Worth challenging IR35 PSC public sector decision?

[MountainMatt]

I'm in a bit of a funny position at the moment.

I work FT in the public sector. I work in 'shadow IT', outside the main IT department. The main IT department was given a last minute assignment and didn't have the resource internally to do the work. My own manager wouldn't give me up to the IT department because we have so much of our own work to crack on with before end of the year.

So the IT department offered to pay me as a contractor, doing the work in evenings/weekends and my annual leave days.

They sent me a new supplier form, which had about 30 questions all aimed at working out whether the contractor should be in/outside IR35. I answered honestly, and expected they'd call it outside IR35.

I've checked the supplier finance system today and noticed that my company is down as 'PSC-IR35 MyCompanyLtd'.

The only thing I can imagine is that because I have a desk, and might at times use the computer supplied to me for work (I mainly used my personal laptop to be fair), that they saw me as inside IR35. But I was clearly held to account as a contractor, not as an employee.

It was a one-off project for a fixed-sum, then a separate invoice for a few days of out-of-scope work which came up as we went along, only totalling a 4-figure sum.

Is it worth trying to challenge this? How would I go about it? I'm probably going to give the procurement team a bell in the morning, but wondered what avenues there are for challenging it outside of that? I wasn't that bothered initially, but there's a possibility of some more work, for a 5-figure sum, which will make a lot of difference.

[Vincenth1]

IR35

Are you sure 'PSC-IR35 MyCompanyLtd' means your inside?

[MountainMatt]

Are you sure 'PSC-IR35 MyCompanyLtd' means your inside?

Not yet. This will be one of the things I ask procurement/finance team tomorrow. I assume so though. Client is raising PO this week, so haven't invoiced and received payment yet.

[MountainMatt]

Provided an argument to Payroll about why it shouldn't be considered an inside IR35 engagement and they've changed their decision - success! It seems that the person submitting one of the forms made an error, so happy days.

[vwdan]

Provided an argument to Payroll about why it shouldn't be considered an inside IR35 engagement and they've changed their decision - success! It seems that the person submitting one of the forms made an error, so happy days.

And everyone is convinced the world is going to end when this comes into the private sector!

[webberg]

And everyone is convinced the world is going to end when this comes into the private sector!

In my opinion, post April 20 there is going to be a hidden and growing problem that will be "solved" by some form of backdating of IR 35 status, unilaterally, by HMRC.

Let's assume that you presently operate via a PSC. That PSC supplies your services to an agency who then supply to an end client.

The role is outside IR35, but this is a self determined position and HMRC has not challenged. You may even believe that operating via a PSC gives you some protection from being inside IR35 (it doesn't) or perhaps the end client/agency insist on a PSC (but probably could not tell you why).

Come the time to renew the contract that will run over the 5th April 2020 date, your end client will need to make an assessment as to IR35 status. That decision may be coming up as soon as April 2019.

There is no incentive for the end client to say that the role is inside IR35 - none at all. Whilst HMRC claim 90% non compliance, I cannot see that the shifting of status determination to end client will have any effect. Why? Because if the role is inside IR35, the end client is liable for employers NIC. Why do they use contractors? To avoid employers NIC. (I know there are other reasons hard and soft, but 13.8% of gross "pay" is a pretty hefty number).

Once the assessment is made (and you can ask them how they have arrived at that), the risk moves to the "fee payer". This is normally the agent. So the agent, who may have had no hand in making the determination but now takes money from end client and passes it to your PSC, could, if that assessment is wrong, be liable. Bonkers.

However, the agent has no financial reason not to go along with the end client determination. Imagine, end client says "outside", agent says "inside" = agency liable for employer NIC, tax and employee NIC. Where are they going to pay that from? Funds from the end client. What gets squeezed? Their fees.

Already we see contracts which seek to move any liability from such situations to the end user (PSC and/or you) and whilst I'm not a lawyer I think making those clauses work could be a nightmare.

However if all this blame/finance shifting does work, you/your PSC will be liable. What protection does your PSC then give you? None.

We are, as the old curse says, going to be living in interesting times over the next 24 months and I predict the rise of new models and the demise of old ones.

[malvolio]

I agree with webberg fully. If we don't see a move to B2B contracts, which is the only way to defeat this nonsense in the market by making IR35 irrelevant, I would be really quitee surprised. Sadly, however, we are in the hands of the agencies and Human Remains...