IR35 and Umbrella Companies Confused
Discussion
Deep Thought said:
Autopilot said:
Just to give some people hope, I thought I'd update you on the following. The private sector company I'm currently with deemed most roles (there is around 500 of us) to be inside IR35 and that's the stance they will take post April 2020. They have some people they would be doomed if they don't retain their services, so there's a smaller group of people they are trying to help put outside of IR35.
I for one won't hang around if an organisation are sorting jobs for the boys and I'm not in on it
Because of this, I have had a quick look out there and have landed a new role (subject to paperwork). They have said the job is deemed to be inside IR35.....unless I would like to write a Statement of Works and quote for it. As this won't be a long contract, I'm not that fussed what I do as it's close to home so won't really have any overheads but will probably quote for it.
How has this come about? Well, a number of key staff have all been contractors and not only know what IR35 is, they also have the right mindset that I'm NOT an employee! The issue at my current place, not so much in the section I deliver services to, is that contractors get seen as employees and are therefore treated like them regardless. One of my fellow contractors was even told that he has to go to team meetings, been treated equally to staff etc etc so did say to him he needs to remind them he isn't staff.
A role can be outside of IR35 though and not have a statement of works? That seems to be their differentiator there?I for one won't hang around if an organisation are sorting jobs for the boys and I'm not in on it
Because of this, I have had a quick look out there and have landed a new role (subject to paperwork). They have said the job is deemed to be inside IR35.....unless I would like to write a Statement of Works and quote for it. As this won't be a long contract, I'm not that fussed what I do as it's close to home so won't really have any overheads but will probably quote for it.How has this come about? Well, a number of key staff have all been contractors and not only know what IR35 is, they also have the right mindset that I'm NOT an employee! The issue at my current place, not so much in the section I deliver services to, is that contractors get seen as employees and are therefore treated like them regardless. One of my fellow contractors was even told that he has to go to team meetings, been treated equally to staff etc etc so did say to him he needs to remind them he isn't staff.
A contract sets out the T's and C's of the engagement so is fairly black and white, but I guess (and I am guessing!) that in their case, a contract which sets out the detail and the fact I'm quoting for the work really does set me apart from somebody just charging a daily rate to sit at one of their desks just doing 'stuff'. I will provide an SoW, quote and payment milestones for deliverables.
So to answer your question, yes, their differentiator is the SoW / Quote and you're right, a role can be outside without an SoW, but I'd take a guess and say that it's easier to argue I'm outside if I'm quoting for the work like a business would.
Venturist said:
In an Inside IR35 determination my understanding is that the income gets taxed at source and so it might as well get paid straight to my personal bank. This means if the company has anything it needs to fund such as:
- investment ie toward new side ventures yet to bear fruit
- ongoing bills
- dry periods with no income
The company will not actually have any money coming into it anymore, so I’d need to support it and supplement the money BACK in again, in the form of a loan(?) from me personally - is that right?
Yes, exactly that. Rather than submitting an invoice, you're treated like an employee for tax purposes so would get a wage slip with deductions. I don't see any value in paying in to a company bank account. The company can remain operational of course and will probably have some expenses incurred as you may need to buy things relating to the running of your business including obtaining new client engagements.- investment ie toward new side ventures yet to bear fruit
- ongoing bills
- dry periods with no income
The company will not actually have any money coming into it anymore, so I’d need to support it and supplement the money BACK in again, in the form of a loan(?) from me personally - is that right?
I'm in a fortunate position in that my business bank account is quite healthy due to me living off scraps for some time so haven't had to think about having to inject funding in to the company. I don't see why you can't lend your company funding if you needed to. I'm sure Eric or somebody will be able to offer some more savvy advice around this.
Could someone please confirm if the following is true?
A UK company is implementing a new ERP system. Over the course of the next 12 months (optimistic I know
) they expect around 50 consultants (not all at the same time) from the ERP vendor to be involved in the ERP implementation.
Under the new legislation then the UK company has to determine the employment status of each of those consultants (i.e. is any organisation in the chain paying PAYE for them) and if not then they need to decide whether to pay PAYE for them? By the chain I'm trying to say that the ERP vendor may use a mix of contractors and other consultancies to deliver the project.
A UK company is implementing a new ERP system. Over the course of the next 12 months (optimistic I know
) they expect around 50 consultants (not all at the same time) from the ERP vendor to be involved in the ERP implementation.Under the new legislation then the UK company has to determine the employment status of each of those consultants (i.e. is any organisation in the chain paying PAYE for them) and if not then they need to decide whether to pay PAYE for them? By the chain I'm trying to say that the ERP vendor may use a mix of contractors and other consultancies to deliver the project.
x5x3 said:
Could someone please confirm if the following is true?
