Renewal contract for outside IR35 role - boilerplate inside clauses removal?

[yorkshirespud]

Hi all,

I'm in a Public Sector role as a Digital Technical Architect for one of the few Departments that has declared most people outside of IR35. The original 6 month contract was pre-IR35 aware, whereas the renewal contract (will be continuing on from the end of original contract in May) is pepperred with 'outside/inside' language, and has two separate rates in the schedule for inside or outside etc.

I'm in negotations to remove all the 'inside' references and rates, as my role has already been declared as outside prior to the renewal. I fully understand the real reason the agency want the clauses in there, which is an attempt to protect themselves and pass on the shaft to me if the PS client has a change of heart in the future and 'changes' the determination to inside at some point in the future. Obviously as far as I'm concerned, the role is outside, end of conversation, remove the clauses.

I've also heard from the Department's own HR that the need to have two rates inside/outside is a 'legal requirement from HMRC'. I've called this out as BS, HMRC don't get to make up the rules as much as they'd like to, I just want to check, there isn't anything in the Finance 2017 bill that actually requires this is there?

Regards

[malvolio]

Hi all,

I'm in a Public Sector role as a Digital Technical Architect for one of the few Departments that has declared most people outside of IR35. The original 6 month contract was pre-IR35 aware, whereas the renewal contract (will be continuing on from the end of original contract in May) is pepperred with 'outside/inside' language, and has two separate rates in the schedule for inside or outside etc.

I'm in negotations to remove all the 'inside' references and rates, as my role has already been declared as outside prior to the renewal. I fully understand the real reason the agency want the clauses in there, which is an attempt to protect themselves and pass on the shaft to me if the PS client has a change of heart in the future and 'changes' the determination to inside at some point in the future. Obviously as far as I'm concerned, the role is outside, end of conversation, remove the clauses.

I've also heard from the Department's own HR that the need to have two rates inside/outside is a 'legal requirement from HMRC'. I've called this out as BS, HMRC don't get to make up the rules as much as they'd like to, I just want to check, there isn't anything in the Finance 2017 bill that actually requires this is there?

Regards

The two rates are for covering Employers NIC payments. That 's been the case for years with umbrella companies, it's just you never normally see it.

But get your contract reviewed properly. If the clauses are conditional on something that won't happen, then they have zero effect.

[TheFaQQer]

I've also heard from the Department's own HR that the need to have two rates inside/outside is a 'legal requirement from HMRC'. I've called this out as BS, HMRC don't get to make up the rules as much as they'd like to, I just want to check, there isn't anything in the Finance 2017 bill that actually requires this is there?

You are correct. There is no requirement for any to offer different rates at all, so there cannot be any obligation to include them in the contract.

Out of interest, what's the difference in the rates that they are offering?

[yorkshirespud]

Out of interest, what's the difference in the rates that they are offering?

The inside rate is 85.7% of the outside rate ..

Which I'm guessing is Employers NI @ 13.8% + Apprentice Levy 0.5% = 14.3% ?

[TheFaQQer]

The inside rate is 85.7% of the outside rate ..

Interesting that they are offering you less money to be inside - I'd be wanting a lot more if it was me.

My gut feeling is that they have misunderstood how the process has to work - even inside you should still invoice at the agreed rate, and they pay that net. IANAL, but I would wonder whether the new contract (whilst trying to clarify what you will get net) is actually going to hit the inside worker twice - they have to invoice at the rate in the contract, and then receive that amount minus taxes.

Unless they have clarified that the rate stated for inside work is net after deductions have been made - which makes it "interesting" to know what to actually invoice...

[yorkshirespud]

Interesting that they are offering you less money to be inside - I'd be wanting a lot more if it was me.

My gut feeling is that they have misunderstood how the process has to work - even inside you should still invoice at the agreed rate, and they pay that net. IANAL, but I would wonder whether the new contract (whilst trying to clarify what you will get net) is actually going to hit the inside worker twice - they have to invoice at the rate in the contract, and then receive that amount minus taxes.

Unless they have clarified that the rate stated for inside work is net after deductions have been made - which makes it "interesting" to know what to actually invoice...

This is why I want it all removed from the contract - it's irrelevant to my role - declared outside already.

[TheFaQQer]

This is why I want it all removed from the contract - it's irrelevant to my role - declared outside already.

I'm with you - it's not needed, it's not a legal requirement, and all it does is add confusion to the contract.

As long as you have the declaration of your role being outside then it's irrelevant.

[psychocandy]

Anyone mention retrospective?

[TheFaQQer]

Anyone mention retrospective?

Why would they? Original contract outside IR35, new contract outside IR35. Where do you think retrospection might apply?

[yorkshirespud]

Anyone mention retrospective?

The role has always been declared outside, without any whiff of inside to it. I'm less worried about retrospective, but a little more concerned that the role has always been declared outside, which may pique HMRC's interest.