Request for your views on 'IR35 testing'

**mudskipper** · 31 January 2019, 10:02

Originally posted by dufrese View Post

Hello
I am about to start my first 12 month contract which the recruiter has deemed outside of IR35.
Having read a lot about this, I am treading carefully but have ascertained;

1. The contract itself is outside IR35 according to my accountant's legal experts
2. The recruiter agrees (as per above)
3. I meet more criteria than not on the 'actual working conditions'. The HMRC IR35 tool clearly shows me as outside of IR35

The one and only source I came across which seems to say I'm inside IR35 is 'IR35testing.co.uk' which is a branch of contractorcalculator.
It seems that unless you meet virtually ALL the criteria (or perhaps I'm just missing one key factor on the survey), you always fall 'inside'. And then it offers to 'fix' specifics for a fee of between £50 and £150.

Has anyone come across this tool or used it? Given it is part of contractorcalculator it carries a great deal of credibility. But equally this tool screams to me that it's a bit of a ploy to take money from nervous contractors, creating or exaggerating risks and then offering to 'fix' them.

I have searched the forums for existing threads on this specific website but couldn't find anything. Apologies if I've missed it.

I'm not asking for a view of if I'm 'outside or inside' as I know the ins and outs of my working conditions. More just an opinion on whether to treat this one survey as a red herring...

I believe I've undertaken the due diligence to ensure I'm outside IR35 - but this 'IR35testing' website and some of the HMRC horror stories on this forum (which, when at their very worst, portray HMRC as unreasonable, tyrannical and borderline sadistic) are playing on my mind.

Any advice (or a pointer to a relevant thread I have missed) would be much appreciated!
Thanks

I'm assuming this is private sector.

If HMRC's tool shows you outside, and you can get the client to agree that you have answered the questions accurately, then print, get them to sign it and keep. HMRC have said they will stand by the result of the tool.

If you're worried, pay for an expert review from AbbeyTax, QDOS, B&C or similar.

Take out tax investigation insurance and don't over worry - the chances of an investigation are very small.

Ensure when you start your contract that you remember you're a B2B relationship and avoid falling into thinking of the client as your "employer".

Good luck!

**simes** · 31 January 2019, 10:24

Completely agree with the above.

Good luck with the contract.

**LondonManc** · 31 January 2019, 10:32

Agreed with the above. The three key aspects are:

Contract - have it checked by QDOS or similar for IR35 compliance
Claimed Working Practices - things like SDC, MoO, etc. that may contradict the contract
Actual Working Practices - are things different on site, which is something you can manage. This includes, but is not limited to: gathering evidence that you're treated differently to a permie (they get a free night out, you have to pay to go along), behaving differently to a permie (e.g. not using permie discount codes, non-essential training courses, etc.), politely declining work that isn't in your schedule of deliverables in the contract but happily offering to quote and do it (as any good consultancy would). Essentially, behave as a one-man consultancy rather than a bum on a seat.

**Maslins** · 31 January 2019, 10:41

From your OP sounds like you're safer than many out there.

Whilst the HMRC tool certainly has its flaws, generally they push towards an inside status. So if it says you're outside, take a "print" of that, ideally get the client to sign to confirm they agree the working practices do tally with the answers given, and you're about as safe as anyone can be.

If you work there for a while, take a bit of care that things don't drift away from the answers given.

**northernladuk** · 31 January 2019, 11:58

Kudos for taking the time and effort to understand IR35 and getting your contract checked. That puts you ahead of 95% of contractors regardless of the result but... oddly enough... you've confused the issue by digging in too far. IR35 is very grey with many people not understanding it properly. By going out and looking for too much validation you've introduced the confusion Some elements were good research, others weren't need and are muddying the waters for you.. Lets look at each one

I am about to start my first 12 month contract which the recruiter has deemed outside of IR35.
Having read a lot about this, I am treading carefully but have ascertained;

All good so far. Good research.

1. The contract itself is outside IR35 according to my accountant's legal experts

This is the best advice you've taken and is really all you need but, totally IMO, you could just go one step further. I keep my accountant and IR35 separate. I use a professional to do my accounts so I'd rather go out and use a professional for IR35. Companies such as QDOS, Baur and Cottrell and so on. If your accountant farms it out to one of these companies then fine I guess.
Once QDOS or B&C have reviewed it then you have your answer no need to go any further.

2. The recruiter agrees (as per above)

Completely ignore this. They will say anything that suits them and in most cases knows nothing about IR35.

3. I meet more criteria than not on the 'actual working conditions'. The HMRC IR35 tool clearly shows me as outside of IR35

I guess this is OK as a backstop but if you've had the review with QDOS you don't need it. The knowledge is extremenly valuable to keep yourself outside whilst in a gig! It will avoid you becoming part and parcel over a long period.

The one and only source I came across which seems to say I'm inside IR35 is 'IR35testing.co.uk' which is a branch of contractorcalculator.
It seems that unless you meet virtually ALL the criteria (or perhaps I'm just missing one key factor on the survey), you always fall 'inside'. And then it offers to 'fix' specifics for a fee of between £50 and £150.

Never seen it but again they aren't professionals. It's a great site for advice but that's it. Refer to the check in point one and don't bother with this one beyond personal learning.

Has anyone come across this tool or used it? Given it is part of contractorcalculator it carries a great deal of credibility. But equally this tool screams to me that it's a bit of a ploy to take money from nervous contractors, creating or exaggerating risks and then offering to 'fix' them.

Correct.

I have searched the forums for existing threads on this specific website but couldn't find anything. Apologies if I've missed it.

More Kudos for searching!!

I'm not asking for a view of if I'm 'outside or inside' as I know the ins and outs of my working conditions. More just an opinion on whether to treat this one survey as a red herring...