A UK company is implementing a new ERP system. Over the course of the next 12 months (optimistic I know) they expect around 50 consultants (not all at the same time) from the ERP vendor to be involved in the ERP implementation.
Under the new legislation then the UK company has to determine the employment status of each of those consultants (i.e. is any organisation in the chain paying PAYE for them) and if not then they need to decide whether to pay PAYE for them? By the chain I'm trying to say that the ERP vendor may use a mix of contractors and other consultancies to deliver the project.
Depends, is the contract for services or for people. If the latter then determination required, if the former it's not.A UK company is implementing a new ERP system. Over the course of the next 12 months (optimistic I know
) they expect around 50 consultants (not all at the same time) from the ERP vendor to be involved in the ERP implementation.Under the new legislation then the UK company has to determine the employment status of each of those consultants (i.e. is any organisation in the chain paying PAYE for them) and if not then they need to decide whether to pay PAYE for them? By the chain I'm trying to say that the ERP vendor may use a mix of contractors and other consultancies to deliver the project.
To put it simply,
Fred Bloggs is a contractor working through BloggRUs. He has a contract with ERPExperts to work on their projects. ERPExperts win a bid to supply a new ERP system to ClientA. ClientA assign a team to build the new system and Fred is assigned to the team. The contract is for building a new ERP system and Fred is not mentioned as a resource in that contract.
Fred Bloggs is a contractor working through BloggRUs. He has a contract with ERPExperts to work on their projects. ERPExperts win a bid to supply people to ClientA to help them build a new ERP system. ClientA build a team to build the new system and Fred is engaged for his expertise via ERPExperts. The contract is for building a new ERP system and Fred specifically mentioned as a resource in that contract.
Autopilot said:
The thing with IR35 as you well know is that there are so many determining factors that it can't be determined by a single thing alone. Surprisingly, when I used the revised HMRC CEST app for my current role, I answered everything honestly and thought the fact that I'd said I get a daily rate and have had loads of contract extensions would be a flag to show I'm in continuous 'employment' and a bum in a seat so to speak, but it still deemed me outside.
A contract sets out the T's and C's of the engagement so is fairly black and white, but I guess (and I am guessing!) that in their case, a contract which sets out the detail and the fact I'm quoting for the work really does set me apart from somebody just charging a daily rate to sit at one of their desks just doing 'stuff'. I will provide an SoW, quote and payment milestones for deliverables.
So to answer your question, yes, their differentiator is the SoW / Quote and you're right, a role can be outside without an SoW, but I'd take a guess and say that it's easier to argue I'm outside if I'm quoting for the work like a business would.
Agreed, however it read like the SoW was the differentiator, and it shouldnt be - although i've heard it bandied about by some clients as a "solution"A contract sets out the T's and C's of the engagement so is fairly black and white, but I guess (and I am guessing!) that in their case, a contract which sets out the detail and the fact I'm quoting for the work really does set me apart from somebody just charging a daily rate to sit at one of their desks just doing 'stuff'. I will provide an SoW, quote and payment milestones for deliverables.
So to answer your question, yes, their differentiator is the SoW / Quote and you're right, a role can be outside without an SoW, but I'd take a guess and say that it's easier to argue I'm outside if I'm quoting for the work like a business would.
Edited by Deep Thought on Wednesday 15th January 08:57
Deep Thought said:
Agreed, however it read like the SoW was the differentiator, and it shouldnt be - although i've heard it bandied about by some clients as a "solution"
To be honest, I'm not sure there is any kind of solution. HMRC clearly state on the CEST page that they will stand by any determination through use of CEST unless you've deliberately answered to get yourself outside or have a contrived arrangement to put yourself outside. I've used the tool and even over egged some answers to try and push the result in to an inside IR35 determination and it just doesn't do it so shouldn't matter if people submit an SoW or not.Edited by Deep Thought on Wednesday 15th January 08:57
I wouldn't dream of telling a client that I'll do work exactly how I want, when I want and where I want. If I'm supplying services to them, they will want and need some say in how things need to be done and what the expectation is and out of common courtesy, I'd discuss it with them. I'm not an office holder, I've had extensions, I get a daily rate, I have liaised with the client when, where. how etc, if I break something (depending what it is) I wouldn't fix it at my own expense, I'd bill for the additional time it took me to rectify it (In reality I do plenty of additional unpaid out of hours work without billing when required to bring things back on track whether it's my fault or not). I don't go to corporate things, my company name appears as the Resource Name on things and is widely known and I make it clear I'm doing work for the client, I can substitute but haven't done it on this contract etc etc....and it still says outside.
