Newbie and IR35 (duck and cover)

[kungfugerbil]

Afternoon all.

Long time listener, first time caller. I'll say now that this is my first contract, so I deserve anything I get, but I've read the guides over there ----> and have a contract, agency, accountant and MyCo all set up...

Got a gig, like it, going well. Signed a contract - sadly before discovering this place (amateur I know).

My question: my accountant's IR35 folk reviewed the (already signed) contract and said that the body of the contract is fine, but some of the stuff they tacked on in one of the schedules counteracts quite a lot of the contract. The daft thing is that the working arrangements, project and the relationship between agency, client and MyCo is actually, in real life, all really rather pointing toward being outside IR35, it's just the ridiculous contract statements.

I asked the agency if they would amend the (live) contract, they said no. Don't blame them. Anyway...

If you were in my position where the working arrangements looked rosy but the contract looked like it was drawn up by a 5-year old with a headache, would you:

a) get head down, ignore it and assume everything was fine and pay salary/divis
b) assume it's gonna be IR35 and instruct the accountant to do PAYE (yuk)
c) as per a), but keep a stash of cash back to throw at the HMRC waste-of-a-cheap-suit if he comes knocking?

I'm inclined toward c), but welcome any input or real-life experience.

Cheers all
<M>

[northernladuk]

Get QDOS or B&C to review it not your accountant. You wouldn't let a contract specialist run your accounts would you?

B&C will negotiate it on your behalf. The agent will be able to smell you newness a mile off and take you over a barrel. If you make it clear you will walk and cause him a headache he will fold.

First step is to get it reviewed properly so you know exactly what to change.

[mudskipper]

I would go with a) and get PCG+ cover in case of an investigation.

[dmini]

At this point you are deemed to have accepted the contract , by signing it and then starting!
However, hopefully it is not too long. There may then be a window for rewriting the contract at renewal point. If it is Hays, probably not a chance though!!
I user Bauer & Cottrell for reviews - they negotiate direct with the agency, then tell me I am OK to sign. It will take into account working practices etc as well so you may pass even with a rotten contract.
So apart from some of the suggestions above, you could ask agency whether they would contemplate a change to contract at renewal, and you could get contract reviewed then as you head up to renewal.

[kungfugerbil]

Cheers all.

The folks who reviewed the contract aren't painters and decorators - they do paid reviews so they're not amateurs, but I take your point about B+C.

I don't know if someone else trying to negotiate with them will just pee off the agency - I sense they're already annoyed with me for questioning their contracts and they've stated they absolutely will not entertain any changes mid flight. I'll obviously try again at renewal, should that come along..

It's one of those scenarios where an agency has a particular company/market sewn up, so I'm treading carefully

Cheers again
(M)

[northernladuk]

Cheers all.

The folks who reviewed the contract aren't painters and decorators - they do paid reviews so they're not amateurs, but I take your point about B+C.

but they are not contract specialists...

I don't know if someone else trying to negotiate with them will just pee off the agency - I sense they're already annoyed with me for questioning their contracts and they've stated they absolutely will not entertain any changes mid flight. I'll obviously try again at renewal, should that come along..

It's one of those scenarios where an agency has a particular company/market sewn up, so I'm treading carefully

Cheers again
(M)

Well B&C make a lot of money out of it so it must work in a lot of cases.

Of course agencies won't change mid contract. Why on earth should they? You signed it. If you wanted to make changes you should have done that before you signed. He is quite within his rights to get annoyed at you about questions like that.

You have been pretty vague in your original posts with the comment that 'schedules counteracts quite a lot of the contract'. This detail is critical. If it counteracts the MoO sub and D&C then you are utterly screwed. If it counteracts much of the rest you are probably ok. You really need to get the contract & schedules review by QDOS (etc) who will tell you if you are inside or outside, not ok or passable etc.

When you have that then you should decide what to do. The option you are missing which is the one you should take is ..

d) Have it reviewed, if it is inside do your accountant to suit, if it is outside then happy days.

Don't assume stuff when it comes to IR35 and your accounting.

[SueEllen]

I don't know if someone else trying to negotiate with them will just pee off the agency - I sense they're already annoyed with me for questioning their contracts and they've stated they absolutely will not entertain any changes mid flight. I'll obviously try again at renewal, should that come along..

You agreed the contract they have no reason to change. Even on renew they have no reason to change.

You need to get the client's details at interview.

Then negogiate the contract using contract specialists who have no issue talking to the agency's "legal expert" if necessary. If the agency doesn't play ball then you talk to the client.

It's one of those scenarios where an agency has a particular company/market sewn up, so I'm treading carefully

Very common and makes no difference.

[kungfugerbil]

You need to get the client's details at interview...Then negogiate the contract using contract specialists

excellent advice no doubt, but as my joining pack didnt't include a time machine (maybe it was in all the advertising stuff I chucked out?) not terribly helpful for the present day. Noted for the future.

NLUK - they are indeed IR35 specialists, but I accept that the industry favoured companies are B&C / QDOS. I'll look into their offerings.

The stupid text is in the schedule of responsibilities, stating "You work for <<Agency>> at clients site, not for the client via <<agency>>". Ridiculous and serves no purpose, but by using terms like " you work for", the review company have naturally picked this up as a flag that HMRC could use to suggest employee status. Later in the contract it states that it isn't an employee/employer relationship and that neither the agency or client can control MyCo's work and so on, hence the contradictory/conflicting bit.

I've made no assumptions about IR35 which is why I've had it professionally reviewed and will look into getting another review.

[Sockpuppet]

Now I don't want to scare you but should it come to light that you had an IR35 review, was warned it was inside IR35 and then decided to operate as if you were outside the penalty applied by HMRC could be at the sharp end of 100% as it could be classed as deliberate concealment as opposed to around 30% if you were just careless.

Also retrospectively amending contracts won't happen, why would the agency change it you're already there. Even if your extensions were changed you'd still have this holding over your head and they could claim the whole contract is inside IR35.

[kungfugerbil]

Now I don't want to scare you but should it come to light that you had an IR35 review, was warned it was inside IR35 and then decided to operate as if you were outside....

Nothing scares me. Except clowns.

To be clear, the contract review came back with strong pointers toward being outside (MoO, financial risk etc) but picked up these throwaway phrases in the schedule that could point to being inside. The working arrangements questionnaire came back very positively as being outside.

The contract reviewer offered her opinion in summing up as it not being definitively either, but suggested that to mitigate I should start building an evidence file (confirmation of arrangements and so on)

As we have a duty to ensure we take reasonable care when assessing our IR35 status, a paid professional review, subsequent report and acting on the advice contained in the report is a good start. It may not be the golden bullet but there are no absolutes from anyone other than her Maj's revenueweenies.