Worrying IR35 defeat
Discussion
Very concerned about this defeat, as the situation is almost identical to many of my contracts. 
http://www.shout99.com/contractors/showarticle.pl?...
http://www.shout99.com/contractors/showarticle.pl?...
Aren't we all potentially knackered by this though - in the sense that it was the contract between the end client and the agent (which we should have no visibility of) that scuppered the substitution clause in the contract between contractor and agent? The added kicker in this case was that the end client gave evidence that "The most that STW agreed to [as far as the right of substitution] was that they would consider a request". HMRC took that to mean there was no right of substitution. Either way the client went some of the way in stitching up the contractor.
I'd be very surprised if this wasn't appealed, and no doubt will be going permy if the judgement stands up and stands the test of time.
I'd be very surprised if this wasn't appealed, and no doubt will be going permy if the judgement stands up and stands the test of time.
Just a thought, and it seems a very un-gentlemanly thing to do, however, if in court it is proved that you are an employee, even though you are a contractor, could you not then take the company to court for not paying you 25 days holiday for the last 5 years, re-imburse days off sick, 5 years worth of pension contributions etc etc etc....
Just a thought.
And then finally - take 12 months off fully paid at your contract rate for stress caused by the court case...
Personally it wouldn't be my tactics, but I'm suprised if no one takes this approach - afterall they will have a hefty Revenue bill after the court case, and will be looking to recoup the costs I would have thought?
Cheers,
JC
Just a thought.
And then finally - take 12 months off fully paid at your contract rate for stress caused by the court case...
Personally it wouldn't be my tactics, but I'm suprised if no one takes this approach - afterall they will have a hefty Revenue bill after the court case, and will be looking to recoup the costs I would have thought?
Cheers,
JC
That would only be a course of action if you didn't want a) the current contract to continue, b) an extension, c) any repeat work from the client or d) any work from anyone your client talks to.
Besides, the Revenue would say that you are only an employee for tax purposes and not benefit purposes.
Besides, the Revenue would say that you are only an employee for tax purposes and not benefit purposes.
They would say that and have done so ! Can't remember the case, but someone did exactly that. He was an employee for tax purposes but not for benefits. Charming.
From what I have read about the STW case, it doesn't set a precedend. Substitution has always only been one of the magic bullets. Better IMHO to lose the right of substituion, but bolster up the MOO and lack of control - if that is the reality. Reality often means that you can't substitute yourself if you are a fairly high level consultant. I was a named consultant on several contracts when I worked for a consultancy.
The main thing here appears that there were also failing on the other areas. He didn't appear to work on one particular project, he just sort of turned up and they gave him work. Looked like an employee who worked in the support department rather than a contractor who was working on the new billing system project (or whatever).
The advice seems to be to make sure you are allocated to a "contractor project" and the contract specifies what happens at the end of that project. There is some stuff on the PCG website from PWC that goes into the details, on the front so you don't have to be a member.
Considering this is the first case Accountax has lost, I am still pretty comfortable with IR35.
From what I have read about the STW case, it doesn't set a precedend. Substitution has always only been one of the magic bullets. Better IMHO to lose the right of substituion, but bolster up the MOO and lack of control - if that is the reality. Reality often means that you can't substitute yourself if you are a fairly high level consultant. I was a named consultant on several contracts when I worked for a consultancy.
The main thing here appears that there were also failing on the other areas. He didn't appear to work on one particular project, he just sort of turned up and they gave him work. Looked like an employee who worked in the support department rather than a contractor who was working on the new billing system project (or whatever).
The advice seems to be to make sure you are allocated to a "contractor project" and the contract specifies what happens at the end of that project. There is some stuff on the PCG website from PWC that goes into the details, on the front so you don't have to be a member.
Considering this is the first case Accountax has lost, I am still pretty comfortable with IR35.
Noger said:
They would say that and have done so ! Can't remember the case, but someone did exactly that. He was an employee for tax purposes but not for benefits.
Indeed. I also recall there being at least one case, but like you can't remember the specific details.Noger said:
Considering this is the first case Accountax has lost, I am still pretty comfortable with IR35.
Hopefully they'll appeal it and take it all the way, because it is working situation that a lot of contractors find themselves in.Edited by JonRB on Friday 27th July 16:16
Aha, Hewlett Packard Ltd v. O'Murphy. I knew it had a computer company in there somewhere.
Yes, would be useful to see an appeal. It is a worry as you say, but not one that people in that situation could not potentially do something about if they push hard for a contract change at renewal ? Easier said than done with many clients/agents though.
Yes, would be useful to see an appeal. It is a worry as you say, but not one that people in that situation could not potentially do something about if they push hard for a contract change at renewal ? Easier said than done with many clients/agents though.
Noger said:
Yes, would be useful to see an appeal. It is a worry as you say, but not one that people in that situation could not potentially do something about if they push hard for a contract change at renewal ? Easier said than done with many clients/agents though.
My reading of the report on Shout99 was that his Supplier-Agency contract was pretty good but the agency and client stuffed him by the former not having symmetry with the Agency-Client and the latter by telling the hearing that they would "merely consider" a substitute which the Special Commisioners took as evidence that there wasn't a true Right of Substitution (I'd contest that) and that, whilst there wasn't MoO with with regards to extensions there was within the contract ie. the client wouldn't send him home mid-week if they'd run out of work for him - and let's face it, most of us are in that situation. With regards to symmetry I always negotiate a clause in the Supplier-Agency contract that warrants symmetry. I've only ever had one agency refuse to comply with that request, and it turns out that they were misrepresenting, just like in this case (different agency, BTW).
But anyway, apart from the lack of a symmetry clause I can't see how this chap's situation is that much different to some of the ones I supply service over.
Edited by JonRB on Saturday 28th July 18:17
Absolutely, I am sure it didn't help the cause having doubts over the Subs clause, but ultimately that was not what sunk them, it was the client.
When there are doubts they always go for the reality. Island had a COA from a few years ago, confirming the substitution was a potential. But they back out of it at the hearing.
The difficultly was that Accountax based the case around Substitution, MOO was poor and control about average. So with substitution gone, STW basically saying they expected personal service, all they had was some weak control arguments. Bummer.
Definately a lesson for those in more support style roles, to make sure they really do have the anti IR35 clauses both in AND refecting reality.
When there are doubts they always go for the reality. Island had a COA from a few years ago, confirming the substitution was a potential. But they back out of it at the hearing.
The difficultly was that Accountax based the case around Substitution, MOO was poor and control about average. So with substitution gone, STW basically saying they expected personal service, all they had was some weak control arguments. Bummer.
Definately a lesson for those in more support style roles, to make sure they really do have the anti IR35 clauses both in AND refecting reality.
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