New Contract - ex-IR35 guarantees? New Contract - ex-IR35 guarantees?
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  1. #1

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    Default New Contract - ex-IR35 guarantees?

    Hi,

    Am likely to receive an offer from a new client in next day or two, but I'm inclined to accept it only if they can provide some sort of guarantee that they will view it as an ex-IR35 arrangement come next April.

    Anyone any views on an appropriate legal form for this?

    EG
    - an accompanying letter explicitly referencing the intermediaries legislation?
    - simply a water tight (unfettered) substitution clause?
    Etc

    My thinking is - even if they're not ready to do this, I am happy to walk away. And at least if more of us start making clients aware now that taking an adverse view on IR35 will have an effect on their ability to hire, it can only help shape the direction the market takes.

  2. #2

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    Quote Originally Posted by Hamlet View Post
    Hi,

    Am likely to receive an offer from a new client in next day or two, but I'm inclined to accept it only if they can provide some sort of guarantee that they will view it as an ex-IR35 arrangement come next April.

    Anyone any views on an appropriate legal form for this?

    EG
    - an accompanying letter explicitly referencing the intermediaries legislation?
    - simply a water tight (unfettered) substitution clause?
    Etc

    My thinking is - even if they're not ready to do this, I am happy to walk away. And at least if more of us start making clients aware now that taking an adverse view on IR35 will have an effect on their ability to hire, it can only help shape the direction the market takes.
    What on Earth do you mean 'ex-IR35'??

    Everything is IR35 - you are either inside or outside, and that is dependant on the contract and the working practices.

    IPSE has a Letter of Arrangement that sets out what you posted, but it has no legal standing. You could try that.

  3. #3

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    Bearing in mind my, admittedly, very limited foray into asking my current agency what their thoughts are on all matters one year hence, and getting very little back by way of Any meaningful knowledge, I am curious as to why you would want to scupper the possibility of a contract for 12 months' jam over an argument that an agency might really not be prepared about which to have any sort of discussion.

    Why not take the contract, and spend the next year educating from the inside?

    I realise in saying this I have not answered your question. Indeed I won't be able to answer it.

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    And I always thought getting contractors together was like herding cats. Good to see some people will stand up and be counted.

  5. #5

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    Quote Originally Posted by cojak View Post
    What on Earth do you mean 'ex-IR35'??

    Everything is IR35 - you are either inside or outside, and that is dependant on the contract and the working practices.

    IPSE has a Letter of Arrangement that sets out what you posted, but it has no legal standing. You could try that.
    Well, the new legislation asks clients to take a *view* on the status of existing arrangements.

    My thought is to get them to clarify that up front, not wait for next April.

    What I'm imagining I guess is that should they say next April "we think this arrangement is inside IR35", that I can produce a piece of paper, saying"but we agreed the exact opposite at the time of signing the contract, and this was our reasoning."

  6. #6

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    Quote Originally Posted by Hamlet View Post
    Hi,

    Am likely to receive an offer from a new client in next day or two, but I'm inclined to accept it only if they can provide some sort of guarantee that they will view it as an ex-IR35 arrangement come next April.

    Anyone any views on an appropriate legal form for this?

    EG
    - an accompanying letter explicitly referencing the intermediaries legislation?
    - simply a water tight (unfettered) substitution clause?
    Etc

    My thinking is - even if they're not ready to do this, I am happy to walk away. And at least if more of us start making clients aware now that taking an adverse view on IR35 will have an effect on their ability to hire, it can only help shape the direction the market takes.
    To make clients aware then you need to be even more aware. Quoting terms like ex IR35 and thinking a piece of paper is a guarantee is not a very good start. Anyone with even a basic understanding will know that working practices trump any paperwork.

    If it were this easy do you not think it would have been in place already?
    'CUK forum personality of 2011 - Winner - Yes really!!!!

  7. #7

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    Quote Originally Posted by simes View Post
    Bearing in mind my, admittedly, very limited foray into asking my current agency what their thoughts are on all matters one year hence, and getting very little back by way of Any meaningful knowledge, I am curious as to why you would want to scupper the possibility of a contract for 12 months' jam over an argument that an agency might really not be prepared about which to have any sort of discussion.

