IR35 risk advice IR35 risk advice
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  1. #1

    Nervous Newbie


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    Default IR35 risk advice

    Hi all, long time lurker first time poster. I'm not looking for free legal advice, just an opinion from anyone in a similar position

    I got diagnosed with a chronic illness 3 years ago and 12 months later I left a C level position to go freelance, exclusively to control my work schedule. I wanted to decide when and where I work depending on how well I feel.

    I started a limited company and was offered 90 days of work from an old colleague who had an expanding business. This work was the form of a purchase order which I did at my own pace and schedule. His business started to boom and the short story is that I have now invoiced 300+ days. These have all been on a purchase order basis. I have always decided when and where to work and I am not line managed in any way and I decide how to complete the work. I have spent more than half the time at the same customer site who know that I am a subcontractor working with my client. I am not on any internal client employee lists and just have a company email for convenience. I do not go to the Christmas Party.

    I have looked at the IR35 guides online but cannot relate my situation to a normal contractor relationship. I have a Confirmation of Arrangements document that explicitly states that I can engage a substitute and I have often considered doing so to make a precedent but have not seen the point for actual business reasons as I can work when I like. It would not be a problem if I vouched for the resource and trained them at my cost.

    My friend wants to engage me for another year but I am nervous about the IR35 position. This is good business for me and my friend but not so good that I would risk an IR35 investigation. I am confident that I could find other freelance work as I am known in my field.

    Any advice or experience would be most welcome.

  2. #2

    Respect my authoritah!

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    Quote Originally Posted by BlackCoffee View Post
    Any advice or experience would be most welcome.
    Lay off the black coffee, as it is making your overly paranoid.

    Seriously, get your contract reviewed by a contractor review service, and follow their advice. But I doubt that you'd be caught during an investigation. You can also insure against it.
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  3. #3

    Should post faster


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    Quote Originally Posted by BlackCoffee View Post
    Hi all, long time lurker first time poster. I'm not looking for free legal advice, just an opinion from anyone in a similar position

    I got diagnosed with a chronic illness 3 years ago and 12 months later I left a C level position to go freelance, exclusively to control my work schedule. I wanted to decide when and where I work depending on how well I feel.

    I started a limited company and was offered 90 days of work from an old colleague who had an expanding business. This work was the form of a purchase order which I did at my own pace and schedule. His business started to boom and the short story is that I have now invoiced 300+ days. These have all been on a purchase order basis. I have always decided when and where to work and I am not line managed in any way and I decide how to complete the work. I have spent more than half the time at the same customer site who know that I am a subcontractor working with my client. I am not on any internal client employee lists and just have a company email for convenience. I do not go to the Christmas Party.

    I have looked at the IR35 guides online but cannot relate my situation to a normal contractor relationship. I have a Confirmation of Arrangements document that explicitly states that I can engage a substitute and I have often considered doing so to make a precedent but have not seen the point for actual business reasons as I can work when I like. It would not be a problem if I vouched for the resource and trained them at my cost.

    My friend wants to engage me for another year but I am nervous about the IR35 position. This is good business for me and my friend but not so good that I would risk an IR35 investigation. I am confident that I could find other freelance work as I am known in my field.

    Any advice or experience would be most welcome.
    As NAT said, get your contract checked by QDOS, B&C etc, follow their advice as to amendments that you need to make to make to make the contract outside of IR35. From what you have said it sounds like you are not under SDC which is one of pillars of IR35, if you have the right of substitution too in your contract too this is something else in your favour. If it is not in their, i imagine when you get your contract checked they will advise including it. You haven't mentioned any Mutuality of Obligation, the other pillar. IANAL but I think you worrying too much, it sounds like you are in strong position.

  4. #4

    Still gathering requirements...


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    I do something similar and consider myself to be outside IR35. My approach is that "IR35 is designed to stop pseudo employees getting good tax breaks".

    I invoice my client directly, work when I choose, and a whole host of other things that mean I don't see myself as an employee.

