Reply to: Clarification re IR35 Status. It's not good

[krytonsheep]

The financial risk moves to the agency if the client discharges their responsibilities i.e. makes & communicates a determination with reasonable care.

That would be a non-compliant agency ( if they decide to go against the determination).

I believe the rules being brought in on April 2020 address non-compliance of an agency in the supply chain by having a transfer of liability. Basically means if you're an end client you've got to do due diligence to ensure everyone in the supply chain is following the determination, otherwise the end client can end up being liable ( if HMRC fail to collect what's owed to them from the agency).

[ComplianceLady]

The risk STAYS WITH THE END CLIENT....

The financial risk moves to the agency if the client discharges their responsibilities i.e. makes & communicates a determination with reasonable care.

[eek]

(my bolding)

Did they provide details on how that would work? The end client is the one making the determination and the one at risk if they haven't taken "reasonable care" in doing so. They can't just push that responsibility to a third party - they also own the risk.

Don't let facts get in the way of the agency's successful sales pitch.

[Paralytic]

Ok - another interesting development.

Still no clearer on IR35 status & contract has been extended until Feb but it seems that the client will be making the determinations & if you're inside IR35 it's FTC but if you're outside the risk is pushed onto a preferred agency. That agency is not the agency through which I am currently contracted & guess what? In my Ts and Cs it clearly states that I can't work for the same client through a different agency within 6 months of my contract ending.

(my bolding)

Did they provide details on how that would work? The end client is the one making the determination and the one at risk if they haven't taken "reasonable care" in doing so. They can't just push that responsibility to a third party - they also own the risk.

[northernladuk]

Ok - another interesting development.

Still no clearer on IR35 status & contract has been extended until Feb but it seems that the client will be making the determinations & if you're inside IR35 it's FTC but if you're outside the risk is pushed onto a preferred agency. That agency is not the agency through which I am currently contracted & guess what? In my Ts and Cs it clearly states that I can't work for the same client through a different agency within 6 months of my contract ending.

This whole thing is a complete shambles.

The handcuff only works if the agency can demonstrate a loss by you moving. If the client is terminating the engagement with the agency they can't make any more money so the handcuff won't stand. It's not a shambles if you understand what is happening.

[Martin Bank Holiday]

Ok - another interesting development.

Still no clearer on IR35 status & contract has been extended until Feb but it seems that the client will be making the determinations & if you're inside IR35 it's FTC but if you're outside the risk is pushed onto a preferred agency. That agency is not the agency through which I am currently contracted & guess what? In my Ts and Cs it clearly states that I can't work for the same client through a different agency within 6 months of my contract ending.

This whole thing is a complete shambles.

[JohntheBike]

QDOS are doing an excellent job of talking to clients who actually engage them. I met with a friend today who's client are working with QDOS to assess each role and where found inside IR35, to see how they can engage with contractors to ensure the role is outside IR35.

My client is also engaging with them, so hopefully correct assessments will be made.

[Martin Bank Holiday]

Well, I'm more confused than I was when I first posted this. Cheers lads

[craigy1874]

Really hate when people say 'PS' as if it couldn't mean public sector or private sector

[LetterBox]

What you have described is tax evasion and comes under the Corporate Criminal Offence legislation which took effect on 30 September 2017.


The client determines if a contract is inside or outside. If a contractor wants to accept a contract that is inside, then challenge the determination with the client, they can, but the client isn't liable to compensate the contractor for reduced earnings during that initial inside IR35 period if they agree the contract is outside ( if that's what you mean).

Just repeating what happened, not saying I agree with it. No idea if they went ahead with it as I secured a private sector contract the following week so left anyway. He may have been blowing off steam, miffed that he was about to lose his contractors.

Interesting on your 2nd point, it really does make any kind of future appeals process pointless. Off-Payroll April 2020 really is becoming a noose.

[krytonsheep]

The agency could make themselves liable by going against the clients determination

In March 2017 I asked what they were planning to do, both them and the PS client. The director of the agency told me directly in a meeting that if the PS client determined inside, they would offer me (and all other contractors) an outside contract.

What you have described is tax evasion and comes under the Corporate Criminal Offence legislation which took effect on 30 September 2017.

Client says you're inside and the agent goes along with it, if the contractor at some point in the future makes a successful argument, then the client is liable.

The client determines if a contract is inside or outside. If a contractor wants to accept a contract that is inside, then challenge the determination with the client, they can, but the client isn't liable to compensate the contractor for reduced earnings during that initial inside IR35 period if they agree the contract is outside ( if that's what you mean).

[LetterBox]

What you on about?

It’s well documented/been said tonnes of times that it’s the FEE PAYER that bears the risk. The client only makes the assessment.

That's true enough, I just took it to it's natural end.

Client says you're outside I see no reason why the agent would not go along with it, if it's wrong then the client is liable. Client says you're inside and the agent goes along with it, if the contractor at some point in the future makes a successful argument, then the client is liable.

The agency could make themselves liable by going against the clients determination, but i see no reason for the agent to determine you inside if the client declares you outside.

But I have actually experienced the thought process of a small agency who I worked through who really only had a few niche projects for a single PS company. In March 2017 I asked what they were planning to do, both them and the PS client. The director of the agency told me directly in a meeting that if the PS client determined inside, they would offer me (and all other contractors) an outside contract. The logic being that we were all prepared to walk to private sector AND from the agency, if they were chased, this was their only client, if that cash cow disappears then so does the agency.

Crash and burn scenario, all on black.

[krytonsheep]

What you on about?

It’s well documented/been said tonnes of times that it’s the FEE PAYER that bears the risk. The client only makes the assessment.

It is the end client who is liable if they get it wrong. Hence why NHS digital ended up owing HMRC £4.3 million and not any agencies.

IR35 liability from April 2020: Who’s liable, for what and when?

[jamesbrown]

What you on about?

It’s well documented/been said tonnes of times that it’s the FEE PAYER that bears the risk. The client only makes the assessment.

Except when the client fails in their responsibilities (e.g., to prepare the SDS) or fraud is involved. So, the fee payer is liable, by default.

[Manic]

Explained here...