I'm not entirely sure why an SoW would be relevant when the CEST tool itself doesn't even look at any of these things. I don't know if the CEST tool is massively flawed or if people are just scared that if you bear any resemblance to an employee then you're in. My attempts of making my current arrangement sound much worse than it actually is for CEST test purposes still puts me outside so assume the tool is design to not really give any baring on your actual status so it becomes open season when HMRC go hunting or people are just too scared to say a role is outside IR35.
Autopilot said:
To be honest, I'm not sure there is any kind of solution. HMRC clearly state on the CEST page that they will stand by any determination through use of CEST unless you've deliberately answered to get yourself outside or have a contrived arrangement to put yourself outside. I've used the tool and even over egged some answers to try and push the result in to an inside IR35 determination and it just doesn't do it so shouldn't matter if people submit an SoW or not.
I wouldn't dream of telling a client that I'll do work exactly how I want, when I want and where I want. If I'm supplying services to them, they will want and need some say in how things need to be done and what the expectation is and out of common courtesy, I'd discuss it with them. I'm not an office holder, I've had extensions, I get a daily rate, I have liaised with the client when, where. how etc, if I break something (depending what it is) I wouldn't fix it at my own expense, I'd bill for the additional time it took me to rectify it (In reality I do plenty of additional unpaid out of hours work without billing when required to bring things back on track whether it's my fault or not). I don't go to corporate things, my company name appears as the Resource Name on things and is widely known and I make it clear I'm doing work for the client, I can substitute but haven't done it on this contract etc etc....and it still says outside.
I'm not entirely sure why an SoW would be relevant when the CEST tool itself doesn't even look at any of these things. I don't know if the CEST tool is massively flawed or if people are just scared that if you bear any resemblance to an employee then you're in. My attempts of making my current arrangement sound much worse than it actually is for CEST test purposes still puts me outside so assume the tool is design to not really give any baring on your actual status so it becomes open season when HMRC go hunting or people are just too scared to say a role is outside IR35.
The CEST tool is still very much open to interpretation and although HMRC have said they will stand over a CEST outcome, they will only do so based on the "accurate" information being entered (or their version of accurate) so its not really worth diddly. I wouldnt rely on it solely to either declare myself outside IR35.I wouldn't dream of telling a client that I'll do work exactly how I want, when I want and where I want. If I'm supplying services to them, they will want and need some say in how things need to be done and what the expectation is and out of common courtesy, I'd discuss it with them. I'm not an office holder, I've had extensions, I get a daily rate, I have liaised with the client when, where. how etc, if I break something (depending what it is) I wouldn't fix it at my own expense, I'd bill for the additional time it took me to rectify it (In reality I do plenty of additional unpaid out of hours work without billing when required to bring things back on track whether it's my fault or not). I don't go to corporate things, my company name appears as the Resource Name on things and is widely known and I make it clear I'm doing work for the client, I can substitute but haven't done it on this contract etc etc....and it still says outside.
I'm not entirely sure why an SoW would be relevant when the CEST tool itself doesn't even look at any of these things. I don't know if the CEST tool is massively flawed or if people are just scared that if you bear any resemblance to an employee then you're in. My attempts of making my current arrangement sound much worse than it actually is for CEST test purposes still puts me outside so assume the tool is design to not really give any baring on your actual status so it becomes open season when HMRC go hunting or people are just too scared to say a role is outside IR35.
I just ran through CEST there and answered the questions honestly and as accurately as i could and it came back with "unable to make a determination". Its as useful as it iever was then
Deep Thought said:
Agreed, however it read like the SoW was the differentiator, and it shouldnt be - although i've heard it bandied about by some clients as a "solution"
A quick update......I had a call about another role. While I made it clear that I'm about to start another contract elsewhere, I did ask a few questions and they said the same in that they'd offer inside or outside of IR35 and the differentiator was again via the use of an SoW. I dare say there would be differences in the contracts, but they explicit in that the SoW changes the terms of engagement and allows them to offer outside of IR35. I have no idea where people are getting their advice from!Edited by Deep Thought on Wednesday 15th January 08:57
Autopilot said:
Deep Thought said:
Agreed, however it read like the SoW was the differentiator, and it shouldnt be - although i've heard it bandied about by some clients as a "solution"
A quick update......I had a call about another role. While I made it clear that I'm about to start another contract elsewhere, I did ask a few questions and they said the same in that they'd offer inside or outside of IR35 and the differentiator was again via the use of an SoW. I dare say there would be differences in the contracts, but they explicit in that the SoW changes the terms of engagement and allows them to offer outside of IR35. I have no idea where people are getting their advice from!Edited by Deep Thought on Wednesday 15th January 08:57
The balloons i am with have decided the best way forward is to offer fixed term contracts at FTE rates.
