Contract clause where Company indemnifies agency against IR35 losses Contract clause where Company indemnifies agency against IR35 losses - Page 3
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  1. #21

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    Quote Originally Posted by Sezzler View Post
    What happens if the role status is changed/deemed incorrect while the contract is still active though? The agent has a 4 week delay from timesheet/invoice to making payment so would in all likelihood just keep the funds using the contract clause as reason (regardless of whether the legal clause was deemed ineffective or not) and then I don't see how you'd ever re-coop those funds without following an expensive legal route.

    IPSE's legal helpline advised that the clause could be enforceable and the agent won't remove it so I'm now in a position where I've been offered a great role but it's too risky to take because of the agent trying to circumnavigate the law laid out by HMRC.
    If the status changes, then the facts change, and you can terminate (or they will). If the fee payer decides not to pay monies due, then you'd follow the normal route for obtaining that money, and that is a risk of doing business, but I can't see how that situation would arise, because they would want to terminate (and possibly issue a different contract) if the situation changed.

    By all means, rely on what IPSE told you. However, there will be different opinions about this and it will depend on the precise nature of the clauses. My opinion is that such attempts will mostly fail, either in substance or because the amount is unrecoverable. Regardless of whether they succeed or fail, the fee payer still carries the risk of not deducting according to their statutory responsibility, and that seems to be the salient point, because they won't rely on the risk having been mitigated by the contract clause (if they have any sense).

    There will continue to be speculation about what happens between now and next April (and thereafter), but there isn't long to wait now. I personally think that it will change contracting fundamentally, but we'll see shortly.

  2. #22

    Fingers like lightning


    Join Date
    Jul 2005
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    514

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    Quote Originally Posted by WordIsBond View Post
    Yes, the issue is enforceability. All a clause like this does is give the agency ..............

    ....................will take one agency figuring out that isn't very secure and insisting on Agent-TLC35 paid by the contractor, and everyone else will follow suit.
    Fair play.

    Exciting times...

  3. #23

    Contractor Among Contractors


    Join Date
    Nov 2018
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    1,103

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    Quote Originally Posted by Sezzler View Post
    What happened with this? I've just been offered a new contract in the public sector but OUTSIDE IR35 and have the same clause in contract ... currently having it checked by QDOS and waiting for a call back from the IPSE legal helpline to see what they suggest and if it would be legally binding but wondered if you had any luck in getting the clause removed?
    "waiting for a call back from the IPSE legal helpline"

    I'd guess they'd recommend you seek advice from an expert source.

  4. #24

    Still gathering requirements...


    Join Date
    Dec 2018
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    62

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    In my experience these clauses are written generally with a view to insurance OR if the contractor makes the status decision. If a loss is suffered and the indemnifier has insurance then the indemnified will seek recovery. Generally they won't bother if insurance doesn't exist. It's not a statutory offsetting of liability - it's contractual so it doesn't change who is liable but it allows one party to pursue the other if they incur a liability. Usually those clauses are written for current private sector - so if a liability comes to the Agency when it's Ltd's job to assess status & deduct tax then Ltd pays back Agency.

    Some agencies have since tried to write these clauses into the post public sector contract which worked as someone else described - Client & Agency assess & deduct tax respectively but if a liability is incurred they come after limited. Most contractors signed it without noticing but there was pushback. The view from Agency is usually that 1. the limited benefits from an incorrect decision so it's fair they pay any liability, 2. they are forced to indemnify clients so tend to push it down the chain.

    I can say from an Agency perspective they are seen as unenforceable without insurance - if agency suffers a liability significant enough to warrant pursuing and pursues limited, the limited will wind up. Anything insignificant it wouldn't be worth the cost of pursuing. They are generally in contracts as a just in case.

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