What does it take for client to do to remain contracting inside IR35?

[ContractorBanking]

For the upcoming April 2020 IR35 changes - in an ideal situation, what does the client have to do to for the contractor not only to remain outside IR35 but also to absolve him of any future liabilities?

I'd like to know the optimal solution, from contractor perspective.

Doesn't mean I'll manage to convince the client but I would like to know what good looks like.

[Amanensia]

what does the client have to do to for the contractor not only to remain inside IR35

An interesting aim.

[cojak]

What does it take for client to do to remain contracting inside IR35?

For the upcoming April 2020 IR35 changes - in an ideal situation, what does the client have to do to for the contractor not only to remain inside IR35 but also to absolve him of any future liabilities?

I'd like to know the optimal solution, from contractor perspective.

Doesn't mean I'll manage to convince the client but I would like to know what good looks like.

Inside IR35?

Find a legitimate umbrella that the agency likes and start using it.

[ContractorBanking]

Ok my bad, edited original post to state OUTSIDE IR35...

You all knew what I meant!

So, back to the original post, what does it take to remain outside IR35 in an ideal situation..

[DeludedKitten]

The client needs to make an assessment of the role. They could use HMRC's widely-derided CEST tool to do that, or they could use anything else (or just plain knowledge!)

As long as they make an assessment that you are outside, and put that in writing, that's the end of your worries because they carry the liability for it being right and the person paying your invoices has the liability for making sure the right amount is paid.

[Paralytic]

For the upcoming April 2020 IR35 changes - in an ideal situation, what does the client have to do to for the contractor not only to remain outside IR35 but also to absolve him of any future liabilities?

This is ambiguous. Who is him here? The client or the contractor?

If the contractor, then as per the response above, the client makes an outside determination and the contractor is pretty much safe.

If the client, they need to "take reasonable care" in making an outside determination, as per this page:

April 2020 changes to off-payroll working for clients - GOV.UK

The issue for the client is that what they deem as reasonable and what HMRC might deem as reasonable at some point in future is in the hands of the gods (because that's pretty much how HMRC see themselves). So, I don't think a client can ever say they have truly absolved themselves of any potential future liabilities.

Which is why so many organisations have made policy decisions not to engage with PSCs going forward.

[ContractorBanking]

Thanks for the feedback.

This is purely from the contractor viewpoint.

I'd like to know how to remain outside IR35 and completely absolve myself (contractor) from any future IR35 penalties at my current gig.

Now I know what to aim for, I will try and get the client to agree to these terms.

Btw, how is the determination made, is it just a signed declaration to my Ltd Co and is this agreement for the length of my current contract?
Does it need to be renewed and signed annually or what else needs to be done?

Will let you know how I get on with client discussions but good to know what the ideal scenario looks like.

[Paralytic]

I'd like to know how to remain outside IR35 and completely absolve myself (contractor) from any future IR35 penalties at my current gig.

I hope you've realised by now that this is out of your control.

Btw, how is the determination made, is it just a signed declaration to my Ltd Co and is this agreement for the length of my current contract?
Does it need to be renewed and signed annually or what else needs to be done?

Did you read the link I sent above? It answers these questions.

Please get a basic understanding of the facts before speaking to your client.

Will let you know how I get on with client discussions but good to know what the ideal scenario looks like.

The ideal scenario for you is not the ideal scenario for your client. Unless you truly are indispensable to them (and I've never met one contractor, including myself, who is) then they'll do what is best for them.

First question to ask yourself: do you believe your working practices put you outside of IR35?

Please do let us know how you get on.

[ContractorBanking]

I hope you've realised by now this is out of your control.



Did you read the link I sent above? It answers these questions.

Please get a basic understanding of the facts before speaking to your client.



The ideal scenario for you is not the ideal scenario for your client. Unless you truly are indispensable to them (and I've never met one contractor, including myself, who is) then they'll do what is best for them.

Please do let us know how you get on.

Yes, read the link, asking follow-on questions, e.g. does client need to renew that determination.

Clearly, the ideal scenario for client and contractor is different. From a selfish point of view, I want to know the best outcome from a contractor's perspective so I know where to set the bar for the best possible outcome.

So, if client letter states contractor is operating outside IR35, is there any possible scenario where the liability could fall back to the contractor?

[Paralytic]

Yes, read the link, asking follow-on questions, e.g. does client need to renew that determination.

Did you read this bit?

A status determination statement issued before 6 April 2020 is valid under the new rules, if it contains the reasons for the conclusion reached. If the working practices of the engagement change or you negotiate a new contract with the worker, you need to make sure that you re-check the rules to see if they still apply.

Clearly, the ideal scenario for client and contractor is different. From a selfish point of view, I want to know the best outcome from a contractor's perspective so I know where to set the bar for the best possible outcome.

So, if client letter states contractor is operating outside IR35, is there any possible scenario where the liability could fall back to the contractor?

I've not seen this answered thoroughly (perhaps because no-one knows).

What we do know is that if the client makes an outside IR35 determination, they are liable for the taxes if they have not taken "reasonable care" when making that determination and HMRC later determines that the role should have been inside IR35.

A thread on this board stated that in this case, the liability would pass onto the agency. One of our IR35 insurance providers backed that up that view. I wasn't 100% convinced with this but didn't receive any response to my request for clarification.

But, if true, and the Agency passes any "reasonable care" test HMRC might also apply to them, I wonder who HMRC would call on next...

Of course, I'm basing this on words on HMRCs website, and have not looked at the draft legislation (and don't have any appetite to do that), so perhaps it will be more cleary defined in statute.