Reply to: Deloitte confirms post-April 2021 ban on PSCs

[eatenrifles]

Yes this is already happening in Engineering where I work. I had an email from my agent letting me know my current role (and the one going forward) is considered outside IR35. The management feel certain roles that are consultant based should remain outside so that they can keep/hire the best.

I'm in engineering too. Current, direct, client has been very pragmatic with the approach and got all contractors third-party assessed, SDS issued as outside.

A friend of mine working for a large automotive is currently in there via a consultancy (owned by said large auto) and has had the same. End client was an absolute poopshow during the run up to the April 2020 false alarm, simply sweeping everyone inside. Having binned almost every contractor when Covid hit last year, they are now allowing certain routes to working with them on an outside basis.

[creativity]

I'm still of the view that at least some big corporates will take a different stance. They'll get their legal/risk/insurance/HR bods to work together and get contracts with clear working practices that make them safe from IR35. They'll then offer outside gigs. Everything else being equal these will be more appealing to contractors than inside gigs elsewhere. This will give those corporates first pick of the best contractors.

Given how many IR35 cases HMRC lose even when the end client hasn't really cared (hence potentially done/said things unhelpful to the contractor from an IR35 perspective), surely it won't be too hard for corporates to be 99% confident they'd win any HMRC legal challenges?

I think as with lots of things, there'll be an initial over-reaction, then a gradual drift back to the new normal (which will be lots of outside IR35 contracting gigs...but now no risk for the contractor).

Yes this is already happening in Engineering where I work. I had an email from my agent letting me know my current role (and the one going forward) is considered outside IR35. The management feel certain roles that are consultant based should remain outside so that they can keep/hire the best.

[vwdan]

I'll be very interested to see what my client, a large IB, will do. I'm currently on an outside contract, Ltd Co and have filled in a questionnaire via QDOS who are presumably supply some kind of service/insurance to them.

We wait and see!

[eek]

Which lucky private company will be the recipient of this I wonder?

IR35 inspectors to probe public PSCs retrospectively

That's from 2017 and HMRC have said they aren't going to do similar this time around.

Although given what they promised in 2017 and then didn't implement is it wise to trust a department that is going to be desperately hunting for any and all money it can raise next year.

[cojak]

Which lucky private company will be the recipient of this I wonder?

IR35 inspectors to probe public PSCs retrospectively

[jamesbrown]

And so the Legal department for company X sends back proof based on advice given by expert IR35 lawyers (the likes of QDOS etc).

What do HMRC do then?

HMRC could still take the case to Tribunal or whatever the next level is and hope they can find cracks in the evidence when they get people testifying in person but that seems to be pretty high risk for HMRC to me. Potentially wasting the courts time when they have no evidence before hand.

OK, I'll humour you and assume that the minority scenario whereby a company actually understands IR35, did their proper due diligence, per contractor, based on working practices and decided to take the (completely unnecessary) risk of hiring outside IR35 contractors is actually a realistic scenario across many big corporates, contrary to the logic of self-preservation and the reality that is emerging

In that case, HMRC don't (and won't) go for high-hanging fruit because that would be stupid and counterproductive. They will go for low-hanging fruit and seek to apply it more widely after that. There are always low-hanging fruit within companies as well as whole companies that are low hanging fruit.

[eek]

And so the Legal department for company X sends back proof based on advice given by expert IR35 lawyers (the likes of QDOS etc).

What do HMRC do then?

HMRC could still take the case to Tribunal or whatever the next level is and hope they can find cracks in the evidence when they get people testifying in person but that seems to be pretty high risk for HMRC to me. Potentially wasting the courts time when they have no evidence before hand.

I don't think you get how HMRC work.

It's not we will pick an individual case - it's we will take all 50 people in the company, identify the weakest and then ask for the other 49 to be included when HMRC win the court case.

[Fraidycat]

You've got it the wrong way around. The burden of proof is not on HMRC, rather on the supply chain (the Fee Payer in the first instance, but possibly the client that issued the SDS in the second instance).

"Why should we believe this SDS? We don't believe it. Show us proof for each aspect."

And so the Legal department for company X sends back proof based on advice given by expert IR35 lawyers (the likes of QDOS etc).

What do HMRC do then?

HMRC could still take the case to Tribunal or whatever the next level is and hope they can find cracks in the evidence when they get people testifying in person but that seems to be pretty high risk for HMRC to me. Potentially wasting the courts time when they have no evidence before hand.

[jamesbrown]

How does HMRC prove the determination is wrong ie. the client made the wrong determination.

