Contractors: IR35 & general discussion

[zippy3x]

Mr Pointy said:

zippy3x said:

Mr Pointy said:

Some of the posts by contractors on this thread are quite hilairious.

Lets face it, it's going to come down to who holds out longest: the clients who need to roll out projects or the contractors who need to pay the mortgage & the loan on the Jag/Beemer/Audi RS.

I've got > 2 years "wages" in the bank, can your project wait 2 years?

I won't need to since there'll be shedloads of contractors not in your position.

Wait until March/April when you haven't got a contract & need to decide if you're going to make that huge, tax efficient pension payment out of your reserves. Do you feel lucky, punk? (I'm aware it's a misquote).

Goes back to good contractors, or bad ones. I've been contracting probably 13 years now, I know many contractors. Good contractors get to pick their contracts, get to pick enjoyable or lucrative ones, get to put money aside for rainy days. Not all do of course, but in my experience the majority do.

Poor contractors, tend to have less choice and work for lower rates.

I'll leave it to you to guess which contractors will be in your "shedloads" category.

[Countdown]

zippy3x said:

This is kind of what I've been trying to get across all thread long. Your decision to adopt a higly risk averse stance and effectively put everyone inside, may have a significant financial cost. If HMRC's "vision" of IR35 is not backed by the courts, that's money you're wasting. Therefore as I have previously said, there is the potential for companies that take a more "risky" stance to gain a competative advantage.

Possibly. However that applies to any business decision - some companies take more risks than others and "win" (at least in the short or medium" term. Others take risks and lose. My company as a rule is very risk averse. That might change depending on the hit to our bottom line, it might not. But we'll weigh that up based on what's best for the Company, not what's best for Contractors.

zippy3x said:

You highlighted me when I said "no reward"

Apologies, I misread.

zippy3x said:

I've got a newsflash for you, HMRC think every contractor is a shadow employee

Again I can only speak from personal experience but the ones I've discussed with IT HAVE been shadow employees. they were literally doing the same job as 3 people sat alongside them on the same desk. the reason why they were employed was because they were just as cheap as Employees (after taking into account Ers NI/Pension) and the IT Director could hire and fire in line with demand. Nothiing wrong with that in principle, they were similar to the Agency staff we had in Finance, except that the Agency staff were PAYE with their Agency and the IT guys were all invoicing their Agency and being paid gross. That's what HMRC are trying to crack down on (IMHO) - people who are basically working as Employees but being paid gross of tax and NI.

We DO have genuine "Contractors" (ie people who we feel meet the HMRC definitions). They maintain our Finance and HR systems when we report bugs. So we ask them to do a specific job, somebody in India provides us with a quote for X hours worth of work @£200/hour, they do the work, our IT Department fixes the bugs in their work, and then they invoice us. We rarely see them, it's usually one of 5 developers who does our work but we don't know who, we don't choose, we simply commission a piece of work, they invoice us, we pay. That's a world apart from somebody who's contracted to work on 6-2, 2-10, and 10-6 shifts on the helpdesk.

[wombleh]

zippy3x said:

zippy3x said:

wormus said:

This is a good guide
https://www.crunch.co.uk/knowledge/tax/is-my-contr...

Just to add evidence and the duration of substitution is significant. They are looking for a longer duration or frequency than just somebody just covering your 2 week annual holiday. Especially on engagements over say 6m - 12m

I may have missed it, but where on the page does it mention length of substitution. Even in the "make it up as you go along" journey that is IR35, i've never heard that one.

btw Wormus, still waiting on guidance for this

There is case history where a cloakroom attendant was found to be a disguised employee despite them actively sending a substitute link.

To my mind substitution is unlikely to apply to most tech roles, I'd bet most end clients have no clue it's even in their agency contracts. D&C/MOO are more useful indicators.

[worsy]

Countdown said:

<Snip>

zippy3x said:

I've got a newsflash for you, HMRC think every contractor is a shadow employee

Again I can only speak from personal experience but the ones I've discussed with IT HAVE been shadow employees. they were literally doing the same job as 3 people sat alongside them on the same desk. the reason why they were employed was because they were just as cheap as Employees (after taking into account Ers NI/Pension) and the IT Director could hire and fire in line with demand. Nothiing wrong with that in principle, they were similar to the Agency staff we had in Finance, except that the Agency staff were PAYE with their Agency and the IT guys were all invoicing their Agency and being paid gross. That's what HMRC are trying to crack down on (IMHO) - people who are basically working as Employees but being paid gross of tax and NI.

