Contractors: IR35 & general discussion

[anonymous-user]

Olivera said:

Would you not agree that is an anomalous and unfair arrangement?

You could ask to go perm?

Besides, I don’t make the rules so it doesn’t matter what I think.

[snake_oil]

A question to which I think I know the answer but will stay schtum for now to gather opinion.

If a working relationship looks like this:

Contractor > Ltd Co > Agency > Client (Supplier) > End Client

Who is the entity the responsibility falls upon to determine the employee status?

Ie recruited through an agency to work for a major company, who in turn have many customers at which there are numerous projects.

Edited by snake_oil on Thursday 3rd October 21:42

[Countdown]

Olivera said:

wormus said:

No, you are not an employee of the end client, you are just taxed as if you are. If you want the bens, you’ll need to work for them.

Would you not agree that is an anomalous and unfair arrangement?

Arguably a bit like shadow employees.

[anonymous-user]

snake_oil said:

A question to which I think I know the answer but will stay schtum for now to gather opinion.

If a working relationship looks like this:

Contractor > Ltd Co > Agency > Client (Supplier) > End Client

Who is the entity the responsibility falls upon to determine the employee status?

Always the end client, the entity you are doing the work for.

[snake_oil]

wormus said:

Always the end client, the person you are doing the work for.

Can you check my edit.

Say, a contractor could be working on projects at several end clients simultaneously. And have nothing to do with the end client in terms of management, IT, anything like that.

Simply delivering a project.

[anonymous-user]

snake_oil said:

Can you check my edit.

Say, a contractor could be working on projects at several end clients simultaneously. And have nothing to do with the end client in terms of management, IT, anything like that.

Simply delivering a project.

Same answer. It’s designed to stop employees disguised behind an intermediary like ltd company hence intermediary regulations #35 (IR35). Only thing that’s changed is the end client has the responsibility for determining if you are working for a proper company or pretending. If you look like an employee, you are one, no matter how many layers you wrap around it.

If for example you own a cabling company and you go into an office to re cable it with cat 6 - you are in to do a defined job using your expertise and equipment, using whoever you want and at the end of the job you leave. This is outside IR35.

That’s not the same as going into an office for example to write software day in, day out where you are told what to do, where to do it and it’s open ended for say 12m. That’s being a disguised employee.

Edited by anonymous-user on Thursday 3rd October 22:05

[FredClogs]

wormus said:

Gecko1978 said:

but do not think for one moment a large multi national does not have the resouce to write a contract that is CEST compliant.

You can’t write a contract that’s compliant for people who are working as disguised employees, which many contractors are. Working practices determine your status, not the contract. And you cannot beat HMRC as the recent ruling against the two BBC presenters has proven. https://www.google.co.uk/amp/s/www.theregister.co....

That's complete gibberish, HMRC have won a very small percentage of cases, even high profile media ones, they lost against Lorrain Kelly and their record of wins against small less publicly known names have withered to virtually nil over the last 15 years.

The HMRC are no infallible in their own poorly constructed, enforced and understood rules.

[anonymous-user]

FredClogs said:

That's complete gibberish, HMRC have won a very small percentage of cases, even high profile media ones, they lost against Lorrain Kelly and their record of wins against small less publicly known names have withered to virtually nil over the last 15 years.

The HMRC are no infallible in their own poorly constructed, enforced and understood rules.

And you obviously haven’t grasped how the regulations are changing or how it affects you.

https://www.personneltoday.com/hr/barclays-and-oth...

https://www.google.co.uk/amp/s/www.computerweekly....

[anonymous-user]

As I’ve said several times, I’m only trying to help, using my own experience to educate others. I’m not going to be criticised for it so I’ll leave you to do your own research.

[FredClogs]

wormus said:

FredClogs said:

That's complete gibberish, HMRC have won a very small percentage of cases, even high profile media ones, they lost against Lorrain Kelly and their record of wins against small less publicly known names have withered to virtually nil over the last 15 years.

The HMRC are no infallible in their own poorly constructed, enforced and understood rules.

And you obviously haven’t grasped how the regulations are changing or how it affects you.

https://www.personneltoday.com/hr/barclays-and-oth...

https://www.google.co.uk/amp/s/www.computerweekly....

