A legal way to avoid IR35...?

[IR35FanClub]

Probably been tried before and failed - but could you turn the recruitment process on it's head and make it into a tendering process?

My other business (of which I'm a 25% shareholder) involves tendering for contracts valued between £50,000 and £200,000 per year. However in that case we are working in the property sector and the contract is a framework contract for services - with any particular person we subcontract to able to perform the service. So no way it would ever fall under IR35. Basically we operate the business to find and organise the people who will carry out the work (kind of a panel management service with quality controls and auditing).

Now - say I got together with a few of my ex-colleagues who are also capable of doing the same job as me (software testing). People who I'd trust and could potentially keep updated with the work I'm doing via email (exactly how my other business is run - as we use a virtual office).

In that case my only barrier would be convincing the company who is recruiting that I am in fact tendering for work for "the company" - and not for "me personally" - although I'd be expected to be the main contact and perform most of the work. If the company we're really flexible - they may for example let me send in a mate to carry out a "comprehension" review of my test scripts from a fresh pair of eyes while I take a couple of days to return the favour for him elsewhere at a later date.

So I'd need to take along CV's and be able to explain what my associates can do in addition to mine. It also has some merit to it - as a value added service I could potentially draw on the skills of others as well as my own.

This is not an umbrella company but a "consultancy". You'd be effectively operating in the same way CapGemini/EDS/Logica/ATOS etc do. Just on a much smaller scale.

The question then becomes how do you split up the proceeds of the company, which is basically "however you want". In my other company we have an arrangement where as directors we take £10,000 a year each as salary, we get profit share bonus when we personally carry out assignments, and we can split of any remaining profits via share dividends by agreement of the 4 of us.

Potential or a waste of time? For my first cocntract it will be a waste of time - I have to have security clearance so no way would the client want me sharing what I'm doing. But in the more general market is it practical?

Simon.

[mick.sap]

different share classes. Declare dividends for each share class.

Be careful you don't piss in your own pocket here.... You sure you want to share their liability for screwing something up ?

[NotAllThere]

There's plenty of legal ways to avoid IR35. Getting the right contract written is a good one.

I don't see any issue with your business model per se. But even with that set-up, if your contracts are badly worded - you'll still get hit for IR35.

[gadgetman]

I think its an odd situation where a clientco goes through the time and expense of advertising a position, interviews and dealing with agencies in the pursuit of a contractor with the exact experience they feel they need.

Whereas the same clientco is quite happy to outsource the majority of their IT (lets say testing) to an IT service company who can put whoever they like onto the task and swap and change the resources at will.

[tim123]

I think its an odd situation where a clientco goes through the time and expense of advertising a position, interviews and dealing with agencies in the pursuit of a contractor with the exact experience they feel they need.

Whereas the same clientco is quite happy to outsource the majority of their IT (lets say testing) to an IT service company who can put whoever they like onto the task and swap and change the resources at will.

I've discussed this with more than one manager that I've worked for, and the reason that he's prepared to let an outsourcer farm the work out to any one of their employees, but he won't let me tender for work on the same basis is because (in his view) the outsourcer has a reputation to protect.

If the outsourcer provides someone who doesn't perform, then the outsourcer will be contractually required to fix the problem and in order to protect their reputation, will do so (so he thinks).

If I, as an independent consultant don't perform, then any clause in the contract requiring me to fix the problem will be worthless, because all I have to do (if I am so minded) is to wind up my company and walk away.

The fact that most companies who use outsourcers have no mechanism in place to monitor the performance of the supplied staff would seem to be irrelevant.

Tim

[richy]

consultancy

I think its an odd situation where a clientco goes through the time and expense of advertising a position, interviews and dealing with agencies in the pursuit of a contractor with the exact experience they feel they need.

Whereas the same clientco is quite happy to outsource the majority of their IT (lets say testing) to an IT service company who can put whoever they like onto the task and swap and change the resources at will.

Very good points. To me Testing is a skill, but perhaps it is slightly simpler to slot anyone into that role than it is to slot any programmer into a Java VM role etc. Although with a few days I manage to switch to new programming role easily.. its just convincing the client to take me on.

Firstly, the consultancy biz model is definately a good one. Just operate on a smaller scale to ATOS, CapGemini and others! The real problem is that many companies won't deal with a 3man band.. Take software testing, they expect you to be able to come up with 20-30 testers for their project. you wont have the capacity to scale up that quick I think..

I'm running my own consultancy, with only a few, we each serve a different client project at present. contracts are all certified IR35 compliant, with substitution clauses etc

the other option is to scale up your testing by having a foreign department in India etc. Then you can sub-contract to one of the big ones over there, RelQ etc.