores.

Good point. The OP has a hunch that HQ is dealing with IR35 but that may be incorrect if its seen as a local issue. We don't know anything about the supply chain here either. Invoices paid from UK or elsewhere? Agency?

[Paralytic]

yes, massive and global, which is why I think they are waiting for the head office (not UK based) to make a decision

I'm late to this, but the above is a red flag for me. I once worked a a massive global company headquartered in the US and they had scant knowledge, nor care, about UK tax laws in any decisions they made and the potential impact on staff.

What size is the UK operation. I thought the mothership would defer to legal on these shores.

[northernladuk]

At the risk of being shot down for asking, if the client does do an 'inside' determination at any time from now until April, doesn't he have to inform his IR35 insurers, who then may decide, that makes his case too difficult to defend in the event of a HMRC investigation ?

You should be striaght on the phone as its a change in circumstance just like any insurance.

[jk3838]

Client has nothing to do with retrospective investigations. It's up to you to determine your status so its you v hmrc. Client may be asked for evidence.

At the risk of being shot down for asking, if the client does do an 'inside' determination at any time from now until April, doesn't he have to inform his IR35 insurers, who then may decide, that makes his case too difficult to defend in the event of a HMRC investigation ?

[Hobosapien]

The project is just me, nobody else involved except for a permi manager I have status update reports with.

What is the current forecast end date of the project? Way beyond next April?

Is there scope to reduce that so it finishes before next April as another option to present to the client if those you deal with have their hands tied into deeming you inside via blanket determination?

If the nature of the project allows a shorter timescale to completion by working longer hours* or descoping some of the 'nice to haves' into a separate phase it allows you to get the job done, leave the client on good terms, avoid issues with contract crossing from outside to inside, with a further phase potentially available if client realise blanket determinations are going to cause them too much pain so take a more considered approach of blanketing the obvious BAU contractors but individually determining cases like yours.

* Ensure the longer hours are catered for in the contract terms if on a day rate so you get rewarded appropriately. e.g. agree with client to charge more than 5 or even 7 days per week via the timesheet to cover those extra hours.

[WordIsBond]

I guess what I am asking is, is there a way I can finish this current project in as much a risk-free way as possible, and if that answer is No (which after this great discussion is looking like it will be the case) then the only answer is to walk.

No way I'd do that without trying. Action plan:

1. Right now, ask if they intend to make an IR35 determination before 31/12.
A. If so, ask them to consult with you beforehand because you will have to walk away if they do an inside determination and you have some ideas to deal with it you'd like to discuss with them. That idea consists of moving to fixed cost in exchange for the outside determination. If they won't hold off until 31/12, and won't work with you, walk now.
B. If they aren't making a determination before 31/12, hold fire until renewal time.

2. At renewal time, tell them you need either an outside determination, move to fixed cost and the obvious outside determination that comes with it, or a two month renewal -- you can't accept an inside determination.
A. If they give you the outside determination, everything is cool.
B. If you move to fixed cost and outside, everything is cool.
C. Otherwise, you could work a couple months to do a handover, as long as they don't make an inside determination during that time. They don't have to make a determination since the contract ends before April.

There's still a slim chance this whole stupidity dies in the next budget.

[northernladuk]

I may obviously be wrong, but I feel confident enough to say that the the only way i'm going to be determined as inside is if they take a blanket approach, and if that does happen I also feel confident enough to say that the determination is wrong.

I'm honestly not trying to play games, not trying to avoid getting "noticed" or anything like that as I honestly don't think any of that applies.

I guess what I am asking is, is there a way I can finish this current project in as much a risk-free way as possible, and if that answer is No (which after this great discussion is looking like it will be the case) then the only answer is to walk.

Looking back, what I should have done is look at way of making this a fixed bill piece of work from the get-go, but i'll just call that a learning experience

Yeah I get what you are saying but a massive consideration for you at the moment is the risk of an investigation. You can't change what you've already done so there isn't much you can do historically. It is what it is. Will you win a case if you are investigated? Who knows? Probably if you are as confident as you say but, IMO, that is not your priority now. It's to plan what to do next with minimal risk.

Worst case is to plod on inside. HMRC could know what you are now as per the GSK letters and they will get a list of determinations at some point to comparing the two roles. Contractor says outside, client says inside all along. HMRC will be licking their lips. You might win, and I'm absolutely sure cases will be brought quickly and it's going to be a mix of wins and loses. Even HMRC can't continue to get it wrong forever. Being investigated and winning will still be a horrible place to be.

