Reply to: I was going to hand in my notice but I need to bounce my thoughts - Outside to Inside

[Vortigan]

Previous IR35 Status

Hi,

I have had contractors in the public sector for years and now support a large private sector client with a range of services, some of which involved IR35. What is happening is painful for a lot of people but as quite a few of us realise, it was on the cards for a while.

As I understand it, there will be no retrospective IR35 claims by HRMC and a line in the sand is drawn from the start of the new legislation. I don't know for sure but as I have never seen this written down by the HRMC but this comes from a few reliable sources so I am confident it is correct. There would be no point in going back to claim from previous years as its expensive and the last thing the HRMC would want to do it start a whole load of test cases against the new legislation. They will leave that to the contractors at their expense and it is inevitable.

Can the company you provide a service too claim any loses incurred back from you if they are found to have bent the rules? That is the real point and its an interesting attempt of shifting the responsibility back to the contractor but I would think it is foolish of them. The law clearly states they have to make the decision and one contract will not be isolated from the other in a court of law so I think you are in quite a nice position and your client is being daft. I don't see it catching on with other companies as they are applying a very basic logic and would get ripped to shreds by a competent law professional. You cant make up your own laws to do away with another one. Something has to give in that equation.

[abz2020]

To get cover for the past it isn't and they won't.

Could be wrong of course.

Yeah, that's the point - to get cover for the past. Actually the B2B contract is still running.
Never had IR35 insurance, do the work as long as the respective contact is on?

[northernladuk]

Is it worth buying any IR35 insurance now? How do they work?

To get cover for the past it isn't and they won't.

Could be wrong of course.

[abz2020]

I am in the same situation.

LTD contract now clearly outside (both wording and WP): no SDC, Sub allowed (never used), can take on other clients. And I have 2 more separate contracts running alongside this one. One is kind of dormant, the other is active with payments received. I will ask the end client to sign the QDOS WP questionnaire as well.

With PSC banned, been handed a new PAYE contract with all clauses about holidays, SDC, sick pay etc. With the same intermediary via an umbrella.

Brain fused, I dont know if this bears high risk of retro investigation or just the usual risk (there is always A risk).

What is the consensus here?

Is it worth buying any IR35 insurance now? How do they work?

[BlueSharp]

It sounds like you have a stack of evidence to fight a reto claim, therefore if I was in your position I would do the same. All down to your appetite to risk and it sounds like you have done due diligence and have a very good chance of fighting a retro investigation. If one was to come your way.

[eek]

With changes in contract in mind, is there any benefit safety wise against investigation to going in through an umbrella instead of actual employment if the terms and conditions are sufficiently different either way? Or is it just that via an intermediary such as an umbrella would obfuscate the contract somewhat and in all likelihood just delay the inevitable...

No - changing your employer doesn't change anything - a new contract that makes you look like an employee rather than a contractor (clear supervision, direction and control, no substitution clause) is better. Agency reporting means the change between limited and umbrella would be capture as a trigger to look further rather than an advantage.

[thatdarnguy]

This. Very important to distinguish the change. What you’re trying to avoid is a continuation of roughly the same work in roughly the same way through a change in employment status for tax purposes. If you can get that, and given all the uncertainty around at present, it’s probably worth the risk.

With changes in contract in mind, is there any benefit safety wise against investigation to going in through an umbrella instead of actual employment if the terms and conditions are sufficiently different either way? Or is it just that via an intermediary such as an umbrella would obfuscate the contract somewhat and in all likelihood just delay the inevitable...

[jamesbrown]

Part of my thought on your case is that there are probably 500K easier targets than you. You've actually done a substitution.

Oh, this too if you’ve actually subbed. Understandable that it’s difficult to see the wood for the trees at present, but you aren’t a low hanging fruit. I would still ensure you get a markedly different contract though, binding you in to employment-like terms, and then document your changed working practices in servitude to your new master

[jamesbrown]

Even if you're staying, get a whole new contract, including commitments on control, non-substitution and mutuality, ,plus holidays and pensions rights. Not doing so is a tacit admission that your previous outside-IR35 one was a sham.

And I assume you know that expenses will be history...

This. Very important to distinguish the change. What you’re trying to avoid is a continuation of roughly the same work in roughly the same way through a change in employment status for tax purposes. If you can get that, and given all the uncertainty around at present, it’s probably worth the risk.

[northernladuk]

Do you mean the new contract to state that you will be under control, can not have subs, will have pension + hols?

No...

[abz2020]

Even if you're staying, get a whole new contract, including commitments on control, non-substitution and mutuality, ,plus holidays and pensions rights. Not doing so is a tacit admission that your previous outside-IR35 one was a sham.

And I assume you know that expenses will be history...

Do you mean the new contract to state that you will be under control, can not have subs, will have pension + hols?

[escapeUK]

Thanks WiB.


So I've left a window open there.
.

Sounds like the best course of action. I would have emphasised your preference to continue and the benefits your business brings to theirs.

[WordIsBond]

Part of my thought on your case is that there are probably 500K easier targets than you. You've actually done a substitution.

[ChimpMaster]

Thanks WiB.

Given the ideas in this thread, I have drawn up a letter in which my company is giving notice to the client that it will stop providing services at end of March under the existing contract. I have put this down to Off payroll changes and the current lack of a SDS from the client. I have reminded them of the evidence pointing to the current outside IR35 position and have said that my company will only be able to continue providing services if an outside determination is received before end-March.

So I've left a window open there.

If I am forced to leave, so be it. Else if I forced to operate as a pseudo-employee then it'll be under a new contract - one of employment (zero-rights), which is awful but my only other choice for now.

What a complete farce.

I will, however, add: I do not advise staying at the same client if your status is changing to inside-IR35, if current conditions mean you are inside. But this is a decision that depends on your exact situation: can you get another role, can you financially deal with downtime, can you prove otherwise that you are outside-IR35 etc. Like mine - complicated but I have to do what I think is best for my specific circumstances - and I'm not happy about it. If you are outside-IR35 right now then evidence it to the nth degree and have Qdos/IPSE insurance in place so that when HMRC come knocking, you can bat them away.

[WordIsBond]

If they send you a letter, your advisor (not you) will send them your printed CEST outside determination, the details of your substitute, and your QDOS review. They will go elsewhere.

They may never link you up because you were direct. In case they do, you definitely want a different contract. You definitely do not want your substitute provision in the new contract. You want a distinct difference especially on that point, because that's your silver bullet, so you want it there before and gone once you are inside / on PAYE.

You also want someone to kidnap the new Chancellor, bring him to your house, make him watch you work there, make him listen to the fact that you are being forced inside despite even having used a substitute in the past, and force him to recite 500 times, "This reform isn't going to affect the truly self-employed, really, honest to God, cross my heart and hope to die."

Then, they can let him go back to Westminster.