Blah blah blah. I've been doing this for 20 years with IR35 hanging like the sword of damocles over the industry for all that time, I'm fully aware of my position and fully aware of the success rate of HMRC at tribunal.

As the definitions within the IR35 legislation aren't changing, my working practices aren't changing, my clients requirements aren't changing and the HMRCs resources to investigate on a case by case basis aren't changing (I suspect rather they'll be reduced) I'm failing to see quite what will be changing.

[Olivera]

anonymous said:

[redacted]

Not always, the 'fee-payer' makes the paye/nic deductions, which *may* be different from the 'end-user'.

It's a clusterfk of complexity, so much so that many large companies are avoiding this HMRC debacle altogether by refusing to even consider engaging contractors of any kind.

[GT03ROB]

Olivera said:

wormus said:

No, you are not an employee of the end client, you are just taxed as if you are. If you want the bens, you’ll need to work for them.

Would you not agree that is an anomalous and unfair arrangement?

Not at all.... as a contractor be it in or outside IR35 ….. it's all in your rate. What you decide to provide for yourself as benefits out of you rate is up to you.

[Gecko1978]

GT03ROB said:

Olivera said:

wormus said:

No, you are not an employee of the end client, you are just taxed as if you are. If you want the bens, you’ll need to work for them.

Would you not agree that is an anomalous and unfair arrangement?

Not at all.... as a contractor be it in or outside IR35 ….. it's all in your rate. What you decide to provide for yourself as benefits out of you rate is up to you.

This is very true what I found is I could purchase on the open market benefits like health and pensions at a lower cost than was being claimed by an employer as the value of the benefit. Non cash benefits were just another way of paying you less and convincing you that it was for your own good.

It's funny really seeing the sector I work in rapidly dry up and being faced with some very hard choices I think on balance I still made the right call becoming a contractor some 11 years ago.

But wormus is right firms solution to IR35 has been not to engage full stop. In the public sector it caused a shift and it will again now. But there will in time still be a need for short term staff and where demand exceeds supply fees will rise.

[98elise]

GT03ROB said:

Olivera said:

wormus said:

No, you are not an employee of the end client, you are just taxed as if you are. If you want the bens, you’ll need to work for them.

Would you not agree that is an anomalous and unfair arrangement?

Not at all.... as a contractor be it in or outside IR35 ….. it's all in your rate. What you decide to provide for yourself as benefits out of you rate is up to you.

Agreed, this is why contractors get paid more. Every tangible and intangible benefit an employee gets it rolled up into the rate.

If you take on a role inside IR35 then the rate paid by the client includes the employers NI contribution etc.

As a contractor you then need to look at the rate you will receive and decide if it's enough for you to apply for the job. If not then look for an outside IR35 or Permanent role that does.

The market will then settle at whatever clients are willing to pay, and contractors are willing to take.

[worsy]

wormus said:

snake_oil said:

A question to which I think I know the answer but will stay schtum for now to gather opinion.

If a working relationship looks like this:

Contractor > Ltd Co > Agency > Client (Supplier) > End Client

Who is the entity the responsibility falls upon to determine the employee status?

Always the end client, the entity you are doing the work for.

That's not the case, in that scenario it would be the Client (Supplier). It is the fee payer that decides.

https://www.gov.uk/guidance/april-2020-changes-to-...

[anonymous-user]

worsy said:

That's not the case, in that scenario it would be the Client (Supplier). It is the fee payer that decides.

https://www.gov.uk/guidance/april-2020-changes-to-...

I think he was suggesting he could sub contract through another supplier (e.g. Accenture) and remain hidden. This is is not the case as the end client gets to decide if the work is inside IR35. If that’s the case, they instruct the supplier to deduct tax at source.

[snake_oil]

wormus said:

worsy said:

That's not the case, in that scenario it would be the Client (Supplier). It is the fee payer that decides.

https://www.gov.uk/guidance/april-2020-changes-to-...

I think he was suggesting he could sub contract through another supplier (e.g. Accenture) and remain hidden. This is is not the case as the end client gets to decide if the work is inside IR35. If that’s the case, they instruct the supplier to deduct tax at source.

