Reply to: Outsourcing advice

[economicpygmy]

You're not my contractor are you??

Nope
Have you spoken to corporate/HR to see if they agree a contract with a clear statement of work and milestone payments is sufficiently outside? If they dont agree you may as well give up.

Use a Qdos type organisation for advice and insurance

Really good point ^^ Last time I spoke to QDOS they spoke of insurance for the client (i.e. your company). Get them to check the contract (and working arrangements), take out the insurance and tell the **** in HR to chill

[simes]

No as I stated in my first post on this thread - the only fix is to get the blanket ban removed as at the moment there are two immovable objects and the contractor has more options (including just taking a holiday) than the end client has...

Oh I completely agree, but while he has a live and, if not necessarily 'kicking', HR department cocking things up, all he can do is to self educate by asking questions, and us to answer as helpfully as the HMRC mess allows.

Otherwise, as below. If in fact any of it is even remotely possible - at this juncture.

Remove HR from any equation
Find other internal department for equation - Procurement?
Lift blanket ban
Do Not use any of the big four for advice
Use a Qdos type organisation for advice and insurance
Hire PSC Contractors

[eek]

1. This is what has been best exemplified by the banks recently whereby they first stated a blanket non-use of PSC LtdCos and then, having thought a bit further, they then became first by telling all their Consultancies that they too, could not use PSC LtdCos as part of any delivery pertaining to the banks' projects.

2. This one has only recently been clarified as it was kinda close to my home. And it comes down to whether the overseas company has any onshore presence and any use of that.

My case: I work for an NL company. I am paid from NL. But I work mostly in the UK and sometime head into the London office. I thought I was exempt because of the first two sentences. Apparently not.

It sounds like your fella will need to be paid from overseas and also work from overseas. Not what you wanted to hear, am sure.

No as I stated in my first post on this thread - the only fix is to get the blanket ban removed as at the moment there are two immovable objects and the contractor has more options (including just taking a holiday) than the end client has...

[simes]

1. If we use an outsourced development company to provide software development services on an ad-hoc basis (which we do today) would we have to assess their workers for IR35? I honestly don't think this is practical, we use numerous outsource providers for all kinds of IT systems and often pay them on a "time and materials" basis.

I genuinely don't know the answer to that question, I'm hoping it's a "no" but I suspect it could be an "it depends".

If the answer isn't a "no", then I have a second question which is …

2. if that outsourced company is overseas (Ukraine, India, Outer Mongolia), do we still have to assess their workers for IR35?

I suspect this boils down to whether they are delivering a finished "product" (working software) or a person? If so, I will propose we outsource this on a deliverables basis rather than time and materials.

1. This is what has been best exemplified by the banks recently whereby they first stated a blanket non-use of PSC LtdCos and then, having thought a bit further, they then became first by telling all their Consultancies that they too, could not use PSC LtdCos as part of any delivery pertaining to the banks' projects.

2. This one has only recently been clarified as it was kinda close to my home. And it comes down to whether the overseas company has any onshore presence and any use of that.

My case: I work for an NL company. I am paid from NL. But I work mostly in the UK and sometime head into the London office. I thought I was exempt because of the first two sentences. Apparently not.

It sounds like your fella will need to be paid from overseas and also work from overseas. Not what you wanted to hear, am sure.

[ComplianceLady]

Thank you, you seem well informed on the subject. Please forgive my ignorance. This may well be a stupid question...

If we use an outsourced development company to provide software development services on an ad-hoc basis (which we do today) would we have to assess their workers for IR35? I honestly don't think this is practical, we use numerous outsource providers for all kinds of IT systems and often pay them on a "time and materials" basis.

I genuinely don't know the answer to that question, I'm hoping it's a "no" but I suspect it could be an "it depends".

If the answer isn't a "no", then I have a second question which is if that outsourced company is overseas (Ukraine, India, Outer Mongolia), do we still have to assess their workers for IR35?

I suspect this boils down to whether they are delivering a finished "product" (working software) or a person? If so, I will propose we outsource this on a deliverables basis rather than time and materials.

Broadly if :

• the person delivering services is a shareholder in a limited co and
• the money paid to the limited co for the services is primarily for that persons service

then IR35 it should be considered.

So if the outsourcing company engages an individual with no limited co and the individual isn't a shareholder of the outsourcing then no.

HMRC recently published guidance on statement of works - the problem with this is if the outsourcing co still engages a UK PSC to deliver the work HMRC can still come after you if they don't think it's true outsourcing.


Trying to find a way around WILL put your company at greater risk (and potentially the contractor). It can be navigated fairly, properly and without risk. But it takes the client to engage properly with someone who understands it and listen to their advice.

[Paralytic]

I suspect this boils down to whether they are delivering a finished "product" (working software) or a person? If so, I will propose we outsource this on a deliverables basis rather than time and materials.

This (since you're not a small company). Good luck getting that agreed with HR due to the additional risk it adds on the client side.

[eek]

Thank you, you seem well informed on the subject. Please forgive my ignorance. This may well be a stupid question...

If we use an outsourced development company to provide software development services on an ad-hoc basis (which we do today) would we have to assess their workers for IR35? I honestly don't think this is practical, we use numerous outsource providers for all kinds of IT systems and often pay them on a "time and materials" basis.

I genuinely don't know the answer to that question, I'm hoping it's a "no" but I suspect it could be an "it depends".

If the answer isn't a "no", then I have a second question which is if that outsourced company is overseas (Ukraine, India, Outer Mongolia), do we still have to assess their workers for IR35?

