Reply to: Will IT contractors be considered permanent employees after one month on site?

[Zero Liability]

Isn't that how the law works in the courts where things are not clear? I might be wrong....

It'd be a bloody awful way of trying to define a corporate structure with no current standing in law, with all the attendant legal ramifications that would have. I think they do invoke such a standard in cases where the experience of the "man on the street" is relevant, e.g. expectations when purchasing a car or entering a broadband contract. However, I can't see why it'd have the least bit of relevance in such a case. I'm not a legal expert, but I'd hope they aren't that foolish.

[MPwannadecentincome]

So basically their standard for what it is, is what the opinion of someone entirely clueless about these matters would be?

Isn't that how the law works in the courts where things are not clear? I might be wrong....

[Zero Liability]

So basically their standard for what it is, is what the opinion of someone entirely clueless about these matters would be?

[MPwannadecentincome]

Last I looked PSC was still not enshrined in anything remotely close to law.

Isn't a PSC anyone who ticks the box on the Tax Return? If nobody ticked the box then PSCs would not exist ;-)

Apart from that even if a PSC was not defined in law, what would a judge assume it meant based on what the man on the street would understand it to be, that is the direction the judge would give surely?

[jamesbrown]

I think that if you supply your services directly to the client, negotiate terms etc etc then you could successfully argue the case - I think where it would fall down is if you have a bunch of contractors, who all secure their contracts through an agency who negotiates with the end client, who refer to themselves as a consultancy because it improves their tax position and for no reason other than that. I see exactly where you're coming from but I think this would be the argument that HMRC would present against the idea

Yes, I think that's about right. The only thing that's clear is the target (i.e. large consultancies outside, micro-businesses inside). The boundary between the two is probably a multi-person consultancy that negotiates and packages services as a collective and coherent whole (i.e. you don't have individual people negotiating the terms of their own consultancy contracts) and these companies are perhaps less likely to second their consultants to other organisations.

Very subjective though, as you have micro-businesses that negotiate directly and deliver services without a consultant onsite (perhaps subcontracting) and large consultancies that second a bunch of staff (essentially labour) while being considered as supplying a coherent service. But the situation that Lisa describes where you have contract negotiations at the level of individual consultants, rather than a B2B negotiation, would clearly be considered a supply of labour.

[TheFaQQer]

Why would you need a legal wrapper to aggregate an arbitrary number of independents who are offering a professional service?
Couldn't it be just as valid to be a 2-person consultancy offering professional services? Or just ... 1 person....?

Maybe the key differentiator is the lack of "...secure their contracts through an agency who negotiates with the end client..."?

IIRC, once you get to the point where no one person has 5%, then you are outside IR35 under the current rules. So it's already in place.

[jpdw]

Why would you need a legal wrapper to aggregate an arbitrary number of independents who are offering a professional service?
Couldn't it be just as valid to be a 2-person consultancy offering professional services? Or just ... 1 person....?

Maybe the key differentiator is the lack of "...secure their contracts through an agency who negotiates with the end client..."?

[Danglekt]

i'd imagine there would have to be some legal wrapper over the ind consultants which provides the vehicle for group bidding and winning, payment and dividend sharing.

Messy game all round.

[Fred Bloggs]

Thanks Lisa.

[LisaContractorUmbrella]

I see where you are coming from but I don't think it is quite so easy to characterise. I mainly contract to companies who run engineering projects. Think of KBR, CB&I, Jacobs, Costain etc... I don't really see any difference in what they do and what I do as a subcontractor. I don't really see why MyCo Ltd isn't supplying professional services?

I think that if you supply your services directly to the client, negotiate terms etc etc then you could successfully argue the case - I think where it would fall down is if you have a bunch of contractors, who all secure their contracts through an agency who negotiates with the end client, who refer to themselves as a consultancy because it improves their tax position and for no reason other than that. I see exactly where you're coming from but I think this would be the argument that HMRC would present against the idea

[Zero Liability]

How you get your revenue - the big 4 will primarily supply accountancy services, for instance, but they will also lend out staff as consultants. From IT contractors point of view, if you were to group together, you would have to supply something other than contractors (if you see what I mean) and I would think you'd have to do it without agencies securing contracts for you to avoid it being seen as a sham arrangement by HMRC

Aren't accountancy services professional services in the end?

[Fred Bloggs]

Isn't it just as valid to say that my main source of income is in supplying professional services? That's what my clients do and I'm just a subby to them.

[jpdw]

Well with one your main source of income is supplying staff and the other your main source of income is supplying staff

Isnt that exactly Fred Bloggs' point ... the difference is far from clear. Yes, the "big 4" do 'accountancy' as well as providing staff to do specific work for clients (the word 'lend' was used, but I doubt the client gets it for gratis - political consulting aside). But there are other 'professional services' consultancies that don't also sell the same client accountancy or whatever.

Is the difference is about having the names of individuals specified in the contract? But that happens with consultancies too (presumably to avoid the consultancy replacing all the smart bods seen during pre-sales with just-out-of-school newbies).

[MicrosoftBob]

So, what exactly is the difference between supplying staff and supplying professional services?

Well with one your main source of income is supplying staff and the other your main source of income is supplying staff

[Fred Bloggs]

How you get your revenue - the big 4 will primarily supply accountancy services, for instance, but they will also lend out staff as consultants. From IT contractors point of view, if you were to group together, you would have to supply something other than contractors (if you see what I mean) and I would think you'd have to do it without agencies securing contracts for you to avoid it being seen as a sham arrangement by HMRC

I see where you are coming from but I don't think it is quite so easy to characterise. I mainly contract to companies who run engineering projects. Think of KBR, CB&I, Jacobs, Costain etc... I don't really see any difference in what they do and what I do as a subcontractor. I don't really see why MyCo Ltd isn't supplying professional services?