Contractors: IR35 & general discussion
Discussion
deadtom said:
Blown2CV said:
for an inside role you typically will not have any greater 'flexibility benefits' than a perm.
I'd be doing the same work for the same organisation and I've already had some informal discussions with them about it, and it's been confirmed that I would not be subject to the requirement to go to the office 3 days per week 'just because'that's useful stuff to think about and get clarity on, thanks all.
Pit Pony said:
I'm not sure why a permie, can't have a flexible work location and a contractor can. That makes no sense to me. Is this the same company ? Maybe a discussion with your current bosses, about your desire to work from home is where you need to start?
Current employer is the civil service, and we're all being pushed back into the office 3 days per week whether or not it makes any sense to do so. I have asked and been told that there is no way around this, because reasons.Pit Pony said:
Does your £20 an hour include their pension contributions, to match yours, does it include thier Employer National insurance. If it doesn't, then maybe its closer to £25? If you sensibly added some sickness insurance to your outgoings, and whatever the umbrellor charges, would the £33 drop to £29?
No, pension is on top of that. as above I am CS so pension is relatively generous; Approx 25% employer contribution and 5% employee. My rough calculations which result in approximate parity of net pay assumes I would take over paying 25% into a private pension Pit Pony said:
The question I'm wondering is where in the country you are based? Because when this contract finishes, where is the next contract ?
Currently west Yorkshire, but burning desire to move north to the somewhere mountainous and remote-ish; Yorkshire Dales is the dream. Contract would be open ended; the work ebbs and flows, but it will continue for as long as there is an automotive industry. The only risk is that when it does ebb then they would prioritise work to permies over me, but from my discussions with other contractors the only time the demand for their work has really changed was during covid lockdowns.Pit Pony said:
I'm Now working in Automotive. My area is Design for Six Sigma, and I'm coaching Design Engineers, but background is in Manufacturing Improvement.
...
Rates in the Northwest were always lower, so I usually ended up in the East Midlands or West Midlands.
We've likely been working on the same sites then; almost all my on site work is midlands, as is the office that I am tied to as a permie....
Rates in the Northwest were always lower, so I usually ended up in the East Midlands or West Midlands.
Frankthered said:
Are you sure this is inside IR35?
A couple of point you've made don't quite gel. I am inside IR35 in my current role and the client has a mixture of inside & outside contractors. (For info, when I started, client would only allow inside for new starters, but has now relented!)
As an inside contractor, I am obliged to follow the same working patterns as the permies - in office 2-3 days per week, wfh for the rest. This also applies to core hours. The client's interpretation is that they cannot dictate these things to the outside contractors, so they are free to work in whatever location and whatever times they see fit. It would appear that the latter arrangement is what you are being offered, but it's not inconceivable (although IMHO quite unlikely) that a client might do this anyway.
Also, you should not need any liability insurance if you are inside - that definitely falls into the category of Somebody Else's Problem unless you are outside.
Worth checking because some of the answers above might be a little different if you are actually outside ...
Thank you, that's a good point you've raised, and why I asked in this thread. I did ask if I would be within IR35 and the response was pretty much 'err, yes I think iso, not entirely sure though', but it sounds like I need to get a better answer and clarity re. things like insurance. I do know that work equipment and ongoing training would be supplied, which suggests it would be very firmly within IR35.A couple of point you've made don't quite gel. I am inside IR35 in my current role and the client has a mixture of inside & outside contractors. (For info, when I started, client would only allow inside for new starters, but has now relented!)
As an inside contractor, I am obliged to follow the same working patterns as the permies - in office 2-3 days per week, wfh for the rest. This also applies to core hours. The client's interpretation is that they cannot dictate these things to the outside contractors, so they are free to work in whatever location and whatever times they see fit. It would appear that the latter arrangement is what you are being offered, but it's not inconceivable (although IMHO quite unlikely) that a client might do this anyway.
Also, you should not need any liability insurance if you are inside - that definitely falls into the category of Somebody Else's Problem unless you are outside.
Worth checking because some of the answers above might be a little different if you are actually outside ...
I have been given a copy of the basic contract and all it says about attendance and availability is that I have to turn up when agreed. It doesn't say anything about office attendance.
deadtom said:
Thank you, that's a good point you've raised, and why I asked in this thread. I did ask if I would be within IR35 and the response was pretty much 'err, yes I think iso, not entirely sure though', but it sounds like I need to get a better answer and clarity re. things like insurance. I do know that work equipment and ongoing training would be supplied, which suggests it would be very firmly within IR35.
