Reply to: End client or agency

[SoleTrader]

They’re about micro sized currently (no where near the turnover/balance sheet totals required). They could have more than 50 staff in a year or so but the rules require two or more of the three to be met.

Just extended for another 3 months today.

[WordIsBond]

Which, rather unfortunately, means the OP is going to have to be a lot more alert that most and be more aware of the whole situation to manage this properly as he doesn't have the benefit of a set timeline that the whole contracting world is talking about.

Depends. Lots of small business will never be large and never be close to breaching that threshold. Yes, if they are close to the threshold, no if they aren't.

It does mean he has to learn about the difference and be alert to if they are close. But if they aren't close he can probably forget about it, unless he's a long termer.

[northernladuk]

Yes, a contractor operating outside with a borderline client needs to have a really, really solid case -- solid enough to discourage the client from making an inside determination and solid enough to have a chance to win on historical investigations even if he gets an unfair determination. And he may also want to be putting money aside just in case....

On the other hand, he'll know if it is borderline, and if he's contracting with a small company, he'll probably get a heads-up about any coming inside determination.

It's only for a year or two until small companies have to make the determination, anyway.

Which, rather unfortunately, means the OP is going to have to be a lot more alert that most and be more aware of the whole situation to manage this properly as he doesn't have the benefit of a set timeline that the whole contracting world is talking about.

[WordIsBond]

He's in the same situation that every other contractor is in with April approaching but instead of a deadline like the rest of us he's got a floating point in time he can't really control.

Yes, a contractor operating outside with a borderline client needs to have a really, really solid case -- solid enough to discourage the client from making an inside determination and solid enough to have a chance to win on historical investigations even if he gets an unfair determination. And he may also want to be putting money aside just in case....

On the other hand, he'll know if it is borderline, and if he's contracting with a small company, he'll probably get a heads-up about any coming inside determination.

It's only for a year or two until small companies have to make the determination, anyway.

[simes]

Oddly enough, out of all this, an interesting question is raised.

So you just carry on as normal for the moment (maybe I should have said that in my first post and we wouldn't still be here but there you go). What happens when they break one of the criteria by even one person?

It then becomes the clients responsibility to make a determination and if they don't they'll be breaking the law. Not the contractors problem.. but... as I suspect in many small setups, they could just be using contractors to supplement the workforce rather than hire perms so the role could very easily be determined inside.
If this happens the OP does have a problem. He's been caught thinking he's outside, role is now inside, HMRC is aware and he's got the possibility of retrospective investigations.

He's in the same situation that every other contractor is in with April approaching but instead of a deadline like the rest of us he's got a floating point in time he can't really control.

Quite.

Maybe you use a temp. Does this count? Maybe you use a contractor. Does this count? If both the former, is there a time period, a period of grace, before that one person does irrevocably qualify to tip the scales and places previously a Small Business into a Medium Business category?

Is there a period before Small Business has to communicate its brand spanking new status to the world for assessment?

Would a contractor look at a small business whose size is three people below Medium size, and actually not bother to apply if the business is Growing?

Will a small business look at the above and think, 'Eff it, let's us too just deem all contractors Inside and not bother with being tripped up by the non-understandable by those who should have never authored this in the first place.'

I am very disappointed by our HMRC right now...

[Paralytic]

Yep, makes sense. From what I've read I wasn't sure who was supposed to determine the status, a lot of things said the "client" but also the "fee payer" (agency). Yep the end client definitely meets the small business criteria as in Companies Act 2006. I'm wary this might change in due course!

Contract review before I started 6 months ago. Review says outside. Sorry wasn't very clear

Read the link above. Determination is with the client except for small business. If inside, taxes are deducted by the fee payer,

But since your client is s small business they are exempt, so the determination continues to remain with you. Effectively, nothing changes for you.

You're at the same risk as you are today, unless HMRC start targeting the smaller number of outside IR35 roles that will be in existence post April 2020.

[northernladuk]

Yep, makes sense. From what I've read I wasn't sure who was supposed to determine the status, a lot of things said the "client" but also the "fee payer" (agency). Yep the end client definitely meets the small business criteria as in Companies Act 2006. I'm wary this might change in due course!

Oddly enough, out of all this, an interesting question is raised.

So you just carry on as normal for the moment (maybe I should have said that in my first post and we wouldn't still be here but there you go). What happens when they break one of the criteria by even one person?

It then becomes the clients responsibility to make a determination and if they don't they'll be breaking the law. Not the contractors problem.. but... as I suspect in many small setups, they could just be using contractors to supplement the workforce rather than hire perms so the role could very easily be determined inside.
If this happens the OP does have a problem. He's been caught thinking he's outside, role is now inside, HMRC is aware and he's got the possibility of retrospective investigations.

