ClientCo has no idea about IR35 - suggestions for legal advice

[Jase]

Have been contracting with this client since May, start up Financial Services company. I've worked with these people before and they are generally very knowledgeable. 50% of current people on site are contractors to get things up and running, including HR. This is being outsourced to a third party who don't have a clue about IR35 (my Qdos IR35 contract review failed, but they were happy to accept my amends).

I was recently told I had to log in to the new HR system to record my holidays and sick days. I point blank refused, however some admin person is going to do it. Evidently the external HR company has legal advice there are no IR35 implications here. Only myself and one other contractor are concerned, the rest are going along with it, even signing "Employee Handbooks"

Next on the list is performance management, with a "light touch" approach being taken for contractors. Again, I will need to battle it out that I won't be doing this - unfortunately it is with the COO who I generally have a good relationship with.

I'd like to get my own IR35 legal advice to counter what the external HR company has supposedly obtained. Has anyone experienced anything similar and can suggest a decent IR35 lawyer or legal firm?

[northernladuk]

Not sure what good an IR35 lawyer will be. If they want temp permies then that's what you are. You could attempt to manipulate the situation but if it's all going to unravel under intense scrutiny its no good.

I would say your best plan is to..

Make sure you properly understand IR35, particularly the 3 main pillars and try gather as much evidence to show you are outside. I've a feeling your sub clause will be a sham and I'm sure you will be being treated as part and parcel though.

Gather any other evidence where you can, even down to photocopying your site badge that says 'contractor' on it.

Take out IR35 insurance. Something like IPSE+ membership or QDOS TLC35.

And pray.

HTH

[Jase]

Not sure what good an IR35 lawyer will be. If they want temp permies then that's what you are. You could attempt to manipulate the situation but if it's all going to unravel under intense scrutiny its no good.

The point of legal advice is to counter what has supposedly been given to the external HR company. I don't believe any has and ClientCo is being lead astray, just going with what they are being told. I'm fairly confident if contrary advice was provided to them, they would treat contractors as such, and outside IR35. The vast majority of contractors are direct and have been brought in for their specific skill set - ClientCo won't want to lose that.

[Hobosapien]

Inform this third party HR that you are not an employee and therefore will not be using their employee systems. If they try to argue, point out you are not on the client's payroll and have no PAYE employee number.

Get the insurance to back up your contract review. IPSE or other providers may offer some form of advice on how to handle the client/HR if you are or become a member, without needing to get legal with the client/HR which may rock the boat a bit too much.

Make sure working practices conform to being outside IR35 as much as you can and that any client personnel you deal with for contract deliverables and timesheet approvals are clued in to why you will have to decline certain things that should be for permies only. If there's a mix of contractors doing this well (aware of implications of IR35 on working practices) or not so well (IR35 fodder), seek out the ones that have managed to get the client on board so you can use a similar approach that the client should recognise and be happy with rather than trying to plough a new furrow to the same end goal.

That is what will matter if HMRC ever decide to investigate the contract for IR35 purposes.

[northernladuk]

The point of legal advice is to counter what has supposedly been given to the external HR company. I don't believe any has and ClientCo is being lead astray, just going with what they are being told. I'm fairly confident if contrary advice was provided to them, they would treat contractors as such, and outside IR35. The vast majority of contractors are direct and have been brought in for their specific skill set - ClientCo won't want to lose that.

But that isn't going to work and is more likely to get you binned off than come to a satisfactory resolution. Think about it, if you take legal advice, you paid for it, trust it and you've got some back up with their PI if it all does go tits up. Some lawyer comes up and tells you you are wrong. What do you do? You check with your service they say it's OK. What next? You sack off all the legal advice you've paid for on the word of someone else you don't know and didn't pay? I don't think so.

This isn't uncommon in start ups. We've seen the same type of question in the past. They are too young to have full time staff as they need the flexibility to get up to speed so they fill the positions with the fastest most flexible staff there is. Contractors. The problem is, in many cases, because they are so young they don't have the time and resources to have different frameworks and follow rules. They also not stable enough to have well defined pieces of work that is also key to contractors. They want someone on site to do whatever they need at that moment.

Both the above make them an IR35 nightmare. You are part and parcel, you are under D&C with no clear SoW, you follow the one and only process they have which is for permies and so on. It's highly likely they won't understand or want to accept subs either so all your three main pillars are out of the window.

Sometimes it is what it is. All the lawyers and arguing won't change the fact they want an employee but on a flexible contract. They just aren't set up for anything else.

[Lance]

The point of legal advice is to counter what has supposedly been given to the external HR company. I don't believe any has and ClientCo is being lead astray, just going with what they are being told. I'm fairly confident if contrary advice was provided to them, they would treat contractors as such, and outside IR35. The vast majority of contractors are direct and have been brought in for their specific skill set - ClientCo won't want to lose that.

they almost certainly don't give a flying youknowhat about IR35 as that's not their problem. They want to keep costs down so use an external HR company who give even less of a youknowwhat.
Client companies only really care about IR35 if it impacts their ability to get the people they need.

It sounds like you either accept the risk (and get insured) or just run your books as 'inside'.

To be clear, if you were investigated do you really think the client's HR are going to answer the questions in such a way that suits you? Or are they going to say
"here's the contract he didn't sign, and he made us change it to this. No it didn't make any difference to working practises and he was treated just like everyone else"

[Jase]

Appreciate the responses. What may be lost is that this start-up consists of many people who have all worked together before at various places. I’ve been brought in for a specific deliverable contained in my contract.
Any legal advice is not intended to be adversarial and would not be taken as such. It is just a lack of understanding of IR35 within the start-up and an external HR company who don’t give a rats a&$e about it. They do want to be contractor friendly, they just don’t know what this means.
Accessing the HR system has already been sorted and agreed I won’t be. I just know there are going to be further IR35 issues as Client Co evolves. Unfortunately, it is only myself and one other contractor that factor IR35 in to their working practices.
I’ll certainly consider IPSE Membership as they offer a tax and legal helpline.

[WordIsBond]

I bet someone like Kate Cottrell would write them a nice letter emphasising that "part and parcel" is not a good idea, and that things that distinguish contractors from employees are all to the good. QDOS might do the same if you have their insurance, and perhaps for less.

Doesn't IPSE have some kind of "best practice for engagers" advice? I doubt you really need a legal letter.

[mudskipper]

Doesn't IPSE have some kind of "best practice for engagers" advice? I doubt you really need a legal letter.

https://www.ipse.co.uk/resource/flex...economy--.html