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IR35 strategies so far...

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    IR35 strategies so far...

    Hi,

    I would like your opinion on the following scenarios I have seen companies/agencies/contractors taking to avoid falling inside IR35:

    1. Make sure the written contract says enough of the right "stuff". Basically, get it reviewed and the amendments made.

    The contract says the client will accept a substitute but thats not actually practical - where would the contractor find someone else at short notice and secondly, the client is unprepared for someone new to just turn up one day and continue as if nothing happened. The end dates for these contracts are May, so perhaps they are hoping that they won't continue and HMRC won't notice for such a small time period.

    2. UK client, UK agency, UK PSC, worker is EU national, living in EU.

    The agency really pushed for this (last revenue stream as all the other contractors chose to go 12 month PAYE) and said they would take the hit if HMRC investigates and issues a fine. I don't think the client is off the hook though, and would take a reputational damage if an investigation finds the worker is inside ir35. I think they are arguing that the contractor is a non-UK national not living in the UK so outside IR35 (not super sure about this as I haven't seen the contract but I have spoken to the contractor).

    I should make clear that the actual working practices are no different to a perm, even if the contract says otherwise. The remote aspect of the position though is highlighted as being something potentially outside IR35.

    What do you think?

    #2
    Originally posted by too_many_details View Post
    Hi,

    I would like your opinion on the following scenarios I have seen companies/agencies/contractors taking to avoid falling inside IR35:

    1. Make sure the written contract says enough of the right "stuff". Basically, get it reviewed and the amendments made.

    The contract says the client will accept a substitute but thats not actually practical - where would the contractor find someone else at short notice and secondly, the client is unprepared for someone new to just turn up one day and continue as if nothing happened. The end dates for these contracts are May, so perhaps they are hoping that they won't continue and HMRC won't notice for such a small time period.

    2. UK client, UK agency, UK PSC, worker is EU national, living in EU.

    The agency really pushed for this (last revenue stream as all the other contractors chose to go 12 month PAYE) and said they would take the hit if HMRC investigates and issues a fine. I don't think the client is off the hook though, and would take a reputational damage if an investigation finds the worker is inside ir35. I think they are arguing that the contractor is a non-UK national not living in the UK so outside IR35 (not super sure about this as I haven't seen the contract but I have spoken to the contractor).

    I should make clear that the actual working practices are no different to a perm, even if the contract says otherwise. The remote aspect of the position though is highlighted as being something potentially outside IR35.

    What do you think?
    A bit more detail on (2):

    "If your company is UK registered but you qualify as a non-UK resident & your duties are performed outside the UK, then it is unlikely that the IR35 rules will apply but you should check your residency status by referring to HMRC residency guidance."

    Thats why (2) is outside IR35. Isn't this going to mean that UK businesses can just get resources from EU rather than UK-based?

    Comment


      #3
      Originally posted by too_many_details View Post
      A bit more detail on (2):

      "If your company is UK registered but you qualify as a non-UK resident & your duties are performed outside the UK, then it is unlikely that the IR35 rules will apply but you should check your residency status by referring to HMRC residency guidance."

      Thats why (2) is outside IR35. Isn't this going to mean that UK businesses can just get resources from EU rather than UK-based?
      I don't understand how this would drive businesses to seek contractors from the EU.

      First of all a local resource is always the preferred option if everything else is equal. Similar culture, same time zone, same language, knowledge of local market, easier ability to come on site, etc.

      So they would only seek EU resources if the equivalent resource isn't available in the UK. I don't think these new ir35 reforms will have much of an impact there but I could be wrong.

      Unless you're talking about multinational companies moving their contract work to EU which is totally feasible but again this would more likely be an indirect result of a diminished talent pool due to ir35 reform rather than a direct result.

      Comment


        #4
        Originally posted by jayn200 View Post
        I don't understand how this would drive businesses to seek contractors from the EU.

        First of all a local resource is always the preferred option if everything else is equal. Similar culture, same time zone, same language, knowledge of local market, easier ability to come on site, etc.

        So they would only seek EU resources if the equivalent resource isn't available in the UK. I don't think these new ir35 reforms will have much of an impact there but I could be wrong.


        Unless you're talking about multinational companies moving their contract work to EU which is totally feasible but again this would more likely be an indirect result of a diminished talent pool due to ir35 reform rather than a direct result.
        None of that matters to a clientCo / business, if the EU resource potentially offered a considerable cost cut in the rates (if they had an interest in that contract) vis-a-vis a local relatively-costly resource (and especially when you take into account the fact that IR-inside roles would only be picked up by a limited set of client-co site-local resources).

        ... and companies would go for that if the EU resources offered less cost... bottom-line and cost is the king.

        Comment

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