You've more than one red herring (IMO) as above.

I believe I've undertaken the due diligence to ensure I'm outside IR35

You have indeed but too much IMO

So you've done your due diligence. You have a professional opinion of you contract and good knowledge of what to do and what not to do on site. The last step is to take out IPSE+ membership which also covers you for tax investigations and you are absolutely golden (as you can be).
There are other IR35 insurances available if you have a low risk tolerance. I get my contracts reviewed by QDOS and take out TLC35. All in one company, no arguing about policies and checks. They own it. I do also have IPSE+ and understand that two policies aren't really useful but IPSE+ has many other benefits including a perkbox rewards system from which you can make up the membership in a year easily.

**dufrese** · 31 January 2019, 15:23

Originally posted by northernladuk View Post

Kudos for taking the time and effort to understand IR35 and getting your contract checked. That puts you ahead of 95% of contractors regardless of the result but... oddly enough... you've confused the issue by digging in too far. IR35 is very grey with many people not understanding it properly. By going out and looking for too much validation you've introduced the confusion Some elements were good research, others weren't need and are muddying the waters for you.. Lets look at each one

All good so far. Good research.

This is the best advice you've taken and is really all you need but, totally IMO, you could just go one step further. I keep my accountant and IR35 separate. I use a professional to do my accounts so I'd rather go out and use a professional for IR35. Companies such as QDOS, Baur and Cottrell and so on. If your accountant farms it out to one of these companies then fine I guess.
Once QDOS or B&C have reviewed it then you have your answer no need to go any further.

Completely ignore this. They will say anything that suits them and in most cases knows nothing about IR35.
I guess this is OK as a backstop but if you've had the review with QDOS you don't need it. The knowledge is extremenly valuable to keep yourself outside whilst in a gig! It will avoid you becoming part and parcel over a long period.

Never seen it but again they aren't professionals. It's a great site for advice but that's it. Refer to the check in point one and don't bother with this one beyond personal learning.

Correct.

More Kudos for searching!!

You've more than one red herring (IMO) as above.

You have indeed but too much IMO

So you've done your due diligence. You have a professional opinion of you contract and good knowledge of what to do and what not to do on site. The last step is to take out IPSE+ membership which also covers you for tax investigations and you are absolutely golden (as you can be).
There are other IR35 insurances available if you have a low risk tolerance. I get my contracts reviewed by QDOS and take out TLC35. All in one company, no arguing about policies and checks. They own it. I do also have IPSE+ and understand that two policies aren't really useful but IPSE+ has many other benefits including a perkbox rewards system from which you can make up the membership in a year easily.

Wow thank you all for replying so quickly!

It’s very useful advice and has also put my mind at ease/solidified my confidence.

Just to confirm it is a private sector contract.

I will look into the relevant options to get a 2nd opinion on the contract and definitely look into the insurance/working practices review by QDOS. I’m very conscious that I need to ensure the everyday work indeed follows the wording and ‘spirit’ of the contract – I have my own little ticklist set up for this!

@ northernladuk – you hit the nail on the head when you said I’ve actually ‘overdone’ some of the research – I started to suspect so myself. ‘Analysis paralysis’ has always been something I have to keep an eye on!

Thanks again for all of the useful advice, I’ll definitely follow up.

**WordIsBond** · 1 February 2019, 10:06

I don't think you've overdone research. You just put too much credence in one of your sources.

I think they provide a lot of useful information, and have some useful suggestions on ways you can structure things, some of which are more important than others.

But despite what HMRC claim, there is no feasible way to construct a one-size-fits-all test because IR35 is not defined clearly enough. Their test may be, in some ways, better than CEST but it can't be perfect, either. I had a contract that failed their test that was clearly outside. I forget now what it was, it was several years ago, but there were provisions in the contract that put it way outside and they didn't even have test questions that brought those provisions into view.

And personally, I think they tilt the balance towards fail. Whether that is because they want to sell an additional service, or whether it is because they don't want to give false reassurance on borderline cases, I don't know.

I think they provide a useful resource, though. Just recognise it as one opinion. A reasonably informed opinion, but still just an opinion.

**simes** · 1 February 2019, 14:09

Originally posted by WordIsBond View Post

And personally, I think they tilt the balance towards fail. Whether that is because they want to sell an additional service, or whether it is because they don't want to give false reassurance on borderline cases, I don't know.

Cynically speaking, do you think it is fair to say that anyone who would benefit from remuneration, would steer those questioning to a Fail?

I think if so, we can fairly and squarely add friends HMRC to that list.

**WordIsBond** · 2 February 2019, 12:36

Originally posted by simes View Post

Cynically speaking, do you think it is fair to say that anyone who would benefit from remuneration, would steer those questioning to a Fail?

I think if so, we can fairly and squarely add friends HMRC to that list.

I don't think it IS fair to say that. There are at least three categories of people / groups who would not give advice which would be to their benefit and to the detriment of the advisee:

1. Those who have integrity.
2. Those who have statutory / regulatory / industry body consequences. Chartered accountants, for instance, might be hesitant to give self-serving advice even if they lacked integrity, because their industry body (in theory, at least) holds them accountable.
3. Those who, even lacking integrity or formal accountability, recognise the cost to their reputation and to their long-term business of taking advantage of their clients.

You can make your own judgment as where HMRC falls on that. My view is that the accountability is poor and that the organisation doesn't care enough about its reputation for fairness to moderate behaviour. That leaves integrity, which would undoubtedly vary significantly between individuals in the organisation, but the culture of it seems problematic. That is only my relatively uninformed opinion, however.

Request for your views on 'IR35 testing'