Bless their little cotton socks!
This is all pretty terrifying quite frankly. I've just had an email through today that the company I contract through has assessed me and found I am inside IR35 and as of April will need to be engaged on a PAYE basis.
Now I am reading that this is a red flag for HMRC to investigate my company over previous years. What the hell am i supposed to do now?
I've always tried to avoid the pub bore whose default position is that all politicians should be lined up and shot, now i'm worried I am starting to agree with him.
Now I am reading that this is a red flag for HMRC to investigate my company over previous years. What the hell am i supposed to do now?
I've always tried to avoid the pub bore whose default position is that all politicians should be lined up and shot, now i'm worried I am starting to agree with him.
fizmo100 said:
This is all pretty terrifying quite frankly. I've just had an email through today that the company I contract through has assessed me and found I am inside IR35 and as of April will need to be engaged on a PAYE basis.
Now I am reading that this is a red flag for HMRC to investigate my company over previous years. What the hell am i supposed to do now?
I've always tried to avoid the pub bore whose default position is that all politicians should be lined up and shot, now i'm worried I am starting to agree with him.
Well its a potential red flag, in so much as HMRC "could" ask the question.Now I am reading that this is a red flag for HMRC to investigate my company over previous years. What the hell am i supposed to do now?
I've always tried to avoid the pub bore whose default position is that all politicians should be lined up and shot, now i'm worried I am starting to agree with him.
They're said, however, they arent going to actively pursue people for potential back taxes relating to this, so thats the first thing.
Secondly, i take it you have supporting evidence as to why you deemed yourself to be outside IR35 in the first instance?
Thirdly, they'd have to be very confident of recovering a multiple of the significant cost of an investigation and they might have bigger fish to fry with their limited resources.
You could resign now on the basis you dont agree with the ruling and thus have that on record? "Accepting" the ruling could be an indicator IF HMRC were to follow up.
The safest way forward at this point would be to resign on the basis you dont accept the ruling i guess.
UK contractor forum might be the place to ask.
fizmo100 said:
This is all pretty terrifying quite frankly. I've just had an email through today that the company I contract through has assessed me and found I am inside IR35 and as of April will need to be engaged on a PAYE basis.
Now I am reading that this is a red flag for HMRC to investigate my company over previous years. What the hell am i supposed to do now?
I've always tried to avoid the pub bore whose default position is that all politicians should be lined up and shot, now i'm worried I am starting to agree with him.
Just out of interest, have you done anything to try and halt IR35 in April or at the very least gain an independent review ?Now I am reading that this is a red flag for HMRC to investigate my company over previous years. What the hell am i supposed to do now?
I've always tried to avoid the pub bore whose default position is that all politicians should be lined up and shot, now i'm worried I am starting to agree with him.
worsy said:
x5x3 said:
Could someone please confirm if the following is true?
A UK company is implementing a new ERP system. Over the course of the next 12 months (optimistic I know) they expect around 50 consultants (not all at the same time) from the ERP vendor to be involved in the ERP implementation.
Under the new legislation then the UK company has to determine the employment status of each of those consultants (i.e. is any organisation in the chain paying PAYE for them) and if not then they need to decide whether to pay PAYE for them? By the chain I'm trying to say that the ERP vendor may use a mix of contractors and other consultancies to deliver the project.
Depends, is the contract for services or for people. If the latter then determination required, if the former it's not.A UK company is implementing a new ERP system. Over the course of the next 12 months (optimistic I know
) they expect around 50 consultants (not all at the same time) from the ERP vendor to be involved in the ERP implementation.Under the new legislation then the UK company has to determine the employment status of each of those consultants (i.e. is any organisation in the chain paying PAYE for them) and if not then they need to decide whether to pay PAYE for them? By the chain I'm trying to say that the ERP vendor may use a mix of contractors and other consultancies to deliver the project.
To put it simply,
Fred Bloggs is a contractor working through BloggRUs. He has a contract with ERPExperts to work on their projects. ERPExperts win a bid to supply a new ERP system to ClientA. ClientA assign a team to build the new system and Fred is assigned to the team. The contract is for building a new ERP system and Fred is not mentioned as a resource in that contract.
Fred Bloggs is a contractor working through BloggRUs. He has a contract with ERPExperts to work on their projects. ERPExperts win a bid to supply people to ClientA to help them build a new ERP system. ClientA build a team to build the new system and Fred is engaged for his expertise via ERPExperts. The contract is for building a new ERP system and Fred specifically mentioned as a resource in that contract.
x5x3 said:
worsy said:
x5x3 said:
Could someone please confirm if the following is true?