I suspect this boils down to whether they are delivering a finished "product" (working software) or a person? If so, I will propose we outsource this on a deliverables basis rather than time and materials.

The answer is that it depends unless the outsourced company is overseas and the person doing the work is also overseas...

[riskycl]

Hi. As others of said using another body in the supply chain makes no difference. You need to assess for IR35. Whilst fixed price work makes is a clear B2B contract IR35 would still need to be assessed - if he's delivering services for which the money being paid to his PSC is primarily for and he's a shareholder in his PSC then it needs to be assessed.

The only legal way to avoid it (other than a PAYE option) is to potentially engage him as a sole trader. There are FCSA accredited umbrellas who offer it but you would need to attest that he's outside of SDC, substitution isn't a factor. It also means him taking on significantly more personal risk so may not be an option.

Honestly though I would be loathe to find a way around it. This is precisely the situation we've been banging on about for months & years and should be used as a way to make corporate see sense.

Thank you, you seem well informed on the subject. Please forgive my ignorance. This may well be a stupid question...

If we use an outsourced development company to provide software development services on an ad-hoc basis (which we do today) would we have to assess their workers for IR35? I honestly don't think this is practical, we use numerous outsource providers for all kinds of IT systems and often pay them on a "time and materials" basis.

I genuinely don't know the answer to that question, I'm hoping it's a "no" but I suspect it could be an "it depends".

If the answer isn't a "no", then I have a second question which is if that outsourced company is overseas (Ukraine, India, Outer Mongolia), do we still have to assess their workers for IR35?

I suspect this boils down to whether they are delivering a finished "product" (working software) or a person? If so, I will propose we outsource this on a deliverables basis rather than time and materials.

[eek]

Why not just take him on a self-employed basis. IR35 does not apply to the self employed and it also get around the blanket ban.

Personally I wouldn't be taking the risk - unlimited personal liability - no way mate.

[BrilloPad]

Why not just take him on a self-employed basis. IR35 does not apply to the self employed and it also get around the blanket ban.

The whole point of IR35 was to add S44 to limited companies.

[ComplianceLady]

Thanks - HR just seem to be intent on shutting down this whole IR35 problem by causing us resourcing gaps. Quite frustrating really. I was hoping to get some support further up the chain with regards to setting up a direct supplier contract but sadly this support hasn't been forthcoming.

Our HR function are seeking professional advice from one of the big business consultancies (won't name names) about the implications of outsourcing but I won't hold my breath, despite changing the way of working / delivery.

I'll update you how this plays out.

Hi. As others of said using another body in the supply chain makes no difference. You need to assess for IR35. Whilst fixed price work makes is a clear B2B contract IR35 would still need to be assessed - if he's delivering services for which the money being paid to his PSC is primarily for and he's a shareholder in his PSC then it needs to be assessed.

The only legal way to avoid it (other than a PAYE option) is to potentially engage him as a sole trader. There are FCSA accredited umbrellas who offer it but you would need to attest that he's outside of SDC, substitution isn't a factor. It also means him taking on significantly more personal risk so may not be an option.

Honestly though I would be loathe to find a way around it. This is precisely the situation we've been banging on about for months & years and should be used as a way to make corporate see sense.

[BlueSharp]

Why not just take him on a self-employed basis. IR35 does not apply to the self employed and it also get around the blanket ban.

[WordIsBond]

Thanks - HR just seem to be intent on shutting down this whole IR35 problem by causing us resourcing gaps.

Tell them you'll be hiring an employee to replace the guy. It will cost as much in salary, plus there will be benefits. You'll be recommending it come out of their budget since they are the ones forcing you to take this action.

[simes]

Thanks - HR just seem to be intent on shutting down this whole IR35 problem by causing us resourcing gaps. Quite frustrating really. I was hoping to get some support further up the chain with regards to setting up a direct supplier contract but sadly this support hasn't been forthcoming.

Our HR function are seeking professional advice from one of the big business consultancies (won't name names) about the implications of outsourcing but I won't hold my breath, despite changing the way of working / delivery.

I'll update you how this plays out.

This will likely be a case of the blind leading the stupid.

I have seen elsewhere (apologies for repeating to those who have already read this) EY's understanding and advice for both Samsung and Sky, and they have totally screwed it up. MoO, one of IR35's three pillars of nearly 40 lesser pillars, being the most laugh-worthy of responses.

Unfortunately, I am not sure which department Should be the one taking the advice, but if one were to be found, advice Should be taken from a Qdos-like body where advice and insurances can be discussed and offered.

But again, one will first have to wrest the decision-making responsibility from the clammy hands of HR.

[riskycl]

I understand in saying this that this does not resolve your issue if you're dealing with HR and their policy. Quite possibly the most redundant and disruptive of departments in any given corporation, I sympathise.

.... Of course you might just have to have someone to tell your HR dept to eff off before being able to get on with business.

And lastly, please do not be put off by the high minded hostility of the few. The preserve of forums the world over, I fear.

Thanks - HR just seem to be intent on shutting down this whole IR35 problem by causing us resourcing gaps. Quite frustrating really. I was hoping to get some support further up the chain with regards to setting up a direct supplier contract but sadly this support hasn't been forthcoming.

Our HR function are seeking professional advice from one of the big business consultancies (won't name names) about the implications of outsourcing but I won't hold my breath, despite changing the way of working / delivery.

I'll update you how this plays out.