We DO have genuine "Contractors" (ie people who we feel meet the HMRC definitions). They maintain our Finance and HR systems when we report bugs. So we ask them to do a specific job, somebody in India provides us with a quote for X hours worth of work @£200/hour, they do the work, our IT Department fixes the bugs in their work, and then they invoice us. We rarely see them, it's usually one of 5 developers who does our work but we don't know who, we don't choose, we simply commission a piece of work, they invoice us, we pay. That's a world apart from somebody who's contracted to work on 6-2, 2-10, and 10-6 shifts on the helpdesk.

Good post, and you highlight the two ends of the spectrum. I can't argue with your differentiation, however there is a huge middle ground of people who are engaged to deliver stuff on a project basis. Some who act as permies, stay for 5 years and get thrown all sorts of BAU tasks and some who act as genuine service providers deliver a good service and move on to the next client. It's those in the latter camp where I think most of the contractors posting here feel they sit who are getting sh*t on with this.

[hyphen]

Countdown said:

gain I can only speak from personal experience but the ones I've discussed with IT HAVE been shadow employees. they were literally doing the same job as 3 people sat alongside them on the same desk. the reason why they were employed was because they were just as cheap as Employees (after taking into account Ers NI/Pension) and the IT Director could hire and fire in line with demand. Nothiing wrong with that in principle, they were similar to the Agency staff we had in Finance, except that the Agency staff were PAYE with their Agency and the IT guys were all invoicing their Agency and being paid gross. That's what HMRC are trying to crack down on (IMHO) - people who are basically working as Employees but being paid gross of tax and NI.

We DO have genuine "Contractors" (ie people who we feel meet the HMRC definitions). They maintain our Finance and HR systems when we report bugs. So we ask them to do a specific job, somebody in India provides us with a quote for X hours worth of work @£200/hour, they do the work, our IT Department fixes the bugs in their work, and then they invoice us. We rarely see them, it's usually one of 5 developers who does our work but we don't know who, we don't choose, we simply commission a piece of work, they invoice us, we pay. That's a world apart from somebody who's contracted to work on 6-2, 2-10, and 10-6 shifts on the helpdesk.

£200 an hour? In India.

[Countdown]

hyphen said:

£200 an hour? In India.

Slightly tongue in cheek - the company we've got a maintenance contract with is UK registered. However they seem to outsource a lot of their stuff to India. Deciphering what they (the Indian tech guys) mean on their emails is a ballache!

[Mr Pointy]

worsy said:

Good post, and you highlight the two ends of the spectrum. I can't argue with your differentiation, however there is a huge middle ground of people who are engaged to deliver stuff on a project basis. Some who act as permies, stay for 5 years and get thrown all sorts of BAU tasks and some who act as genuine service providers deliver a good service and move on to the next client. It's those in the latter camp where I think most of the contractors posting here feel they sit who are getting sh*t on with this.

Everyone knows the vast, vast majority of contractors are in the first group. The number who are truly acting on their own account is tiny. They hate to have it pointed out though.

[Countdown]

worsy said:

Good post, and you highlight the two ends of the spectrum. I can't argue with your differentiation, however there is a huge middle ground of people who are engaged to deliver stuff on a project basis. Some who act as permies, stay for 5 years and get thrown all sorts of BAU tasks and some who act as genuine service providers deliver a good service and move on to the next client. It's those in the latter camp where I think most of the contractors posting here feel they sit who are getting sh*t on with this.

Fair enough. I agree and I'm also very conscious that my experience with Contractors is very limited, especially in comparison to people working in industries such as banking.

[zippy3x]

wombleh said:

zippy3x said:

zippy3x said:

wormus said:

This is a good guide
https://www.crunch.co.uk/knowledge/tax/is-my-contr...

Just to add evidence and the duration of substitution is significant. They are looking for a longer duration or frequency than just somebody just covering your 2 week annual holiday. Especially on engagements over say 6m - 12m

I may have missed it, but where on the page does it mention length of substitution. Even in the "make it up as you go along" journey that is IR35, i've never heard that one.

btw Wormus, still waiting on guidance for this

There is case history where a cloakroom attendant was found to be a disguised employee despite them actively sending a substitute link.

