Ir35 2020

[ComplianceLady]

It may be an overly simplistic view, coming from a contractor rather than client or agent or someone that supports them in a legal/compliance way as yourself, but it seems there is an opportunity to improve the standard of contracts being used by agents or direct clients by:

1. Providing a selection of clauses to add to a base template with each clause coming with supplemental notes detailing the benefits and impact of adding or excluding that clause.

2. Providing a selection of clauses that are required to ensure the contract when reviewed by a trusted independent service will fit the goal of it being inside or outside IR35.

3. Providing clear details of what working practices the client will need to adhere to to ensure a clause intended to take the contract outside IR35 stands up to scrutiny.

Someone with your skills could use the above to provide a service to agencies and clients to take away the burden of drafting appropriate contracts regarding IR35 or any other relevant compliance requirements, moving to an accredited service that is backed by the independent review services that offer the insurance, and recognised by HMRC as being fit for purpose so every instance of that contract in that state clause wise can be fast tracked through any review or investigation providing the client signs an acknowledgement that the working practices fit the requirements for the clauses used in the contract.

The overall benefit, other than efficiency in contract processing, would be everyone that is impacted by (client/agent/contractor) or has an interest in the contract terms can be assured the contract meets the requirements of its intended use.

The key would be getting the client to sign off that the contract and associated working practices match, as part of their role post April 2020 to be the one that determines if the contract is inside or outside IR35.

Other side benefits being:

a. IR35 related insurance would be cheaper as the risk will be reduced. Though if the client is responsible for determining status and the overall financial penalty (based on the agent or fee payer last in the chain ensuring contract clauses pass the financial risk to the client) then it is the client and not contractor (as currently) that will be needing IR35 insurance.
b. HMRC investigations will be curtailed once it's clear the approved/accredited contracts are being used between Client/agency/contractor.
c. Quicker turnaround in the contract initiation process as there will be less need for contractors to request clause changes.

Maybe all this, or the parts that make sense, are already being done behind the scenes and I've just been exercising my keyboard.

From a contractor point of view at post April 2020 there will be less stress as we know where we stand when a client says whether the contract is inside or outside IR35 up front of applying, and any risk is passed from contractor to agency or client if they get it wrong in the eyes of HMRC. Though we've yet to see in court who ends up paying the due taxes for such cases. Don't think there's been much on this from the public sector that already has this in play.

That is, in essence, where we start from. The problems arise because each Client generally has their own contract or varies the standard one, matching that to the contractor contract takes time and effort and so the base contract is written to require as little change as possible -all change costs money. Some contractor read and understand their contract, the majority do not.

What I have done in the past is the reverse of this process which is to break down our contract and explain why each clause exists and the effect of it. It is useful to some parties.

[ComplianceLady]

It's a hell of a lot more accurate than the converse and stating agents can be trusted in all circumstances.

Might be a bit over the top yes but if you start off in this mode of thinking it will drive you to do your own diligence and check everything they say. In most cases you'll find nothing amiss which is great but it'll certainly help you spot the standard rubbish they roll out. Stuff that is very well documented on here.

I'd guess you have a different relationship with agents so may see a very different side. When it comes to creaming the top off some suckers rate they can be a very different beast.



Isn't that a very good the reason not to trust everything an agent says? That's not even touching on the devious crap they knowingly do, two references, another candidate will take the gig at 50 a day less yada yada yada.

Keep up the fight around answering questions they don't understand though. We've had some pretty incredible threads about what an agent said. Sometimes saying nothing and getting back to us would be much more productive and certainly help the trust issues. Thankless task that one.

I completely agree you should not take everything recruiters say as gospel.

I have seen firsthand some of the appalling things said and done that you reference so I do understand the perspective.

Good recruiters should be good at lots of things - knowing when to say 'I don't know' is one of them. A good Agency has to have the resources in place for the Recruiter to have someone who does know.

You'll generally find a Recruiter that answers something they shouldn't either 1. doesn't have anyone to ask, 2. doesn't care/being deliberately deceitful or 3. doesn't know who to ask. 3 is the one I work on constantly, 1. is an Agency I would avoid and if it's 3. and it happens more than once I'd equally avoid as it means the Agency doesn't have a way of combating that.

[malvolio]

Fascinating conversation.

Just wondering why the agencies over the last 20 years haven't actually realised that they would save themselves a huge amount of work and risk by stopping selling people and starting selling skills? I've challenged several on this point and am usually met with some degree of dumb incomprehension (and that's talking to senior managers and some directors, not the junior on the resourcing desk). Now, come the new world, they may finally realise that what we been asking for since IR35 started is actually the whole solution.

Obviously some roles are inside IR35 so it makes no difference. But in my case, for example, there's no way I would ever be inside according to case law, so why is my contract stuffed with clauses trying to ensure that I am not an employee of the agency* or the client and imposing shedloads of conditions that simply do not apply to a supplier of services. Go take a look at the contract between your company and the office cleaners, for example.


* Although in many cases agencies seem to want to sell themselves as organisations with a stock of staff on hand ready to fill any role...

