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koopa
26th March 2017, 23:46
Hi everyone,

I'd really appreciate someone sanity checking my logic as I am new to contracting (and most of the threads here are related to existing public sector contracts).

I am due to start contracting (CL1 via capita) with a public sector body after 6th April. The setup is that the PSB will use Capita to engage an agency who pay my Ltd company. The PSB offer letter stipulates:

"At all times during the assignment period you will be providing your services as an independent contractor, nothing in this letter or otherwise should be construed as creating an employment relationship between yourself and <PSB>."

I assume this means the PSB, as the client, are declaring my contract outside IR35.

My understanding is that the agency, being the body that pays my Ltd company, will hold liability for paying tax and employer/employee NICs should HMRC come knocking and determine the contract to actually be inside IR35.

As such I do not see the value in IR35 insurance (either enquiry or full liability) as it will be the agency who will have to foot the bill.

Is my logic correct or have I made a newbie blunder and missed the point completely?


Thanks in advance!

mudskipper
27th March 2017, 06:02
Hi everyone,

I'd really appreciate someone sanity checking my logic as I am new to contracting (and most of the threads here are related to existing public sector contracts).

I am due to start contracting (CL1 via capita) with a public sector body after 6th April. The setup is that the PSB will use Capita to engage an agency who pay my Ltd company. The PSB offer letter stipulates:

"At all times during the assignment period you will be providing your services as an independent contractor, nothing in this letter or otherwise should be construed as creating an employment relationship between yourself and <PSB>."

I assume this means the PSB, as the client, are declaring my contract outside IR35.

My understanding is that the agency, being the body that pays my Ltd company, will hold liability for paying tax and employer/employee NICs should HMRC come knocking and determine the contract to actually be inside IR35.

As such I do not see the value in IR35 insurance (either enquiry or full liability) as it will be the agency who will have to foot the bill.

Is my logic correct or have I made a newbie blunder and missed the point completely?


Thanks in advance!

Yes, I fear you have missed the point :)

They are spelling out that you are not an employee of the client - i.e. you will get no sick pay, holiday, training, redundancy etc, etc. No employment rights.

However, employment status for employment purposes != employment status for tax purposes.

You need to specifically ask about the IR35 status of the engagement, and get it in writing.

However, you are right about IR35 insurance - you won't need it, as you will either be inside (taxes deducted) or outside with the client bearing the liability.

Good luck!

John Lane
27th March 2017, 06:52
You may wish to search previous posts on cl1 contracts and IR35 - most likely to be inside? Manpower substitution?

malvolio
27th March 2017, 09:04
You may wish to search previous posts on cl1 contracts and IR35 - most likely to be inside? Manpower substitution?
Absolutely bloody certain to be. If not, you're on the wrong framework...

LondonManc
27th March 2017, 10:32
Absolutely bloody certain to be. If not, you're on the wrong framework...

The general consensus being that CL1 = Inside IR35 from April then?

polagon
27th March 2017, 12:13
Absolutely bloody certain to be. If not, you're on the wrong framework...

Why is that? I.e. wrong framework?

My client has deemed my role to be outside, and it is Capita CL1 contract role.

LondonManc
27th March 2017, 12:14
Why is that? I.e. wrong framework?

My client has deemed my role to be outside, and it is Capita CL1 contract role.

Have you had an official confirmation of determination or is it just the agency telling you?

polagon
27th March 2017, 12:22
Have you had an official confirmation of determination or is it just the agency telling you?

Not sure how official it is, but got sent it over from the client who used the new beta tool. "HMRC will stand by the result given unless a compliance check finds the information provided isn’t accurate.". So unless that happens it should be fine.

LondonManc
27th March 2017, 12:23
Not sure how official it is, but got sent it over from the client who used the new beta tool. "HMRC will stand by the result given unless a compliance check finds the information provided isn’t accurate.". So unless that happens it should be fine.

Happy days then. Make sure you get a correctly worded confirmation together with the signed contract and away you go.

koopa
28th March 2017, 00:19
Yes, I fear you have missed the point :)

They are spelling out that you are not an employee of the client - i.e. you will get no sick pay, holiday, training, redundancy etc, etc. No employment rights.

However, employment status for employment purposes != employment status for tax purposes.

You need to specifically ask about the IR35 status of the engagement, and get it in writing.