To my mind substitution is unlikely to apply to most tech roles, I'd bet most end clients have no clue it's even in their agency contracts. D&C/MOO are more useful indicators.

That's it?

"In the (1953) case of Pauley v. Kenaldo Ltd however, where a cloakroom attendant had to arrange for a substitute at her own expense on her day off but was otherwise obliged to carry out work personally, it was held that the contract could be one of employment."

Doesn't mention duration?

I'm going to assume that Ms Pauley wasn't operating via a Ltd company and as I'm sure you know employment status is quite different with self-employment

Also literally the paragraph above:

"In Express and Echo Ltd v Tanton the Court of Appeal held that where a worker was free, under the terms of his contract, to use a substitute whenever he was unable or unwilling to do the work personally, that meant that the contract could not be a contract of employment."

I'm not a lawyer and I have no idea if either of those cases are relevant to IR35, or which would take precedence.

I do agree the right of substitution doubtful, but not only to contractors. In my youth I did occasional building site work. I was once thrown off-site for smoking in a restricted area. My employer was told in no uncertain terms that I would not be allowed back on site, on that day or any other.

Someone mentioned PAT testers last week, suppose one of the testers came on site and spent all day chatting up the office girls in a bordeline threatening way, leading to many complaints. Would the client be within their rights to ban that tester from their site?

Bottom line is it's doubtfull that any company truly has the "right" to substitution without any possible scenario where a substitute could be vetoed.

[worsy]

Mr Pointy said:

worsy said:

Good post, and you highlight the two ends of the spectrum. I can't argue with your differentiation, however there is a huge middle ground of people who are engaged to deliver stuff on a project basis. Some who act as permies, stay for 5 years and get thrown all sorts of BAU tasks and some who act as genuine service providers deliver a good service and move on to the next client. It's those in the latter camp where I think most of the contractors posting here feel they sit who are getting sh*t on with this.

Everyone knows the vast, vast majority of contractors are in the first group. The number who are truly acting on their own account is tiny. They hate to have it pointed out though.

You might be correct, but I would argue I fit into the service provider bucket, and therefore in the main the people I work with are also similarly defined.

I do not, however differentiate between people who are sat doing BAU support, Development etc who are, as you suggest a bum on seat. I never have cause to ask them if they are a permy or contractor so would never know.

So if there are thousands of these people, I wouldn't know and would have to agree with you.

[Mr Pointy]

worsy said:

Mr Pointy said:

worsy said:

Good post, and you highlight the two ends of the spectrum. I can't argue with your differentiation, however there is a huge middle ground of people who are engaged to deliver stuff on a project basis. Some who act as permies, stay for 5 years and get thrown all sorts of BAU tasks and some who act as genuine service providers deliver a good service and move on to the next client. It's those in the latter camp where I think most of the contractors posting here feel they sit who are getting sh*t on with this.

Everyone knows the vast, vast majority of contractors are in the first group. The number who are truly acting on their own account is tiny. They hate to have it pointed out though.

You might be correct, but I would argue I fit into the service provider bucket, and therefore in the main the people I work with are also similarly defined.

I do not, however differentiate between people who are sat doing BAU support, Development etc who are, as you suggest a bum on seat. I never have cause to ask them if they are a permy or contractor so would never know.

So if there are thousands of these people, I wouldn't know and would have to agree with you.

Would you describe for us what you do & how you work?

[worsy]

Mr Pointy said:

worsy said:

Mr Pointy said:

worsy said:

Good post, and you highlight the two ends of the spectrum. I can't argue with your differentiation, however there is a huge middle ground of people who are engaged to deliver stuff on a project basis. Some who act as permies, stay for 5 years and get thrown all sorts of BAU tasks and some who act as genuine service providers deliver a good service and move on to the next client. It's those in the latter camp where I think most of the contractors posting here feel they sit who are getting sh*t on with this.

Everyone knows the vast, vast majority of contractors are in the first group. The number who are truly acting on their own account is tiny. They hate to have it pointed out though.

You might be correct, but I would argue I fit into the service provider bucket, and therefore in the main the people I work with are also similarly defined.

I do not, however differentiate between people who are sat doing BAU support, Development etc who are, as you suggest a bum on seat. I never have cause to ask them if they are a permy or contractor so would never know.

So if there are thousands of these people, I wouldn't know and would have to agree with you.

