Contractors: IR35 & general discussion

[servantleader]

deebs said:

I had a look at the CEST tool again the other day based on a new contract I'm trying to *ahem* win. After a couple of questions , it asked if the client would be able in any circumstances reject a substitute. I answered no, and then it asked something along the lines of: if a substitute was to be used, who would pay the substitute: my business, or the client/agency. It had an additional bit of info that said, if it's the client /agency the intermediary legislation (IR35) applies to this engagement.

I thought that's a clever wee nudge , you can smash most reviews out the park with that, will they accept a subbie, yes, then who will pay the subbie you or the client. 3 questions and your goose is cooked.

As a contractor myself, I would expect my business to pay any substitutes I send in.

[UpTheIron]

servantleader said:

As a contractor myself, I would expect my business to pay any substitutes I send in.

Exactly. It's been an obvious indicator from the year dot.

[deebs]

UpTheIron said:

servantleader said:

As a contractor myself, I would expect my business to pay any substitutes I send in.

Exactly. It's been an obvious indicator from the year dot.

Sure , but you think the end client faced with these sorts of questions, where is says they will continue to pay "you" for the work even though " you" aren't on site and another individual is will see it the same way?

[blank]

deebs said:

UpTheIron said:

servantleader said:

As a contractor myself, I would expect my business to pay any substitutes I send in.

Exactly. It's been an obvious indicator from the year dot.

Sure , but you think the end client faced with these sorts of questions, where is says they will continue to pay "you" for the work even though " you" aren't on site and another individual is will see it the same way?

Isn't that exactly how a B2B supply/purchasing engagement usually works?

Business A purchases services from business B, gets invoiced, and pays them. Who Business B sends to deliver those services is pretty much irrelevant.

We have some PAT testers going round work at the moment. If tomorrow's bloke is different to today's no-one will bat an eyelid.

[hyphen]

Spoke to someone at a large ftse financial today Their contractors are being extended to March.

So sounds like they are going to keep them going (on some manner) after April, or they would have extended them shorter and replaced with perm.

[anonymous-user]

Think about the reality which is about unfettered substitution - you as a business gets to say who does the job, not your end client. This means you have access to several people who can do the work which is fine if you are working as a proper business. If you are a one man contractor business working as a permie would, you’ll be inside.

[deebs]

blank said:

deebs said:

UpTheIron said:

servantleader said:

As a contractor myself, I would expect my business to pay any substitutes I send in.

Exactly. It's been an obvious indicator from the year dot.

Sure , but you think the end client faced with these sorts of questions, where is says they will continue to pay "you" for the work even though " you" aren't on site and another individual is will see it the same way?

Isn't that exactly how a B2B supply/purchasing engagement usually works?

Business A purchases services from business B, gets invoiced, and pays them. Who Business B sends to deliver those services is pretty much irrelevant.

We have some PAT testers going round work at the moment. If tomorrow's bloke is different to today's no-one will bat an eyelid.

Im not sure examples at the extreme end of the scale help bring clarity to the situation. PAT testers I'm guessing will be in and out in a couple of weeks. Many contractors will be working on projects with clients for years, as would any of the big 4 consultancies if they were engaged instead. Their knowledge of the organisation, work done to date etc is embedded in them as individuals, regardless of how big the organisation behind them are. But neither example helps.

wormus said:

Think about the reality which is about unfettered substitution - you as a business gets to say who does the job, not your end client. In reality this means you have access to several people who can do the work which is fine if you are working as a proper business. If you are a one man contractor business working as a permie would, you’ll be inside.

I'm with you and I'm not particularly bothered about fighting clients or HMRC about it, for me I'll go umbrella , close the company and everything regardless of what the client thinks will be out through PAYE. Life will be more simple as less worrisome that way.

However, part of what I've done in the recent past is manage on behalf of 'my" client, the consultancy and system implementations from other companies (e.g. oracle). On my last contract, the big consultanty tried to change the consultants on the project, but I, representing the client, told them in no uncertain terms that wasn't going to happen as it would negatively impact the work. Contractually of course they would be able to but in reality my client would not accept it. The big consultanty also had to provide a "profile" of all the people they have on site (like a cut down CV) giving me an overview of the skills and experience of people they wanted £much a day for.