He's in the same situation that every other contractor is in with April approaching but instead of a deadline like the rest of us he's got a floating point in time he can't really control.

[SoleTrader]

You need to be clearer with your question. Your original post spoke of determination by QDOS and mix that with determination by the client and say the client is small. Then you talk of being deemed outside on this post. By whom?

If the client is by the legal definition, small, you continue as you are, making a determination.

If you have had a review done by QDOS, and they say outside, that helps you should you ever be investigated. But, HMRC may disagree. Is this a contract or a working practices review?

If the review by QDOS says inside and you continue you work outside, and HMRC come to review, and they find out the QDOS review said inside, you're in a little bit of trouble...

Have you read this?

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

Contract review before I started 6 months ago. Review says outside. Sorry wasn't very clear

[SoleTrader]

He's on the bench. Get him to sub in for you for a couple days and you'll get a break and have a good IR35 argument, and he won't have time to post here as much. Win-win.

I agree with you this time, FWIW. OP obviously isn't an idiot, he's been getting reviews. The legislation still hasn't been passed and who knows what the arrogant fools in Parliament are going to do between now and April. Someone who is thinking about April now is maybe a little behind the game compared to some others but chances are he's still ahead of a lot of people, and the fact that he's trying to figure out what comes in April doesn't indicate he's remiss.

OP: If the end client is a small business then the determination and the liability remains with you, as per the legislation as currently proposed. This, of course, is subject to change. Most people think the small business exemption is not likely to be long with us, and that within a couple years all clients will have this responsibility / liability. For now, though, it seems likely that 'as you were' will be the rule of the day, as long as you are absolutely certain that they are a small company.

One other question, though. Your handle is SoleTrader. Is that your actual status, or do you work through a Ltd Co? Because sole traders don't have to worry about IR35 anyway.

Yep, makes sense. From what I've read I wasn't sure who was supposed to determine the status, a lot of things said the "client" but also the "fee payer" (agency). Yep the end client definitely meets the small business criteria as in Companies Act 2006. I'm wary this might change in due course!

Yep, working through a Ltd Co since April 2017.

Many thanks for your help

[Paralytic]

Next one... so as I am deemed outside IR35, come April, I won’t have to go down the PAYE route etc, and continue as I am now, or will I?

You need to be clearer with your questions and wording. Your original post spoke of determination by QDOS and mixed that with determination by the client and say the client is small. Then you talk of being deemed outside on this post. By whom?

If the client is by the legal definition, small, you continue as you are, making a determination.

If you have had a review done by QDOS, and they say outside, that helps you should you ever be investigated. But, HMRC may disagree. Is this a contract or a working practices review?

If the review by QDOS says inside and you continue you work outside, and HMRC come to review, and they find out the QDOS review said inside, you're in a little bit of trouble...

Have you read this?

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

[Paralytic]

And my point is made perfectly...

I find a combination of answering the question, while also belittling the person for having to ask, is a happy medium.

[WordIsBond]

Sorry...but I feel I have to say this.

He's on the bench. Get him to sub in for you for a couple days and you'll get a break and have a good IR35 argument, and he won't have time to post here as much. Win-win.

I agree with you this time, FWIW. OP obviously isn't an idiot, he's been getting reviews. The legislation still hasn't been passed and who knows what the arrogant fools in Parliament are going to do between now and April. Someone who is thinking about April now is maybe a little behind the game compared to some others but chances are he's still ahead of a lot of people, and the fact that he's trying to figure out what comes in April doesn't indicate he's remiss.

OP: If the end client is a small business then the determination and the liability remains with you, as per the legislation as currently proposed. This, of course, is subject to change. Most people think the small business exemption is not likely to be long with us, and that within a couple years all clients will have this responsibility / liability. For now, though, it seems likely that 'as you were' will be the rule of the day, as long as you are absolutely certain that they are a small company.

One other question, though. Your handle is SoleTrader. Is that your actual status, or do you work through a Ltd Co? Because sole traders don't have to worry about IR35 anyway.

[northernladuk]

And my point is made perfectly...

[SoleTrader]

No problem with northernlad’s response

Next one... so as I am deemed outside IR35, come April, I won’t have to go down the PAYE route etc, and continue as I am now, or will I?

[northernladuk]

Fair comment and very nicely put by the way. I might have been able to phrase it slightly better but the message would still be similar.

People should not be asking questions like this at this stage and I do think pointing out his failing in this area, although harsh, is constructive. He reads ladymuck answer and just carrying on not having a clue.

Go on any decent topical forum and ask a pretty silly question and you'll get told. Try asking something daft on mumsnet...