Would you describe for us what you do & how you work?

Yes, I'm a PM in a specific niche IT industry, I am engaged to implement a specific system which may include the processes that underpin it. The nature of the niche means the underlying system knowledge is not usually available in the customer employee base.

I am usually expected to build the delivery team which would normally include a third party delivery partner plus additional contractor resources. Occasionally I may have a small number of internal resources in my team who will form the eventual support team. I manage the client budget, plan and associated deliverables. Occasionally the client may have a delivery framework that I need to follow in terms of governance but how I choose to deliver the project will be my decision.

I'm not told what to do or how to do it, simply asked to deliver an outcome. I choose my own working hours and whether I attend the office or not. There is no expectation that once i have achieved what I have been asked, any further project work will be offered or accepted. I certainly wouldn't expect to be given tasks to "fill my time" during a period of quiet.

I do not attend generic client parties like the summer bbq, christmas party etc, nor do I request days off. Rather i inform the client when i'm not available with as much notice as possible to be courteous.

I bring my own Phone/IT equipment including software I need, such as Visio, MS Project etc although invariably the client supplies all staff, consultants and contractors with a laptop to aid access to the client infrastructure.

My contract states I am liable for any poor work and would need to remediate at my own expense. I have my own insurances, indemnity, liability etc.

Edited by worsy on Friday 4th October 18:11

[Mr Pointy]

worsy said:

Yes, I'm a PM in a specific niche IT industry, I am engaged to implement a specific system which may include the processes that underpin it. The nature of the niche means the underlying system knowledge is not usually available in the customer employee base.

I am usually expected to build the delivery team which would normally include a third party delivery partner plus additional contractor resources. Occasionally I may have a small number of internal resources in my team who will form the eventual support team. I manage the client budget, plan and associated deliverables. Occasionally the client may have a delivery framework that I need to follow in terms of governance but how I choose to deliver the project will be my decision.

I'm not told what to do or how to do it, simply asked to deliver an outcome. I choose my own working hours and whether I attend the office or not. There is no expectation that once i have achieved what I have been asked, any further project work will be offered or accepted. I certainly wouldn't expect to be given tasks to "fill my time" during a period of quiet.

I do not attend generic client parties like the summer bbq, christmas party etc, nor do I request days off. Rather i inform the client when i'm not available with as much notice as possible to be courteous.

I bring my own Phone/IT equipment including software I need, such as Visio, MS Project etc although invariably the client supplies all staff, consultants and contractors with a laptop to aid access to the client infrastructure.

My contract states I am liable for any poor work and would need to remediate at my own expense. I have my own insurances, indemnity, liability etc.

Who engages & pays the "delivery team which would normally include a third party delivery partner plus additional contractor resources"? I suspect you don't, although I may be wrong.

If you are supplying all elements required to implement the whole project then you might get away with saying you are outside IR35/working on your own account. If you aren't delivering the project as a packaged whole then you're basically a PM overseeing the delivery; you're inside IR35.

What would the client say if you told them you weren't going to run the project & you'd be sending someone else?

[FredClogs]

Mr Pointy said:

worsy said:

Yes, I'm a PM in a specific niche IT industry, I am engaged to implement a specific system which may include the processes that underpin it. The nature of the niche means the underlying system knowledge is not usually available in the customer employee base.

I am usually expected to build the delivery team which would normally include a third party delivery partner plus additional contractor resources. Occasionally I may have a small number of internal resources in my team who will form the eventual support team. I manage the client budget, plan and associated deliverables. Occasionally the client may have a delivery framework that I need to follow in terms of governance but how I choose to deliver the project will be my decision.

I'm not told what to do or how to do it, simply asked to deliver an outcome. I choose my own working hours and whether I attend the office or not. There is no expectation that once i have achieved what I have been asked, any further project work will be offered or accepted. I certainly wouldn't expect to be given tasks to "fill my time" during a period of quiet.

I do not attend generic client parties like the summer bbq, christmas party etc, nor do I request days off. Rather i inform the client when i'm not available with as much notice as possible to be courteous.

I bring my own Phone/IT equipment including software I need, such as Visio, MS Project etc although invariably the client supplies all staff, consultants and contractors with a laptop to aid access to the client infrastructure.

My contract states I am liable for any poor work and would need to remediate at my own expense. I have my own insurances, indemnity, liability etc.