By taking the right actions before it happens you don't appear on these lists and your chance of investigation is greatly reduced. Risk mitigated quite considerably. Problem is we don't know exactly how this works or how HMRC will be investigated. Being outside and HMRC having no determination to compare against us your best bet. They'll have 1000's to look at.

So, I think it very strongly applies. I think Cojaks sticky eludes to exactly this and is going to need a lot of hard thinking and proactive decision making to get it right.

I don't think you need to see it as a lesson that you didn't go fixed price. The opportunity for us to do this is next to zero and, although I don't have enough information, I would have thought it would be very difficult for you to have done so. If they wanted a contractor on a chair then that's all they'd accept, particularly in a large org so you probably played it the only way you could.

If you can trun it in to a fixed price piece of work then happy days and well done. Virtually no one will be able to do this. Do it before a determination and you've mitigated the risk as far as you can next to leaving.

If you have a foot in the door with fixed price work when the other guys start leaving you could hover up a lot of work!!

[lancerkris]

Depends. Can you really get to that before Jan Feb next year? at which point you could appear on HMRCs list? You sure you aren't on it already (like the GSK guys)?

If you can drop off the list of determinations as soon as possible they yes you might not get noticed and risk is reduced but if the client does deem the role inside when you were doing it outside then there is still a case for HMRC to look at. All you are asking is, can I avoid being on an easy hit list. I'm not sure but possibly yes.

I may obviously be wrong, but I feel confident enough to say that the the only way i'm going to be determined as inside is if they take a blanket approach, and if that does happen I also feel confident enough to say that the determination is wrong.

I'm honestly not trying to play games, not trying to avoid getting "noticed" or anything like that as I honestly don't think any of that applies.

I guess what I am asking is, is there a way I can finish this current project in as much a risk-free way as possible, and if that answer is No (which after this great discussion is looking like it will be the case) then the only answer is to walk.

Looking back, what I should have done is look at way of making this a fixed bill piece of work from the get-go, but i'll just call that a learning experience

[northernladuk]

yeah i'm down with that, but will that make the previous time spent working on the project as a ltd co contractor who has been deemed inside IR35 by the client a red flag?

Depends. Can you really get to that before Jan Feb next year? at which point you could appear on HMRCs list? You sure you aren't on it already (like the GSK guys)?

If you can drop off the list of determinations as soon as possible they yes you might not get noticed and risk is reduced but if the client does deem the role inside when you were doing it outside then there is still a case for HMRC to look at. All you are asking is, can I avoid being on an easy hit list. I'm not sure but possibly yes.

[lancerkris]

That was cojak's prediction, don't blame me

Re the OP, fixed deliverable for fixed price should lead to a crystal clear outside IR35 IMHO. Obviously the tricky bit is getting nailed down exactly what is/isn't included, minimising risk of scope creep or fall out further down the line if your/their expectations turn out to be different.

yeah i'm down with that, but will that make the previous time spent working on the project as a ltd co contractor who has been deemed inside IR35 by the client a red flag?

[lancerkris]

Would you not have to completely change your engagement and have to get on their PSL and other shenanigans before you can switch to fixed price? I would have thought it would be much harder to switch in an environment like that?

That said, if you can get in that that then you have an opportunity to expand exponentially in to a consultancy.

This is where it's new territory for me. Yes and if it's fixed deadline, I will most definitely have to hire help.

I haven't had the conversation yet, and i'm not sure If i should do it now or wait until they know what they are doing about IR35.

[northernladuk]

yes, massive and global, which is why I think they are waiting for the head office (not UK based) to make a decision

Would you not have to completely change your engagement and have to get on their PSL and other shenanigans before you can switch to fixed price? I would have thought it would be much harder to switch in an environment like that?

That said, if you can get in that that then you have an opportunity to expand exponentially in to a consultancy.

[lancerkris]

Also - how big is your client?

More than 50 employees?

yes, massive and global, which is why I think they are waiting for the head office (not UK based) to make a decision

[northernladuk]

That was cojak's prediction, don't blame me

Re the OP, fixed deliverable for fixed price should lead to a crystal clear outside IR35 IMHO. Obviously the tricky bit is getting nailed down exactly what is/isn't included, minimising risk of scope creep or fall out further down the line if your/their expectations turn out to be different.

Oops sorry.

It will be clear but only for the new role going forward. Won't help defend the old one.

[Maslins]

I think it was Maslin that predicts a return to something normality in 18 months which would be a bit longer than the PS but sounds about right.

That was cojak's prediction, don't blame me

Re the OP, fixed deliverable for fixed price should lead to a crystal clear outside IR35 IMHO. Obviously the tricky bit is getting nailed down exactly what is/isn't included, minimising risk of scope creep or fall out further down the line if your/their expectations turn out to be different.