[GhostofTarbera]

* Although in many cases agencies seem to want to sell themselves as organisations with a stock of staff on hand ready to fill any role...

And they have missed the boat

Try completing with sapient or wipro where the entire scrum teams are from outside the EU, 70% Indian but now Turkey / china / Russian who are prepared to work 12 hours a day, 7 days a week, work from home when sick and seldom take a holiday and replaced when someone better / cheaper comes along - work visas lol that’s a real funny one


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[Snooky]

And they have missed the boat

Try completing with sapient or wipro where the entire scrum teams are from outside the EU, 70% Indian but now Turkey / china / Russian who are prepared to work 12 hours a day, 7 days a week, work from home when sick and seldom take a holiday and replaced when someone better / cheaper comes along - work visas lol that’s a real funny one


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You mention scrum teams so I assume the organisation is doing some flavour of Agile? I'm no Agile expert and I'm fairly sure they're not "doing" it properly, but at my client co they insist that colocation is one of the core tenets of Agile and they've gone all vertically-aligned, so it's actually had the effect that the whole team has to be in London - dev, support, end users - pretty much the opposite of the offshoring road they were careering down just a couple of years ago.

[dsc]

Just a quick question from myself after reading the above and having a conversation with my client today. If you are deemed to be inside by your client, there's bugger all you can do right? I mean apart from saying bye.

I'm near the end of my contract (mid Nov) and they are offering an extension, most likely 3 months which would take me to mid Feb, kind of perfect, as I can get paid before 6/4/19 and bugger off if need be. What shocks me is the sheer lack of understanding what happens if they carry on what their plan is ie. Deem everyone inside. I said that most contractors will walk to which they replied with "why?" and that it would be a huge risk to the business if it happened (at least that's right). No tulip sherlock..

[northernladuk]

They've decided that in their wisdom that if you want to challenge your status your first port of call is to raise it with your client. So by the letter there is something you can do. In practice it's probably bugger all as you state.

I think everyone that was following the consultation that saw that and rolled their eyes.

Have a read of this.
Off-Payroll draft legislation published: Government dismisses consultation concerns

[dsc]

As it turns out they are getting an outside company to do an assessment of their IR35 status, which means, at least theoretically, a more individual approach. They will most likely go through contracts etc. and deem most people in as the original contract I got was full of IR35 red flags (which they only found out about from myself after it was reviewed by Qdos - this then became their new "master" contract as far as I'm aware).

Any ideas on how this works if work is subcontracted to another company? There's two chaps working on the same floor, they are "loaners" from company X, one is a permie over there and the other is a contractor, I reckon he gets his own status assessed by company X as this is his direct client and the whole "loaning" situation doesn't really change things much? the guy gets moved about from project to project, "loaned" to different clients of company X, so it smells of "being used like a resource".

Thanks for the link, I think at this stage HMRC just ignores anyone, just ploughing through to get as much money as possible. Some of the recent cases mentioned by Qdos show how big of a bully they are, scaring the living s*it out of legit outside-IR35 contractors, only to back out at a random stage if so they decide.

[jamesbrown]

As it turns out they are getting an outside company to do an assessment of their IR35 status, which means, at least theoretically, a more individual approach. They will most likely go through contracts etc. and deem most people in as the original contract I got was full of IR35 red flags (which they only found out about from myself after it was reviewed by Qdos - this then became their new "master" contract as far as I'm aware).

Any ideas on how this works if work is subcontracted to another company? There's two chaps working on the same floor, they are "loaners" from company X, one is a permie over there and the other is a contractor, I reckon he gets his own status assessed by company X as this is his direct client and the whole "loaning" situation doesn't really change things much? the guy gets moved about from project to project, "loaned" to different clients of company X, so it smells of "being used like a resource".

Thanks for the link, I think at this stage HMRC just ignores anyone, just ploughing through to get as much money as possible. Some of the recent cases mentioned by Qdos show how big of a bully they are, scaring the living s*it out of legit outside-IR35 contractors, only to back out at a random stage if so they decide.

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.

[CryingSheep]

As it turns out they are getting an outside company to do an assessment of their IR35 status, which means, at least theoretically, a more individual approach. They will most likely go through contracts etc. and deem most people in as the original contract I got was full of IR35 red flags (which they only found out about from myself after it was reviewed by Qdos - this then became their new "master" contract as far as I'm aware).

Any ideas on how this works if work is subcontracted to another company? There's two chaps working on the same floor, they are "loaners" from company X, one is a permie over there and the other is a contractor, I reckon he gets his own status assessed by company X as this is his direct client and the whole "loaning" situation doesn't really change things much? the guy gets moved about from project to project, "loaned" to different clients of company X, so it smells of "being used like a resource".

Thanks for the link, I think at this stage HMRC just ignores anyone, just ploughing through to get as much money as possible. Some of the recent cases mentioned by Qdos show how big of a bully they are, scaring the living s*it out of legit outside-IR35 contractors, only to back out at a random stage if so they decide.

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?