It seems like a strange punishment to one man band businesses to use substitution as a key deciding factor in all this when the reality for a multi billion dollar company, in this instance, was the same . If this arrangement had been subject to the same test/questions using CEST as I will be as a contractor , they too would fall foul of the intermediary legislation on substitution questions alone, even though it's pretty clear they are not an intermediary.

[98elise]

servantleader said:

deebs said:

I had a look at the CEST tool again the other day based on a new contract I'm trying to *ahem* win. After a couple of questions , it asked if the client would be able in any circumstances reject a substitute. I answered no, and then it asked something along the lines of: if a substitute was to be used, who would pay the substitute: my business, or the client/agency. It had an additional bit of info that said, if it's the client /agency the intermediary legislation (IR35) applies to this engagement.

I thought that's a clever wee nudge , you can smash most reviews out the park with that, will they accept a subbie, yes, then who will pay the subbie you or the client. 3 questions and your goose is cooked.

As a contractor myself, I would expect my business to pay any substitutes I send in.

So would I.

[worsy]

98elise said:

servantleader said:

deebs said:

I had a look at the CEST tool again the other day based on a new contract I'm trying to *ahem* win. After a couple of questions , it asked if the client would be able in any circumstances reject a substitute. I answered no, and then it asked something along the lines of: if a substitute was to be used, who would pay the substitute: my business, or the client/agency. It had an additional bit of info that said, if it's the client /agency the intermediary legislation (IR35) applies to this engagement.

I thought that's a clever wee nudge , you can smash most reviews out the park with that, will they accept a subbie, yes, then who will pay the subbie you or the client. 3 questions and your goose is cooked.

As a contractor myself, I would expect my business to pay any substitutes I send in.

So would I.

Agreed, sub contract with the subbie, you pay subbie and invoice agent. Chance to make a margin too

[Flooble]

worsy said:

98elise said:

servantleader said:

deebs said:

I had a look at the CEST tool again the other day based on a new contract I'm trying to *ahem* win. After a couple of questions , it asked if the client would be able in any circumstances reject a substitute. I answered no, and then it asked something along the lines of: if a substitute was to be used, who would pay the substitute: my business, or the client/agency. It had an additional bit of info that said, if it's the client /agency the intermediary legislation (IR35) applies to this engagement.

I thought that's a clever wee nudge , you can smash most reviews out the park with that, will they accept a subbie, yes, then who will pay the subbie you or the client. 3 questions and your goose is cooked.

As a contractor myself, I would expect my business to pay any substitutes I send in.

So would I.

Ditto, this is how I have done it in the past. Your company signed the contract, you should be the one to bear the risk of getting paid by the customer.

Otherwise all you have done is made an introduction ...

Agreed, sub contract with the subbie, you pay subbie and invoice agent. Chance to make a margin too

[Autopilot]

Gecko1978 said:

oh I also have more than 1 client at one time its fking tiring to be honest but if that is what it takes to add to the outside IR35 status happy to.

It doesn't add to being outside IR35, it just means that each of your engagements needs the end client to determine whether that particular engagement is in or out. It's perfectly feasible to have one contract inside, one out, both in, both out etc. The IR35 status isn't about you, it's about the specific engagement and the T's and C's that surround it.

[anonymous-user]

Autopilot said:

It doesn't add to being outside IR35, it just means that each of your engagements needs the end client to determine whether that particular engagement is in or out. It's perfectly feasible to have one contract inside, one out, both in, both out etc. The IR35 status isn't about you, it's about the specific engagement and the T's and C's that surround it.

Specifically it’s about working practices, mainly:

Control and direction
The right to substitute
Mutuality of obligation

However there are other indicators which all contribute. One of the main ones for us has been contractors who are just part and parcel of the organisation. Useful people who do stuff.

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

Edited by anonymous-user on Wednesday 25th September 16:09

[theboss]

Autopilot said:

It doesn't add to being outside IR35, it just means that each of your engagements needs the end client to determine whether that particular engagement is in or out. It's perfectly feasible to have one contract inside, one out, both in, both out etc. The IR35 status isn't about you, it's about the specific engagement and the T's and C's that surround it.