You've got it the wrong way around. The burden of proof is not on HMRC, rather on the supply chain (the Fee Payer in the first instance, but possibly the client that issued the SDS in the second instance).

"Why should we believe this SDS? We don't believe it. Show us proof for each aspect."

[eek]

Hello Company X - this is HMRC calling we are looking at XYZ would you like to be helpful or would you prefer us to (ab)use our Customs powers...

[Fraidycat]

Company X gives contractor Y an outside determination backed up with a pass from CEST.

How does HMRC prove the determination is wrong ie. the client made the wrong determination.

Any enquiry is going to be handled by Company X's legal department. Who will have the resources to get proper legal advice in handling the enquiry and will not want to make the company liable in any way.

Unless someone on the inside on company X (a disgruntled permie perhaps) snitches or the contractor himself gives evidence against the company i cant see how how HMRC can gather enough evidence to bring any sort of case to tribunal or court.

[Fraidycat]

I'm still of the view that at least some big corporates will take a different stance. They'll get their legal/risk/insurance/HR bods to work together and get contracts with clear working practices that make them safe from IR35. They'll then offer outside gigs. Everything else being equal these will be more appealing to contractors than inside gigs elsewhere. This will give those corporates first pick of the best contractors.

This is exactly what current client co is doing.

No brainer really. It is easy to get a genuine pass from CEST if working practices really are outside IR35.

[jammer]

Everyone will have their own personal anecdotes from the sectors in which they typically work. Remember, the reform hasn’t happened yet and many companies are only now starting to act. If you want more than a couple of anecdotes, read the CUK news or look at offpayroll.org.uk. The market is about to change fundamentally. As you say yourself, you were asked to stay as a permie.

Deloitte, Metro Bank, Zurich, Three UK and BoI ban limited company contractors, as IR35 reform looms

Find fairer IR35 & CV19 clients, agents & brollys. OffPayroll.org.uk

Sure, very true. Will check out those links, thanks.

[jamesbrown]

From the companies I'm talking to, they are all struggling to find good developers to employ. Everyone in the market now are the ones that didn't make the pandemic cull so they are all the juniors and staff that should have been gotten rid off before.

Literally, every company I talk too at the moment is struggling to fill senior roles with permies as they can't find decent ones. That's been true of every company I've contracted for since the start of 2020.

All of them have asked me to stay as a permie at the end of the contract.

Everyone will have their own personal anecdotes from the sectors in which they typically work. Remember, the reform hasn’t happened yet and many companies are only now starting to act. If you want more than a couple of anecdotes, read the CUK news or look at offpayroll.org.uk. The market is about to change fundamentally. As you say yourself, you were asked to stay as a permie.

Deloitte, Metro Bank, Zurich, Three UK and BoI ban limited company contractors, as IR35 reform looms

Find fairer IR35 & CV19 clients, agents & brollys. OffPayroll.org.uk

[jammer]

I'm still of the view that at least some big corporates will take a different stance. They'll get their legal/risk/insurance/HR bods to work together and get contracts with clear working practices that make them safe from IR35. They'll then offer outside gigs. Everything else being equal these will be more appealing to contractors than inside gigs elsewhere. This will give those corporates first pick of the best contractors.

Given how many IR35 cases HMRC lose even when the end client hasn't really cared (hence potentially done/said things unhelpful to the contractor from an IR35 perspective), surely it won't be too hard for corporates to be 99% confident they'd win any HMRC legal challenges?

I think as with lots of things, there'll be an initial over-reaction, then a gradual drift back to the new normal (which will be lots of outside IR35 contracting gigs...but now no risk for the contractor).

This is sort of along the lines I'm hearing and thinking as well.

I honestly think there is a silver lining in all of this.

I've been approaching this a bit differently or at least trying to push towards the kind of arrangements we should have always had, such as using statements of work.

Lets face it, at the heart of IR35 is actually a sound idea. Contractors should have never been sitting at the same desk for 20 years claiming not to be employees. But just as with everything else HMRC, it's a sledgehammer to crack a nut and a broken sledgehammer at that.

When I contract I'm NOT an employee, I don't want to be spoken about like one, or thought about as one, as I fundamentally am not an employee. On top of that, the company paying the fee has to start appreciating that fact and the changes ushured in by IR35 can be capitalised on to formalise that a bit more I think. They haven't "found a temp member of staff", they've engaged with a company, fundamentally different.

I had to go three rounds of amendments on my current one to get the legals right and this was from an agency that HAD done IR35 checks on their contracts and were fairly up-to-speed on things.

Interesting times I think.