Direct and outside, to potentially inside

[dsc]

Bear in mind that, post April, large clients are more likely to be targeted for all of their juicy targets, rather than individual contractors. You already see this direction of travel from GSK etc. But, yes, the agency reporting requirement is another useful tool to help them join dots, only applicable in that context.

Even if the client doesn't share it's list of 3rd party suppliers with anyone, it would be fairly easy for HMRC to simply come over, do a quick inspection based on the fact that some outside assessments were done pre April and then start a detailed look into everyone who's apparently outside. I'd venture a guess and say that the smaller the client the lower the possibility of this happening though.

[PSChick]

And the agency reporting requirement is designed for things such like this. Ones where you look at say February 2020's record and compare it to May 2020's and search for National insurance codes in both reports but where the third party payer has changed. You then check the tax paid in the two months and if significantly different add to the list "of give them a scare and quick shakedown" letters.

When these changes were implemented in the public sector 3 years ago S3 group explicitly moved any contractor going from outside IR35 to inside IR35 to a different agency to avoid people showing up on such reports.

Aha yes that makes sense. I am in the fortunate position of having only had a year via an agency during the last 5. The rest have been direct deals with the client. I would therefore have last appeared on an agency report over 3 years ago, and since then my NI number would only be on salary paid by the PSC and of course my tax return.

On that basis, that is probably one "red flag" that won't apply to me, whatever happens.

[eek]

Bear in mind that, post April, large clients are more likely to be targeted for all of their juicy targets, rather than individual contractors. You already see this direction of travel from GSK etc. But, yes, the agency reporting requirement is another useful tool to help them join dots, only applicable in that context.

And the agency reporting requirement is designed for things such like this. Ones where you look at say February 2020's record and compare it to May 2020's and search for National insurance codes in both reports but where the third party payer has changed. You then check the tax paid in the two months and if significantly different add to the list "of give them a scare and quick shakedown" letters.

When these changes were implemented in the public sector 3 years ago S3 group explicitly moved any contractor going from outside IR35 to inside IR35 to a different agency to avoid people showing up on such reports.

[jamesbrown]

True, but the PSC doesn't submit anything to HMRC regarding who its clients are. I guess the question I am trying to answer is "how could they know that I have been at ClientCo prior to my possible inside contract?

Bear in mind that, post April, large clients are more likely to be targeted for all of their juicy targets, rather than individual contractors. You already see this direction of travel from GSK etc. But, yes, the agency reporting requirement is another useful tool to help them join dots, only applicable in that context.

[PSChick]

I'm in a similar boat, direct and awaiting determination, been there almost 2 years on a single project, getting close to delivery, but if their decision is inside / PAYE / umbrella I'll be walking. It's too big of a risk imho to carry on as it's basically admitting you've been an employee all this time (and I don't care about a slightly different contract or a slightly different position - I doubt a client would offer something drastically different, you'll most likely keep doing something similar / the same anyway).

How special is your role? many other contractors with the same skillset as yours or do you know enough about something that might make them want to keep you outside?

Same problem here really, if the "inside" contract was merely to finish the project that you've been working on all along, you'll be doing the same thing and I can see why that could be taken as a tacit admission that you have been inside all along.

At least what I do is very niche, so it would be quite hard to find someone else with the same skills. Even harder to find someone else with the same skills if all you're offering is an FTC. The PM is very keen to keep it all rolling as it is, so I have some hope that the client will try to find a solution that works for everybody.

[PSChick]

On a point of detail, your PSC is an intermediary between you, personally, and the end client. I mean, those going "direct" (via their PSC) to a client are not exempt.

True, but the PSC doesn't submit anything to HMRC regarding who its clients are. I guess the question I am trying to answer is "how could they know that I have been at ClientCo prior to my possible inside contract?

[PSChick]

Erm.. But as soon as the determination lands inside you've admitted you've been inside all along surely?

Not sure about that. If the client made the termination using the CEST tool and a large side order of risk aversion, the result could differ from your opinion of inside/outside, especially if yours was based on a professional contract review and assessment of working practices surely?

[dsc]

Erm.. But as soon as the determination lands inside you've admitted you've been inside all along surely?

Should've said "decision whether to leave things as they are or push for PAYE / umbrella" rather than "determination".

[jamesbrown]

On a point of detail, your PSC is an intermediary between you, personally, and the end client. I mean, those going "direct" (via their PSC) to a client are not exempt.

[northernladuk]

I'm in a similar boat, direct and awaiting determination, been there almost 2 years on a single project, getting close to delivery, but if their decision is inside / PAYE / umbrella I'll be walking. It's too big of a risk imho to carry on as it's basically admitting you've been an employee all this time

Erm.. But as soon as the determination lands inside you've admitted you've been inside all along surely?

[dsc]

I'm in a similar boat, direct and awaiting determination, been there almost 2 years on a single project, getting close to delivery, but if their decision is inside / PAYE / umbrella I'll be walking. It's too big of a risk imho to carry on as it's basically admitting you've been an employee all this time (and I don't care about a slightly different contract or a slightly different position - I doubt a client would offer something drastically different, you'll most likely keep doing something similar / the same anyway).

How special is your role? many other contractors with the same skillset as yours or do you know enough about something that might make them want to keep you outside?

[PSChick]

Hello all,

Current contract is outside IR35 and direct with client (no agency involved). Client is assessing all contracts and aims to "make a determination" by the end of January. Given that they are quite risk averse, I am expecting that the determination will be inside IR35 and that they will want people to go on payroll.

My contract only runs until the end of June, so an extra 3 months worth of invoices is not, in my view, worth the risk of being seen to have gone from outside to inside. To mitigate that risk, I am preparing for the eventuality that I may need to give notice of termination of the contract in time to receive payment of the final invoice no later than 5th April. Happily, they are fast payers and have never taken more than 10 days to pay up even though I am on 30 day invoicing, so I can leave it a little later than some .....

HOWEVER, there is a slim chance that they will make me some kind of offer that is palatable, and I would like to stay if possible as I am enjoying the project a great deal and think it would be a nice place to work, if permie looks to be the only option going forward.

Now what I am asking myself is: if I took a permie/on payroll FTC role with this client, just how risky is that? As far as I understand it, IR35 is correctly called the intermediaries legislation and one of the effects of it is to require agencies to submit their report stating who is working through them, and on what basis (inside/outside). Since there is no intermediary in my case, just my PSC dealing directly with ClientCo, presumably there is no reporting of my contract either. So am I flying under the radar here? I can't see how HMRC would have any idea of where I was working, unless ClientCo told them, and I can't see why they would have to do that. Does anybody know whether I am correct in that assumption?

I'd like to know this, as if they do make me some kind of offer, my attitude to the attendant risk will vary depending on whether there is any real likelihood of HMRC joining the dots and establishing that I offered services to the same client via a PSC.

Before anyone suggests that an SDS would give the game away, I have told ClientCo that I do not want a written SDS, nor do I want any document to exist prior to 5th April. I have asked for verbal confirmation of their determination in the first instance, and if the position looks untenable, I will give notice of termination of the contract and make sure that I am removed from the pool of people/contracts being assessed, as no determination will be necessary if I am not there after April. I will also be exercising my rights under GDPR to have all of my data removed from ClientCo's systems.

All opinions gratefully received