I don’t think it would be a major determining factor in an IR35 investigation, but if my “main” contract were scrutinised, I would certainly argue that providing professional services to other clients concurrently to the “main” contract is something which should be taken into account. Just about every employment relationship, certainly in the industry concerned, is based on exclusivity and the idea that a member of staff can just inform the employer they are working for someone else next week is nonsense. So whilst not a deciding factor it would certainly lend some weight to an argument IMHO.

[zippy3x]

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.

[Countdown]

theboss said:

I don’t think it would be a major determining factor in an IR35 investigation, but if my “main” contract were scrutinised, I would certainly argue that providing professional services to other clients concurrently to the “main” contract is something which should be taken into account. Just about every employment relationship, certainly in the industry concerned, is based on exclusivity and the idea that a member of staff can just inform the employer they are working for someone else next week is nonsense. So whilst not a deciding factor it would certainly lend some weight to an argument IMHO.

Apologies if I've misinterpreted but if your "Main" Contractor can decide who you can/cannot work for, that (to me) suggests that you're an Employee as opposed to Self-Employed.

[Autopilot]

Countdown said:

theboss said:

I don’t think it would be a major determining factor in an IR35 investigation, but if my “main” contract were scrutinised, I would certainly argue that providing professional services to other clients concurrently to the “main” contract is something which should be taken into account. Just about every employment relationship, certainly in the industry concerned, is based on exclusivity and the idea that a member of staff can just inform the employer they are working for someone else next week is nonsense. So whilst not a deciding factor it would certainly lend some weight to an argument IMHO.

Apologies if I've misinterpreted but if your "Main" Contractor can decide who you can/cannot work for, that (to me) suggests that you're an Employee as opposed to Self-Employed.

You have indeed misinterpreted and misread

Theboss said 'Main Contract', meaning his companies current main source of income. In other words, his point is that if HMRC were to investigate him, part of his defence would be that his company sells services to other companies, so not something an employee would typically do.so would look more like a business than an employee.

[Venturist]

Autopilot said:

You have indeed misinterpreted and misread

Theboss said 'Main Contract', meaning his companies current main source of income. In other words, his point is that if HMRC were to investigate him, part of his defence would be that his company sells services to other companies, so not something an employee would typically do.so would look more like a business than an employee.

They’ll argue of course that it’s perfectly common to have more than one job as salaried staff, surely?

[Autopilot]

theboss said:

Autopilot said:

It doesn't add to being outside IR35, it just means that each of your engagements needs the end client to determine whether that particular engagement is in or out. It's perfectly feasible to have one contract inside, one out, both in, both out etc. The IR35 status isn't about you, it's about the specific engagement and the T's and C's that surround it.

I don’t think it would be a major determining factor in an IR35 investigation, but if my “main” contract were scrutinised, I would certainly argue that providing professional services to other clients concurrently to the “main” contract is something which should be taken into account. Just about every employment relationship, certainly in the industry concerned, is based on exclusivity and the idea that a member of staff can just inform the employer they are working for someone else next week is nonsense. So whilst not a deciding factor it would certainly lend some weight to an argument IMHO.

If I had multiple contracts, I would of course do the same if investigated, demonstrate that my business has multiple customers because I chose that and I'm allowed to, I'm a business and not subject to an employee contract.

I guess the issue is going to be that after April 2020, multiple contracts won't mean anything as us contractors don't get any say in the status other then by not going for any Inside IR35 contracts

[Autopilot]

Venturist said:

They’ll argue of course that it’s perfectly common to have more than one job as salaried staff, surely?

Undoubtedly...and it's a strong argument as the very person I'm sat opposite at a client site today works in a bar in the evenings etc etc.

[Olivera]

Autopilot said:

If I had multiple contracts, I would of course do the same if investigated, demonstrate that my business has multiple customers because I chose that and I'm allowed to, I'm a business and not subject to an employee contract.

I guess the issue is going to be that after April 2020, multiple contracts won't mean anything as us contractors don't get any say in the status other then by not going for any Inside IR35 contracts

Multiple contracts mean absolutely *nothing* just now when attempting to prove IR35 status. Whether you have 1 or 100 clients makes no difference, each contract is assessed individually without reference to the others.