Reply to: Outside IR35. Who suffers if it's the wrong call?

[eazy]

Correct defective work

If the client was not happy with your work, would you have to put it right?

"we don't ask contractors to do that, we still just pay them anyway"

My client as part of the role reviews which were carried out prior to individual assessments replied to the above question

No - "We don't ask contractors to do that, we just terminate the contract"

[northernladuk]

Fair enough Actually I can probably handle that bit, was just sharing my progress.

It's the bit below the ----- I would welcome comment on.

If the client is happy to and expects you to fix issues as part of your day rate what does it matter what you think you do. That's your choice. Permies can and do do that.
Can't see your view on the matter is relevant.

[CalmEddie]

Fair enough Actually I can probably handle that bit, was just sharing my progress.

It's the bit below the ----- I would welcome comment on.

[northernladuk]

So this is developing interestingly, their CERT results differ from my CERT results.

Didn't read anything beyond this.

[CalmEddie]

So this is developing interestingly, their CERT results differ from my CERT results. One of the points is

If the client was not happy with your work, would
you have to put it right?

They say no, on the basis that "we don't ask contractors to do that, we still just pay them anyway"

I say yes, on the basis that the contract wording explicitly calls out liability on my part for just such an occurence, and they go into the fine print on insurance docs to check that this is the case. And in my day-to-day, if there is a mistake, I will work evenings and weekends to put it right. I've done this, and can evidence it.

I think that HMRC might very well have engineered this situtation deliberately, to lead reviewers to answer on the basis of day-to-day operations, rather that reviewing on the basis of what the contract says.

--------
Separate point - thinking ahead. I asked them what was the risk they are trying to mitigate? And they said that they want to be squeaky clean.

I'm next going to have a risk avoidance conversation with them. Which makes me think I need to flip my OP question around.

If inside later becomes determined by HMRC as outside, who feels the pain then?

So if I were to appeal in some way, and HMRC uphold the position that I should not be inside IR35, and I continue working. Presumably agent would need to start paying gross again, but is there any financial impact for agent and clientco?

[jamesbrown]

don't think anyone knows 100% all this stuff. As with any new laws & regulations, it will always be up for different interpretations. who's right? we'll know soon.

Right, but this is at the core of the draft legislation, not peripheral. If QDOS really said that, then they're wrong, but I doubt they did or, if they did, meant it as you relayed it.

[BritishLad88]

I doubt it, what with them knowing about this stuff 'n all.

don't think anyone knows 100% all this stuff. As with any new laws & regulations, it will always be up for different interpretations. who's right? we'll know soon.

[BritishLad88]

If they start doing smth completely different then you can argue that indeed they are fairly safe, but if they just carry on like before but on a new contract they might be in for a nasty surprise (or might get away with, I'm sure HMRC won't have the resources to investigate everyone).

Yes, exactly, they probably banking on that. I think another reason for their views is that HMRC said they're not doing retro investigations and they somehow believe HMRC 100%. I won't & I know lot of us here won't either but that's what they believe. what else can I say then.

What I was trying to highlight is that walking away from your current client is probably the safest bet.

completely agree. i'm doing that as well. walking away.

[dsc]

i agree with you. however, a lot of my current colleagues moving inside have said they're super safe because their counter argument is that then it would be a complete brand new contract after moving inside. But hey, that's their view.

If they start doing smth completely different then you can argue that indeed they are fairly safe, but if they just carry on like before but on a new contract they might be in for a nasty surprise (or might get away with, I'm sure HMRC won't have the resources to investigate everyone).

What I was trying to highlight is that walking away from your current client is probably the safest bet.

[jamesbrown]

my statement regarding clients would be completely risk free is not mines. I was just relaying on what QDos are saying.

I doubt it, what with them knowing about this stuff 'n all.

[BritishLad88]

No they wouldn’t. They have responsibilities and, potentially, liabilities. Why do you think many are banning PSCs altogether?

my statement regarding clients would be completely risk free is not mines. I was just relaying on what QDos are saying.

[BritishLad88]

Being declared inside and carrying on is obviously super risky..

i agree with you. however, a lot of my current colleagues moving inside have said they're super safe because their counter argument is that then it would be a complete brand new contract after moving inside. But hey, that's their view.

[eazy]

Liability

James Brown
There is some incorrect information above. The Fee Payer is liable once the client has completed an SDS with reasonable care and provided it to the supply chain. The Fee Payer is the closest UK entity to the PSC. However, the transfer of debt clauses allow for liability to be transferred to any entity in the supply chain above the PSC if HMRC cannot acquire the tax due within a reasonable timeframe. In the event of fraud, even the PSC and the individual contractor could become liable. In summary, the entire supply chain above the PSC is at risk, but primarily the Fee Payer.

For the above reason few of the companies are outlawing the use of Ltd company contractors anywhere in the supply chain. For example, today I heard of this scenario
Contractor - Ltd Co - Agency - Client (Engineering Co) - End User (Oil Company) set-up, Client determines the status & issues the SDS outside determination for contractors based at their offices, the End user (oil company) is insisting no Ltd contractors to be used for their workscopes.

[jamesbrown]

Very interesting, thank you.

Though in terms of PSC - As futile as it may be, we refute the PSC label. We are a small consultancy with 4 employees.
Which actually brings up an interesting point, should 3 of us take the path of going "inside IR35", the situation actually influences the tax status of others in my company, by defaulting the 4th person into being a PSC. Possibly that indicates some additional level of unfairness?

I agree that a PSC is a meaningless term, legally speaking, but it has become convenient. As such, there is no entry or exit from being one, because it doesn't legally exist.

[CalmEddie]

There is some incorrect information above. The Fee Payer is liable once the client has completed an SDS with reasonable care and provided it to the supply chain. The Fee Payer is the closest UK entity to the PSC. However, the transfer of debt clauses allow for liability to be transferred to any entity in the supply chain above the PSC if HMRC cannot acquire the tax due within a reasonable timeframe. In the event of fraud, even the PSC and the individual contractor could become liable. In summary, the entire supply chain above the PSC is at risk, but primarily the Fee Payer.

Very interesting, thank you.

Though in terms of PSC - As futile as it may be, we refute the PSC label. We are a small consultancy with 4 employees.
Which actually brings up an interesting point, should 3 of us take the path of going "inside IR35", the situation actually influences the tax status of others in my company, by defaulting the 4th person into being a PSC. Possibly that indicates some additional level of unfairness?