Already in public sector (outside ir35) since 2017, agency now wants to review it!

[ewokuk]

Basically my end client is public sector and so I have fallen under the new IR35 rules since they came out for the public sector in 2017. The public sector company have a framework agreement with the private company that supplies the people and they had both agreed the role was outside IR35 in 2017, however that private company seemingly still wasn't happy with the risk and decided we had to go via a recruitment agency who was happy with the risk, and as a result this agency takes 3% of our day rate for effectively doing nothing but taking the ir35 risk.

Not a huge issue, except that agency has now decided for some reason that due to the new IR35 rules coming in April, they want a new assessment from the private company that the people going through them to the public company are outside IR35, they are not happy with the CEST tool since people can just lie on it, they want a reputable 3rd party assessment which I think they plan on using to get insurance. So far the private company has not responded to the agency at all so the agency are now pushing me to try to get them to respond. They have effectively said as of April without this new assessment we will all have to go umbrella.

What I am trying to figure out is does ANYTHING change in April for people already outside and working for a public sector end client? As far as I am aware nothing at all changes since the new changes are for private sector only. Can someone confirm this? If this is the case, what the hell are the agency doing? I suspect this is some idiot in the agency with no clue about what is changing and trying to tick a few boxes, but is to stupid to figure out they are screwing themselves over.....

I believe this agency is being very stupid here. If it is suddenly deemed that the roles are inside IR35, surely HMRC can then easily come along and say thank you very much agency, here is a nice big fine and we will have 3 years of back taxes and interest as well please, on the basis that the roles have not changed in any way and neither have the IR35 rules related to public sector, so if they are deemed inside now, they must have been inside since 2017! Also if we end up going umbrella, there would be no need for this agency at all and so they would end up getting nothing.

[jamesbrown]

No, the new rules apply to the public sector and to medium and large companies. For example, after April, the client is the Fee Payer until they provide a timely SDS with reasonable care. Bottom line, the rules are changing for the public sector too (assuming they go ahead, which looks almost certain) and it’s up to the supply chain above you to comply.

[ewokuk]

I see. ok looks like I am leaving end of March then!

[Lance]

I see. ok looks like I am leaving end of March then!

I think you were right in the first post.
Nothing is changing for public sector. They have already decided you are outside, so to overturn that will be a significant problem for them unless they can prove a role change.

If they want you inside for risk aversion reasons they need to terminate and re-engage under different terms. So they can do it but it’s not just ‘here’s a new determination now please tell us your umbrella’.

[ewokuk]

I think you were right in the first post.
Nothing is changing for public sector. They have already decided you are outside, so to overturn that will be a significant problem for them unless they can prove a role change.

If they want you inside for risk aversion reasons they need to terminate and re-engage under different terms. So they can do it but it’s not just ‘here’s a new determination now please tell us your umbrella’.

They will surely just terminate it then won't they. They will say without an SDS saying outside we will terminate it and you can re-engage under an umbrella.

I think there are still advantages to being LTD company even if inside IR35 (although I don't remember exactly what, I know you can't claim travel or expenses?) but they will no doubt not allow that.

Not that I would stay while inside anyway, unless they up the rate by about 30% to account for it.

[CheeseSlice]

No, the new rules apply to the public sector and to medium and large companies. For example, after April, the client is the Fee Payer until they provide a timely SDS with reasonable care. Bottom line, the rules are changing for the public sector too (assuming they go ahead, which looks almost certain) and it’s up to the supply chain above you to comply.

This.

The agency must do this or they are liable for the unpaid taxes if the determination is found to be incorrect. By getting the client to produce an SDS using reasonable care, this is shifted towards the next party in the supply chain. As of today the outside determination may have just been a hunch from end client with no formal process followed. Unless you know otherwise?

Interesting that you think the agency was brought into the mix to shift liability towards them. That doesn't seem likely.

[ewokuk]

This.

The agency must do this or they are liable for the unpaid taxes if the determination is found to be incorrect. By getting the client to produce an SDS using reasonable care, this is shifted towards the next party in the supply chain. As of today the outside determination may have just been a hunch from end client with no formal process followed. Unless you know otherwise?

Interesting that you think the agency was brought into the mix to shift liability towards them. That doesn't seem likely.

Not sure if there was a formal process, both the private company and the public company agreed it was outside, that's all I know. The private company in question is also an agency themselves and are quite capable of handling payments to contractors so the only reason this additional agency can have been brought in was the first agency still wasn't confident enough to take the risk. Either that or by going through one agency to another they thought it still fell under private?

As it stands the structure is [agency1 who pay me] -----> [agency2 who pays agency1 and has the framework agreement contract to supply people to the public company] -----> [public company who pays agency2 for the people they supply under the framework]

I am guessing in this structure agency1 is the one who must have the SDS since they pay me. They are saying they want the SDS from agency2, who have so far not responded to the request at all.