A UK company is implementing a new ERP system. Over the course of the next 12 months (optimistic I know) they expect around 50 consultants (not all at the same time) from the ERP vendor to be involved in the ERP implementation.
Under the new legislation then the UK company has to determine the employment status of each of those consultants (i.e. is any organisation in the chain paying PAYE for them) and if not then they need to decide whether to pay PAYE for them? By the chain I'm trying to say that the ERP vendor may use a mix of contractors and other consultancies to deliver the project.
Depends, is the contract for services or for people. If the latter then determination required, if the former it's not.A UK company is implementing a new ERP system. Over the course of the next 12 months (optimistic I know
) they expect around 50 consultants (not all at the same time) from the ERP vendor to be involved in the ERP implementation.Under the new legislation then the UK company has to determine the employment status of each of those consultants (i.e. is any organisation in the chain paying PAYE for them) and if not then they need to decide whether to pay PAYE for them? By the chain I'm trying to say that the ERP vendor may use a mix of contractors and other consultancies to deliver the project.
To put it simply,
Fred Bloggs is a contractor working through BloggRUs. He has a contract with ERPExperts to work on their projects. ERPExperts win a bid to supply a new ERP system to ClientA. ClientA assign a team to build the new system and Fred is assigned to the team. The contract is for building a new ERP system and Fred is not mentioned as a resource in that contract.
Fred Bloggs is a contractor working through BloggRUs. He has a contract with ERPExperts to work on their projects. ERPExperts win a bid to supply people to ClientA to help them build a new ERP system. ClientA build a team to build the new system and Fred is engaged for his expertise via ERPExperts. The contract is for building a new ERP system and Fred specifically mentioned as a resource in that contract.
In reality they would probably stick a brolly in there to do the actual payroll.
fizmo100 said:
This is all pretty terrifying quite frankly. I've just had an email through today that the company I contract through has assessed me and found I am inside IR35 and as of April will need to be engaged on a PAYE basis.
Now I am reading that this is a red flag for HMRC to investigate my company over previous years. What the hell am i supposed to do now?
I've always tried to avoid the pub bore whose default position is that all politicians should be lined up and shot, now i'm worried I am starting to agree with him.
As Deep Thought say's, it's about due diligence and appetite for risk I'm not an expert but I am a well seasoned contractor who has had a number of scrapes in the past! You'll need to make your own decisions of course, but if I were in your shoes, I'd be thinking about the following...…Now I am reading that this is a red flag for HMRC to investigate my company over previous years. What the hell am i supposed to do now?
I've always tried to avoid the pub bore whose default position is that all politicians should be lined up and shot, now i'm worried I am starting to agree with him.
...The legislation where private sector clients determine the IR35 status of a role has not yet been passed, so while very likely, it's NOT currently legislation. It only effects you WHEN the legislation comes in or if the end client can't be arsed with it and makes it their own policy to not allow PSC's or do what some Public Sector bodies did and just not wait for the legislation to come in to play and just do it etc.
…..As the legislation hasn't come in yet, your clients FUTURE determination is currently irrelevant. They have no business contacting HMRC now to say they've made a future determination on a role which the person currently in it deemed themselves to be outside of IR35 for it. In other words, right now, you are at no risk at all in my opinion.
...…the can of worms is where you're treated the role as outside, the client now deems it to be inside and you then stay in the role post legislation change. At the open door meetings, HMRC have said being outside but put inside doesn't spark off an investigation, they just want people to pay the right tax. Having been subject to a retrospective tax investigation, I would NEVER trust anything they say!!! I'd be very surprised if they aren't already geared up to go and pick on the little guy and go get that low hanging fruit. This is just my opinion, possibly shared by others but who knows.
I personally think anybody currently outside, but deemed inside is a fool if they were to stay in that role. I'd assume any post April 06th contract would be a new contract rather than an extension so you could argue the T's and C's are now different, but I personally wouldn't risk it.
My current role is to be moved inside of IR35 post April. I have found another role and am off!! I will work inside or outside of IR35, but I personally wouldn't be out and then in on the same role but that's just my view.
To conclude, at present you're at no significant risk, but continue the 'current' role under IR35 then you need to weigh up the risk and likelihood of HMRC investigating that whole contract. A few guys I work with have recently started and don't know what to do. In their shoes, as they've not been there long, if any retro action were taken, it would be fairly small, so would consider that far less risky due to the short timeframe in the role and the impact that would have.
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