No that's not what I'm suggesting.

Client (supplier) has a project to deliver widgets to their customer, the End Client in my analogy.

The supplier engages my Ltd Co via an agency for an individual in my company to deliver this project. The Ltd Co contract is with the agency. Effectively the Ltd Co is working for the Supplier. But delivering widgets to End Client.

The contract and the project may last for say, 2 months and Ltd Co has the freedom to deliver the project how it sees fit. But due to security reasons uses a laptop supplied by the supplier and has a supplier email address.

When the project is delivered, Supplier is happy with the services Ltd Co provides, so engage the services again to deliver some more widgets to End Client B and issues a new contract.

And so on and so forth. I am not sure End Clients A, B..... N etc should be determining the employment status of individuals within the Ltd Co.

[Greshamst]

Gecko1978 said:

Lloyds have today announced that all PSC contractors will be communicated by 8th October with news that they will be offered 3 choices a) Leave b) Go Perm c) Go via umbrella company. Following which a short data capture session will be held with Line managers to capture contractor preference. Decisions will then be relayed back to the contractors starting from 9th November. All PSC contractors will need to convert to Perm or Umbrella by 29th Feb or leave the group by 31/3. There is NO CEST assessment being undertaken. Nobody will be deemed IN or OUTSIDE IR35, this is simply being communicated as a new method of engagement for PSCs. Oh. and there are NO rate increases to be offered to compensate for lower take home pay

so all the debate about CEST has been a waste of time, we are toast but I have always said its been a great 10 years but looks like it's over. My guess is longer term there will be an new equivalent and that will be where many of us end up.

ps I have contacted at lloyds and the above does not surprise me.

That’s where I am currently. Can’t say either Lloyds or the agency that advertised the role have told me anything of it though, thanks!

[anonymous-user]

snake_oil said:

No that's not what I'm suggesting.

Client (supplier) has a project to deliver widgets to their customer, the End Client in my analogy.

The supplier engages my Ltd Co via an agency for an individual in my company to deliver this project. The Ltd Co contract is with the agency. Effectively the Ltd Co is working for the Supplier. But delivering widgets to End Client.

The contract and the project may last for say, 2 months and Ltd Co has the freedom to deliver the project how it sees fit. But due to security reasons uses a laptop supplied by the supplier and has a supplier email address.

When the project is delivered, Supplier is happy with the services Ltd Co provides, so engage the services again to deliver some more widgets to End Client B and issues a new contract.

And so on and so forth. I am not sure End Clients A, B..... N etc should be determining the employment status of individuals within the Ltd Co.

Ah, in that case you are talking about different services. You are being paid to create widgets so employment status is determined by the supplier you are working for. They will tell your agency and they deduct tax at source. The contract to buy the widgets that have been made is between the supplier and the client. It’s got nothing to do with you.

[snake_oil]

wormus said:

snake_oil said:

No that's not what I'm suggesting.

Client (supplier) has a project to deliver widgets to their customer, the End Client in my analogy.

The supplier engages my Ltd Co via an agency for an individual in my company to deliver this project. The Ltd Co contract is with the agency. Effectively the Ltd Co is working for the Supplier. But delivering widgets to End Client.

The contract and the project may last for say, 2 months and Ltd Co has the freedom to deliver the project how it sees fit. But due to security reasons uses a laptop supplied by the supplier and has a supplier email address.

When the project is delivered, Supplier is happy with the services Ltd Co provides, so engage the services again to deliver some more widgets to End Client B and issues a new contract.

And so on and so forth. I am not sure End Clients A, B..... N etc should be determining the employment status of individuals within the Ltd Co.

Ah, in that case you are talking about different services. You are being paid to create widgets so employment status is determined by the supplier you are working for. They will tell your agency and they deduct tax at source. The contract to buy the widgets that have been made is between the supplier and the client. It’s got nothing to do with you.

Just to be absolutely clear around the services provided, I am not manufacturing the widgets. The supplier manufacturers the widgets, these widgets are then delivered to the end clients (via the project) to deliver a service.