Reply to: Agency withholding invoices

[northernladuk]

I have only ever seen umbrella company or PAYE through an agency when the role has already been flagged up as inside IR35.

A vast majority of finance co's have gone no LTD therefore no inside. It's highly possible a lazy agent hasn't bothered to differentiate the difference between no PSC's and inside IR35 in the advert. Both are the same to the end user, but the no PSC's does not need an SDS because the roles isn't offered to PSCs.

[andymalory]

I have only ever seen umbrella company or PAYE through an agency when the role has already been flagged up as inside IR35.

[Protagoras]

If the client says we only allow umbrella routes, or PAYE through an agency, that doesn't remove the requirement on them to take 'reasonable care' to come to an inside IR35 assessment.

Where the client or worker refuses to engage with the off-payroll rules, PAYE is operated.

This does not make the engagement 'inside' IR35. Working practices etc could well be such that, if assessed, the engagement would be 'outside'.
The off-payroll rules become inapplicable and no assessment is made.

Umbrella != 'inside'

[andymalory]

Why doesn't the need for an SDS go away when the client is simply saying "We don't allow the use of Limited Company - you can only work here via PAYE (i.e. via a FCSA listed umbrella)."

The entire point of the approach is to explicitly show that the contract is not subject to IR35, the only option is PAYE hence no SDS is required because the process has nothing to do with IR35.

An SDS is a mandatory document, for determinations made as inside and outside IR35. If the client says we only allow umbrella routes, or PAYE through an agency, that doesn't remove the requirement on them to take 'reasonable care' to come to an inside IR35 assessment.

Now its an entirely different issue that most organisations, public and private, are not doing this.

[Protagoras]

Why doesn't the need for an SDS go away when the client is simply saying "We don't allow the use of Limited Company - you can only work here via PAYE (i.e. via a FCSA listed umbrella)."

The entire point of the approach is to explicitly show that the contract is not subject to IR35 - as the only option is PAYE.

It works the other way round too.

When a worker refuses to engage under the Ch.10 rules, there is no need for a SDS and the engagement is operated under Agent or Umbrella PAYE.

[eek]

Most simply ignore the 'reasonable care' principle and I have seen very scant evidence of any contractor/freelancer taking a client to task on it (the imbalance of power clearly at play here).

So whilst the blanket inside IR35 approach is almost ubiquitous, the need for an SDS doesn't go away. The end client should still be providing one - https://www.gov.uk/guidance/off-payr...ply%20or%20not

There is a conflicting paragraph on the preceding section though, which doesn't help.

Why doesn't the need for an SDS go away when the client is simply saying "We don't allow the use of Limited Company - you can only work here via PAYE (i.e. via a FCSA listed umbrella)."

The entire point of the approach is to explicitly show that the contract is not subject to IR35, the only option is PAYE hence no SDS is required because the process has nothing to do with IR35.

[andymalory]

Most sane firms operate on the basis that ir35 is way too much like hard work (and way too risky) so insist on employment vis an umbrella firm only.
Voila no SDS determination required.

Most simply ignore the 'reasonable care' principle and I have seen very scant evidence of any contractor/freelancer taking a client to task on it (the imbalance of power clearly at play here).

So whilst the blanket inside IR35 approach is almost ubiquitous, the need for an SDS doesn't go away. The end client should still be providing one - https://www.gov.uk/guidance/off-payr...ply%20or%20not

There is a conflicting paragraph on the preceding section though, which doesn't help.

[eek]

The reason I mentioned an SDS (Status Determination Statement) is because if you are deemed inside IR35, then an SDS has to be issued by the end client. Otherwise, regardless of paperwork, they are the deemed employer.

Most sane firms operate on the basis that ir35 is way too much like hard work (and way too risky) so insist on employment vis an umbrella firm only.
Voila no SDS determination required.

[Protagoras]

The reason I mentioned an SDS (Status Determination Statement) is because if you are deemed inside IR35, then an SDS has to be issued by the end client. Otherwise, regardless of paperwork, they are the deemed employer.

OP states that it's an 'inside' arrangement and that payment has already been made by the umbrella company with whom OP has a contract (of employment), hence my assertion that the umbrella company is the entity to pursue.

But you make a rather interesting point.

I understand that the responsibility of the 'deemed employer' under off-payroll is essentially to make payment to HMRC for NI, AL, PAYE.

I was approaching this on the basis that the 'deemed employer' is for tax purposes only under the off-payroll rules - is that incorrect?

[b0redom]

Giant did exactly the same to me. I told the client co I was leaving due to a toxic work environment and they were fine with it. I called up Giant who told me that I was obliged to finish the contract.

I pointed out that they'd just been lights out for weeks following a very public hack, and they were probably in breach of contract themselves, and they rolled over, but I will never touch them again.

"No we can't call out from our offices. We don't have outgoing phones."
"No you can't email us. You need to use our secure portal."

etc...

[andymalory]

SDS - https://www.contractorcalculator.co....ement_sds.aspx

But, a SDS is not relevant here either!

This is a matter between the OP and the Umbrella company, under employment law.

PS - If OP has legal assistance insurance (e.g. as an add-on to home insurance) then it would be worth considering this option for resolution support.

The reason I mentioned an SDS (Status Determination Statement) is because if you are deemed inside IR35, then an SDS has to be issued by the end client. Otherwise, regardless of paperwork, they are the deemed employer.

[Protagoras]

Sorry for asking but what's an SDS?

SDS - https://www.contractorcalculator.co....ement_sds.aspx

But, a SDS is not relevant here either!

This is a matter between the OP and the Umbrella company, under employment law.

PS - If OP has legal assistance insurance (e.g. as an add-on to home insurance) then it would be worth considering this option for resolution support.

[komododragon]

First thing to check - did you get an SDS?

Sorry for asking but what's an SDS?

[andymalory]

Thanks for your reply.

The agreement was made directly with the end client and I do have their agreement. However, the agency I was working is claiming that I had to serve a notice period of 1 month.

This notice period of one month appears absolutely nowhere and they claim it has been done between Giant and the said agency.

I asked Giant what the issue was and they told me they can't do anything since it's the agency who is withholding the money.

First thing to check - did you get an SDS?

[NotAllThere]

Unless the contract says otherwise, the agent is contractually obliged to pay the invoices for work done. They allege that Giant, as supplier of the worker (you) are in breach of contract. If they want redress from that, they have to sue Giant. They cannot withhold payment. Giant must dun the agency for non-payment and if necessary go to court.