Who engages & pays the "delivery team which would normally include a third party delivery partner plus additional contractor resources"? I suspect you don't, although I may be wrong.

If you are supplying all elements required to implement the whole project then you might get away with saying you are outside IR35/working on your own account. If you aren't delivering the project as a packaged whole then you're basically a PM overseeing the delivery; you're inside IR35.

What would the client say if you told them you weren't going to run the project & you'd be sending someone else?

You seem very certain of your opinion, even though Tribunal decisions and case law would seem to imply the opposite. Are you sure you're not just talking bks?

[worsy]

FredClogs said:

Mr Pointy said:

worsy said:

Yes, I'm a PM in a specific niche IT industry, I am engaged to implement a specific system which may include the processes that underpin it. The nature of the niche means the underlying system knowledge is not usually available in the customer employee base.

I am usually expected to build the delivery team which would normally include a third party delivery partner plus additional contractor resources. Occasionally I may have a small number of internal resources in my team who will form the eventual support team. I manage the client budget, plan and associated deliverables. Occasionally the client may have a delivery framework that I need to follow in terms of governance but how I choose to deliver the project will be my decision.

I'm not told what to do or how to do it, simply asked to deliver an outcome. I choose my own working hours and whether I attend the office or not. There is no expectation that once i have achieved what I have been asked, any further project work will be offered or accepted. I certainly wouldn't expect to be given tasks to "fill my time" during a period of quiet.

I do not attend generic client parties like the summer bbq, christmas party etc, nor do I request days off. Rather i inform the client when i'm not available with as much notice as possible to be courteous.

I bring my own Phone/IT equipment including software I need, such as Visio, MS Project etc although invariably the client supplies all staff, consultants and contractors with a laptop to aid access to the client infrastructure.

My contract states I am liable for any poor work and would need to remediate at my own expense. I have my own insurances, indemnity, liability etc.

Who engages & pays the "delivery team which would normally include a third party delivery partner plus additional contractor resources"? I suspect you don't, although I may be wrong.

If you are supplying all elements required to implement the whole project then you might get away with saying you are outside IR35/working on your own account. If you aren't delivering the project as a packaged whole then you're basically a PM overseeing the delivery; you're inside IR35.

What would the client say if you told them you weren't going to run the project & you'd be sending someone else?

You seem very certain of your opinion, even though Tribunal decisions and case law would seem to imply the opposite. Are you sure you're not just talking bks?

This

[Gazzab]

FredClogs said:

You seem very certain of your opinion, even though Tribunal decisions and case law would seem to imply the opposite. Are you sure you're not just talking bks?

I understand why he might be of this opinion. It’s typical layman or politicians view. I run big programmes of work for big ftse 100 companies. Like the project manager above I am not controlled by the client, I do not partake in any ‘permie’ stuff, I use my own equipment (albeit the clients will often have security etc reasons why I need to use one of their laptops), I can substitute myself, I have significant liability insurance, i define my own working practices etc etc etc. But now it will be clients defining my IR35 status which will likely mean some overtly risk averse companies will cease to be potential clients, at least for now (albeit I don’t expect the blankets to cover everyone).

[anonymous-user]

FredClogs said:

You seem very certain of your opinion, even though Tribunal decisions and case law would seem to imply the opposite. Are you sure you're not just talking bks?

So do you think a company would opt to not pay VAT, PAYE/NI or CT because it “doesn’t apply to them” ? Of course not and this is the same. On average an additional 26% paid to every contractor inside IR35 will go to HMRC. The liability is on the company who employs their services and can be ruinous if they get it wrong. They will not accept that risk which is what you are seeing with the banks, GSK etc.

Sadly your point of view is out of date and largely irrelevant.

[anonymous-user]

anonymous said:

[redacted]

Exactly

[wombleh]

zippy3x said:

That's it?

May not be as wasn't me who originally made that claim, that was just an case I'd found when it was mentioned that was interesting. I'm not sure where the guidance on length of substitution has come from, I had the impression HMRC run a mile as soon as they hear that any kind of substitution has gone on.

Edited by wombleh on Friday 4th October 23:42

[Dog Star]

After 21 years of contracting I stopped a few years ago. I ignored IR35, but even so it was crap compared to back in the day.

However this is the future:



That’s going to be how the vast majority of contracts will go now; they’ll all follow. You won’t get a choice in the matter.

<GAME OVER>