I have been given a copy of the basic contract and all it says about attendance and availability is that I have to turn up when agreed. It doesn't say anything about office attendance.
I'll bang my pedantic drum again, but in the vast majority of cases (probably including yours) the term 'Inside IR35' actually means 'on the payroll', whether that's through an Umbrella or on the books of an agency. Therefore 'Inside IR35' or IR35 in general does not apply in any way to your arrangement, you're just a normal payroll employee.I have been given a copy of the basic contract and all it says about attendance and availability is that I have to turn up when agreed. It doesn't say anything about office attendance.
Olivera said:
I'll bang my pedantic drum again, but in the vast majority of cases (probably including yours) the term 'Inside IR35' actually means 'on the payroll', whether that's through an Umbrella or on the books of an agency. Therefore 'Inside IR35' or IR35 in general does not apply in any way to your arrangement, you're just a normal payroll employee.
I hope you'll forgive my ignorance, but is 'normal payroll employee' not the same as permanent employee?deadtom said:
I hope you'll forgive my ignorance, but is 'normal payroll employee' not the same as permanent employee?
A payroll employee is someone employed that pays PAYE tax. The employers could be the main company, or an Umbrella, or an agency. General employment rights are the same across them all. Permanent versus temporary employee arrangements are defined via specifics of the individual contracts. In all cases IR35 does not apply.To be completely honest it sounds like they don't really know what they are talking about and I'm not really surprised. IR35 can be a bit of a tricky beast and not many companies are actually geared up to understand it's various nuances which is why most companies either outsourced their IR35 process or just avoided it all together with blanket bans.
deadtom said:
I hope you'll forgive my ignorance, but is 'normal payroll employee' not the same as permanent employee?
No, there are many temporary employees too. Employment legislation (both tax law and general law) recognises that employment does not have to be of a permanent nature. It can be of a "temporary nature" too. The hours/days worked in themselves are not the determining factor when deciding when somebody is an employee or not. Most of the people who work on supermarket check-outs will be "temporary employees".
Olivera said:
deadtom said:
Thank you, that's a good point you've raised, and why I asked in this thread. I did ask if I would be within IR35 and the response was pretty much 'err, yes I think iso, not entirely sure though', but it sounds like I need to get a better answer and clarity re. things like insurance. I do know that work equipment and ongoing training would be supplied, which suggests it would be very firmly within IR35.
I have been given a copy of the basic contract and all it says about attendance and availability is that I have to turn up when agreed. It doesn't say anything about office attendance.
I'll bang my pedantic drum again, but in the vast majority of cases (probably including yours) the term 'Inside IR35' actually means 'on the payroll', whether that's through an Umbrella or on the books of an agency. Therefore 'Inside IR35' or IR35 in general does not apply in any way to your arrangement, you're just a normal payroll employee.I have been given a copy of the basic contract and all it says about attendance and availability is that I have to turn up when agreed. It doesn't say anything about office attendance.
Burrow01 said:
Depends, if you are via an Umbrella, then you are an employee of the Umbrella company, not the end customer, and so are subject to the Umbrella employment contract conditions.
Yes that's what I meant, perhaps clearer as "employed (PAYE) by an Umbrella or agency", either way IR35 is not applicable.Olivera said:
Burrow01 said:
Depends, if you are via an Umbrella, then you are an employee of the Umbrella company, not the end customer, and so are subject to the Umbrella employment contract conditions.
Yes that's what I meant, perhaps clearer as "employed (PAYE) by an Umbrella or agency", either way IR35 is not applicable.Blown2CV said:
any contractor employed by an umbrella and being paid through PAYE is doing so specifically to comply with IR35 so i wouldn't say it's not applicable, technically.
No, they're being paid PAYE via an Umbrella precisely because IR35 (in it's entirety) does not apply at all, and hence no determination needs to be made (inside or outside).Blown2CV said:
The biggest focus when it comes to compliance is on the group of contractors who are doing roles to which the IR35 rules do not apply, i.e. outside contractors.
