Ir35 2020

[ComplianceLady]

I heard of a similar solution:

Agency X becomes the service provider for client Y. Contractors ltd that were providing their services to client Y are now providing to Agency X.

Agency X has now the responsibility to make the IR35 assessment (and liability) and deems everyone outside, so everything stays the same for those contractors and their ltds.

It sounds to easy way around of this complex issue, what are the flaws of such approach?

The agency carries all the liability ONLY if it's real. If it's a sham the Agency disappears and the client is still on the hook.

For it to be real the Agency has to invest in proper project management / service delivery whilst being sure to engage those individuals on an outside bassi - not an easy thing to do.

If the work can be delivered on an outside basis just deliver it to the end client that way and the agency pays for an insurance backed determination and manages the process for them, plus they indemnify the client if it goes wrong. Even in the event the determination is wrong and HMRC come calling AND the agency diappears, the insurance product stays plus the end client have evidence of reasonable care.

It's not so much what's wrong with SOW it's what's right with it. If it's suitable for SOW via Limited Co's then there are MUCH better ways to do it.

[dsc]

If it's a supply of labour, then the consumer will be the "end client" and will do the assessment and the supplier will be the "fee payer". If it's a service supply, then the supplier will do the assessment, and the supplier is both the "end client" and "fee payer".

There is necessarily some ambiguity about what constitutes a supply of labour vs. a service, but it will be clear in most cases. For real employees (not ones deemed for tax purposes), this is irrelevant, of course, because IR35 is irrelevant.

Is supplying a software engineer classed as labour or service? both the supplied contractor and permie work on-site, can't work remotely due to all the hardware being on site and only claim for the hours done on-site. Of course it's a non-issue for the permie, I'm just curious how the contractor gets treated and whether he should be worried or not.

As for the supplier, they are a proper company, it's not a scam agency, they do their own work, but also found this niche where they can supply people with a specific product skillset to my client who can't be bothered hiring permies with this skillset (even though they rely on this skillset heavily).

[CryingSheep]

The agency carries all the liability ONLY if it's real. If it's a sham the Agency disappears and the client is still on the hook.

For it to be real the Agency has to invest in proper project management / service delivery whilst being sure to engage those individuals on an outside bassi - not an easy thing to do.

If the work can be delivered on an outside basis just deliver it to the end client that way and the agency pays for an insurance backed determination and manages the process for them, plus they indemnify the client if it goes wrong. Even in the event the determination is wrong and HMRC come calling AND the agency diappears, the insurance product stays plus the end client have evidence of reasonable care.

It's not so much what's wrong with SOW it's what's right with it. If it's suitable for SOW via Limited Co's then there are MUCH better ways to do it.

The agency is a big, well known and well established one. Will only offer the solution for projects where contractors are 'easily' accessed as outside.

End client is a massive company and main reason given for blank inside assessment is the cost involved in doing it case to case...

[jamesbrown]

Is supplying a software engineer classed as labour or service? both the supplied contractor and permie work on-site, can't work remotely due to all the hardware being on site and only claim for the hours done on-site. Of course it's a non-issue for the permie, I'm just curious how the contractor gets treated and whether he should be worried or not.

As for the supplier, they are a proper company, it's not a scam agency, they do their own work, but also found this niche where they can supply people with a specific product skillset to my client who can't be bothered hiring permies with this skillset (even though they rely on this skillset heavily).

It is clearly a labour supply. A software engineer is labour. If a person is supplied, it is labour. Software is not labour. The grey area is when a contract includes both, such as a software supply whose installation requires labour, but I think that would count as a service, because the contract would be written that way. Either way, someone is going to make the assessment and issue an SDS. It isn't as though this classification absolves the end client from its responsibility, it just clarifies who that end client is. So you can overthink this. If you're inside, you're inside, you're inside. If you're outside, you're outside, you're outside. It's based on WP and you'll get the SDS from whomever knows them best (to simplify).

[dsc]

Cheers James, I'm just curious what happens if my client classes everyone inside and all the supplied consultants via the supplier are deemed outside by their own clients. Then I guess it all boils down to why the "inside" decision was in the first place...

The above is purely theoretical and my own curiosity, I'm direct so if I'm classed inside I'm out (even though I've been classed as outside by Qdos after assessing my own contract and wp).

[ComplianceLady]

The agency is a big, well known and well established one. Will only offer the solution for projects where contractors are 'easily' accessed as outside.

End client is a massive company and main reason given for blank inside assessment is the cost involved in doing it case to case...

If they only offer it for those that are easily assessed as outside what value is there in it?

[CryingSheep]

If they only offer it for those that are easily assessed as outside what value is there in it?

The client can't be bothered (financially and timewise) to access individual cases, so client will deemed everyone inside without looking case to case!

The only value is to offer a solution around this...

Of course this are initial conversations, maybe client change its mind once he sees the bill the agency will present for this solution or the alternative of most contractors walk away!