However, you are right about IR35 insurance - you won't need it, as you will either be inside (taxes deducted) or outside with the client bearing the liability.

Good luck!

Thanks Mudskipper - that's really helpful. I've since clarified and the client has confirmed that they consider the contract to be outside IR35 so happy days!

And as it seems with Polagon's contract, CL1 does not necessarily equate to inside IR35, but perhaps only strongly suggests it.

polagon
28th March 2017, 19:35
Thanks Mudskipper - that's really helpful. I've since clarified and the client has confirmed that they consider the contract to be outside IR35 so happy days!

And as it seems with Polagon's contract, CL1 does not necessarily equate to inside IR35, but perhaps only strongly suggests it.

So I talked with a colleague who has been at the client for a few months, and apparently it looked like for a while that hers (and if so probably my) role would fall inside. And then some of the information from the client/HMRC got revised and it's now then outside. So yeah thanks for that. But from the sound of it, it has been far from a clear decision until now.

LondonManc
29th March 2017, 08:13
So I talked with a colleague who has been at the client for a few months, and apparently it looked like for a while that hers (and if so probably my) role would fall inside. And then some of the information from the client/HMRC got revised and it's now then outside. So yeah thanks for that. But from the sound of it, it has been far from a clear decision until now.

It's been far from clear all over as new titbits of news filter through that potentially changed previous thinking. If you're at a client already and outside and QDOS have reviewed your contract as outside, I'd have a chat with the client about exercising reasonable care if they're declaring blanket inside.

I'd like to think that each new role can, in isolation, have that reasonable care exercised on it but that remains to be seen.

polagon
29th March 2017, 13:19
It's been far from clear all over as new titbits of news filter through that potentially changed previous thinking. If you're at a client already and outside and QDOS have reviewed your contract as outside, I'd have a chat with the client about exercising reasonable care if they're declaring blanket inside.

I'd like to think that each new role can, in isolation, have that reasonable care exercised on it but that remains to be seen.

OK, thanks for the tips. Could you perhaps go quickly into this with reasonable care. And if there's any leverage to be used/rights to get this exercised on our... contracts?

LondonManc
29th March 2017, 14:29
OK, thanks for the tips. Could you perhaps go quickly into this with reasonable care. And if there's any leverage to be used/rights to get this exercised on our... contracts?

The PSBs have a duty of reasonable care to ensure that the correct determination is reached - your individual contract must be declared inside or outside IR35; a blanket inside declaration is not reasonable care. If you're through an agency, get one of the senior agency guys to speak to the PSB about IR35 and what it means (assuming they know about it) to be inside vs outside. It's cheaper to the PSB if you're outside.

kav k
14th April 2017, 16:54
@koopa Can I ask you if you get the confimation of it as outside IR35 from Capita or DWP?

I have been offered a contract which I havent signed it yet as I am reviewing it with QDOS and gathering more information. And also need to get the written confirmation of IR35

The contract is between my limited company and agency , then between Capita and the agency. My contract is CL1 and mentions Capita as endclient and DWP as end client's customer.

John Lane
15th April 2017, 08:15
I have read some previous discussions on this forum that suggest most/all capita/cl1 are likely to be inside as they are 'manpower substitution'. Some clients such as MoD/Capita have got around 'reasonable care' by just ending all contracts on 31 mar and requiring all new contracts to be via an umbrella - effectively inside.

Other clients on the same cl1 type contracts seem to have taken a different view.... does your head in doesnt it?

koopa
30th April 2017, 22:07
@koopa Can I ask you if you get the confimation of it as outside IR35 from Capita or DWP?

I have been offered a contract which I havent signed it yet as I am reviewing it with QDOS and gathering more information. And also need to get the written confirmation of IR35

The contract is between my limited company and agency , then between Capita and the agency. My contract is CL1 and mentions Capita as endclient and DWP as end client's customer.

Hi Kav - My contract was confirmed outside by DWP. The agency also confirmed by virtue of the fact that the contract mentions it being outside scope of IR35.

paulb567
1st May 2017, 06:45
virtue of the fact that the contract mentions it being outside scope of IR35.

Then I guess it must be. Lol.

koopa
2nd May 2017, 22:30
Then I guess it must be. Lol.

Not sure if joke or... :s