    Whereas, if I was working full-time onsite with a six month contract, via an agency, then I'd feel like an employee.

    I think IR35 a state of mind - if you feel like an employee, you probably are one, and vice versa.

  5. #5

    TPAFKAk2p2

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    It sounds like OP doesn't have a formal contract, just a PO.

    I think, as others have said, it sounds like it would be very difficult to make a convincing case against you, so take out investigation insurance and relax.

    Do be aware though, that after 2020, the government plan to move the IR35 decision onto the client - unless your client is 'small' which sounds like it might be the case.

    If you want to, then go through HMRC's CEST tool - if you can get an 'outside' determination (and with a genuine RoS you should) print it off, get the client to sign to agree you've answered the questions accurately and file it in case of the unlikely brown envelope. HMRC have said they'll stand by the tools outcome.

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  6. #6

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    I'm also invoicing on a PO basis. I have a contract setup which details work schedule, IP etc. This has been reviewed by QDOS for IR35. The contract allows for PO's to be raised against it.

    Get that done, pay for your working conditions reviewed and you are good to go. I would recommend some sort of tax insurance to handle an investigation if it ever happened. You can even insure against the liability rather than just the investigation as well.

  7. #7

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    One key thing that appears to be missing in your situation is a clear statement of work. All the things you have listed do make a challenge highly unlikely to be successful as others have said but without a clear statement of work they could still try and argue you are part and parcel, just being given work to do once the last has finished.

    Just to polish off your situation I'd get a contract sorted as already mentioned and have each contract period covering a set piece of work. Despite everything you've said, just turning up and doing work you are given is giving HMRC something to grab hold of. Delivering set pieces of work word close any gaps.
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  8. #8

    Should post faster


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    Quote Originally Posted by t0bytoo View Post

    I think IR35 a state of mind - if you feel like an employee, you probably are one, and vice versa.
    I wouldn't say IR35 is a state of mind. You may not feel like an employee, but your working habits could very well suggest otherwise.

    As what others have said, get an SoW. Get a contract reviewed and amended where needed. Get insurance for the worst case scenario.
    You will be fine.

  9. #9

    Nervous Newbie


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    Thank you for all the quick replies.

    As previous posters have guessed I do not have any formal contract. A verbal contract has worked because they know me and I know them. I was recently asked to join the company as a director and shareholder but refused because I don't want that level of responsibility any more. Getting ill in my 30's killed off my ambition to rule the world and you need real drive to be a good director. But even at 70% of my old self I'm still useful on projects

    I have TCL35 insurance from QDOS and I could get the CEST tool printed out and signed by my client if that helps too. It jumps to the outside result as soon as I say I can use a substitute without permission.

    Looks like I should be good for another year. The place I work with is under £3M turnover so I suppose that next year when the onus of IR35 moves to the company it will stay with me because they are a "small" business. Or at least I think that is how it will work.

  10. #10

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    Quote Originally Posted by northernladuk View Post
    One key thing that appears to be missing in your situation is a clear statement of work. All the things you have listed do make a challenge highly unlikely to be successful as others have said but without a clear statement of work they could still try and argue you are part and parcel, just being given work to do once the last has finished.

    Just to polish off your situation I'd get a contract sorted as already mentioned and have each contract period covering a set piece of work. Despite everything you've said, just turning up and doing work you are given is giving HMRC something to grab hold of. Delivering set pieces of work word close any gaps.

    Thank you for the advice, it is appreciated.

    I don't have a SOW but each purchase order has the deliverables specified that I will work on. Mostly, these are projects that I have seen from beginning to end with only me working on them. In most cases these are projects that I have estimated so I usually get a PO to cover the number of months but rarely invoice all of it because I rarely work more than 18 days a month.

    I doubt I will get a written contract from my client. There is resistance from the MD who would rather keep things as they are. I think he is happy with me being a sub contractor but does not want to normalise it because he doesn't want other people in the organisation to think it is an option. They are a small company.

    If your advice is get a SOW for each of the PO's I have worked on then that would be a simple task.

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