I'll be pedantic once more, but there are usually three categories of contractor:1) Via PSC - IR35 does not apply, determined as Outside IR35
2) Via PSC - IR35 applies, determined as Inside IR35 (extremely rare, lots of obscure accounting rules apply)
3) Not via PSC - IR35 does not apply, normal payroll employee (Umbrella/Agency etc)
The thing that would worry me about deadtom's possible choice, is that as an employee, they have protected employment rights; okay they may not like working at the office three days per week, but if the employer wants rid, then there's a whole civil service consultation procedure to go through, which could take months, or years.
But the minute they're a temp. then it doesn't matter what's been agreed, as the client can just state they want deadtom in the office five days a week, the "as required" clause.
But the minute they're a temp. then it doesn't matter what's been agreed, as the client can just state they want deadtom in the office five days a week, the "as required" clause.
Olivera said:
Blown2CV said:
any contractor employed by an umbrella and being paid through PAYE is doing so specifically to comply with IR35 so i wouldn't say it's not applicable, technically.
No, they're being paid PAYE via an Umbrella precisely because IR35 (in it's entirety) does not apply at all, and hence no determination needs to be made (inside or outside).I doubt any Contractor chooses to operate via an Umbrella if they can operate via a PSC. The only reason they're doing so is because they're forced to because the end-Client has determined the role inside.
We've just done the same for an Interim CTO. He's got a PSC but because the role has been determined as "inside" he's being paid via an Umbrella (well via an Agency who are paying the Umbrella who are paying him).
sigh. The point i was making was that far from IR35 not applying to umbrella contractors, it just means that they have no choice but to comply with the regs, so there is no need to scrutinise their tax affairs. On the other hand those that are saying "IR35 does not apply to me" i.e. 'outside' contractors do need to be scrutinised as they have the flexibility to not comply with the rules and to avoid tax etc. Most of the effort with IR35 is validating that those who say they are outside IR35 are in fact meeting that criteria.
Countdown said:
If they're being paid via an Umbrella isn't that only because following a determination the role has been determined "inside"?
I doubt any Contractor chooses to operate via an Umbrella if they can operate via a PSC. The only reason they're doing so is because they're forced to because the end-Client has determined the role inside.
We've just done the same for an Interim CTO. He's got a PSC but because the role has been determined as "inside" he's being paid via an Umbrella (well via an Agency who are paying the Umbrella who are paying him).
Yes.I doubt any Contractor chooses to operate via an Umbrella if they can operate via a PSC. The only reason they're doing so is because they're forced to because the end-Client has determined the role inside.
We've just done the same for an Interim CTO. He's got a PSC but because the role has been determined as "inside" he's being paid via an Umbrella (well via an Agency who are paying the Umbrella who are paying him).
In Oliviera’s example above, it’s like the clients are determining “if (2) then go straight to (3)”
Arguing that IR35 doesn’t apply is obtuse. It may not apply in the literal sense but the two go hand on hand - PAYE is the de facto engagement structure for an off payroll worker that would otherwise have been determined to be inside.
Countdown said:
If they're being paid via an Umbrella isn't that only because following a determination the role has been determined "inside"?
In my experience most large corporates have 'blanket banned' PSCs, so the answer to that is no. IR35 is a onerous, arcane and subjective piece of legislation, hence large corporates have just lumped everyone into category 3, even those that could legitimately operate via a PSC outside of IR35. In other words no IR35 determination ever takes place.Olivera said:
In my experience most large corporates have 'blanket banned' PSCs, so the answer to that is no. IR35 is a onerous, arcane and subjective piece of legislation, hence large corporates have just lumped everyone into category 3, even those that could legitimately operate via a PSC outside of IR35. In other words no IR35 determination ever takes place.
Why are most contracts advertised as insider IR35 then? I'd say 90% of the IT roles I see on job boards are advertised as such. My current role certainly was and I'm paid via umbrella. So while technically you may be correct, in reality the term inside IR35 has become synonymous with any role not being operated through a PSC.
Guvernator said:
Why are most contracts advertised as insider IR35 then? I'd say 90% of the IT roles I see on job boards are advertised as such.
Because most HR, recruitment staff and even contractors fundamentally misunderstand the legislation. I agree that somehow 'inside IR35' has colloquially come to mean 'a normal PAYE employee', but it still remains wrong.Gassing Station | Jobs & Employment Matters | Top of Page | What's New | My Stuff