    Why not take the contract, and spend the next year educating from the inside?

    I realise in saying this I have not answered your question. Indeed I won't be able to answer it.
    To be fair you can't answer his question because what he's after doesn't exist but instead you've given him the perfect solution.

    But.. If anyone does want to educate from the inside, please make sure you've got a clue or you are going to cause more problems than you solve
    We've got some chump at my current gig that's told one of the client managers their 2 year rule is IR35 linked and led him up the wrong path.
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  8. #8

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    Quote Originally Posted by northernladuk View Post
    To make clients aware then you need to be even more aware. Quoting terms like ex IR35 and thinking a piece of paper is a guarantee is not a very good start. Anyone with even a basic understanding will know that working practices trump any paperwork.

    If it were this easy do you not think it would have been in place already?
    So where I'm coming from is - the new legislation asks clients to take a *view* on the arrangements, wrt IR35. They've never had to do this before.

    While, yes, you're right, the reality is the reality, and HMRC could in principle challenge even a shared view held by both client and contractor, it nonetheless seems valuable to clarify at the outset what the client's view actually is. It's that that I would like a "guarantee" on, the client's view.

    I think it has started to happen in Public Sector that clients state their view at outset? That they explicitly advertise certain roles as being outside?

  9. #9

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    Quote Originally Posted by Hamlet View Post
    So where I'm coming from is - the new legislation asks clients to take a *view* on the arrangements, wrt IR35. They've never had to do this before.

    While, yes, you're right, the reality is the reality, and HMRC could in principle challenge even a shared view held by both client and contractor, it nonetheless seems valuable to clarify at the outset what the client's view actually is. It's that that I would like a "guarantee" on, the client's view.
    Which is a Confirmation Of Arrangements document that has been around a very long time. Google it. There are a ton of articles about it and QDOS, amongst others, offer templates. There is still no guarantee and is fraught with problems which is why it is not a standard part of our arsenal like a contract check and IR35 insurance. It's very difficult to find the right person that can make the decision and then even harder to actually get them to sign it. Just asking the client manager to do it is useless as they don't have the authority to make it stick if they do change working practices later. I've attempted twice to get one of these done and it failed miserably both times so I just don't bother. I don't think it's worth the effort anyway. A minor bit of defence if you can actually get the right person to sign it but that's it. Much better is to know IR35 in great detail and educate the client to keep yourself outside.

    There is also another angle to this. RoS is one of the main pillars, albeit not the strongest, and we rely on the fact it's in the contract but never got invoked so our argument is it is available but was never tested. Some cases are just calling the arrangement out as a sham, which is true in most cases TBH, but unless it's tested then the contract clause stands. Now if you go to a client with a CoA and they turn round and say 'Well we wouldn't really let you substitute' you now KNOW it's a sham and you've just destroyed your own IR35 defence. Sometimes it's better not to say anything and rely on the fact it's available but not tested.

    IMO, reading between the lines of your posts, particularly the last sentence below, a much better defence would be for you to get a much better grasp of IR35 and keep yourself outside.
    I think it has started to happen in Public Sector that clients state their view at outset? That they explicitly advertise certain roles as being outside?
    Where have you been the last 2 and half years? Another area you need to research and understand.

    You can't handle IR35 with documents, tick boxes and 'you think' I am afraid.
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  10. #10

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    You are unlikely to get what you want. They don't even know what CEST is going to look like in 12 months. Few clients are really ready to make this determination yet, and they are not going to want to tie their hands on it. They don't even know if they'll be happy to have you around that long, why should they bother to go through the hassle? You're on your way to sending your CV to their shredder.

    I'm not sure why you want it. It's 12 months away. You don't know, either, that you'll be around that long. Maybe they'll hate you. Maybe you'll hate them. Why borrow trouble? This would make sense if it is a 6 month contract next January. It doesn't make much sense right now.

    If you want to do something about it now, give them a notification that:
    1. If the IR35 reform currently being consulted comes in April 2020....
    2. If you are still under contract to them....
    3. If they fail to make a determination at that time that your role is outside IR35....
    4. Then you will give notice and leave the role. Depending on circumstances, you might be willing to renew at a higher rate to compensate you for the additional tax to which they would be subjecting you. But you won't work under these terms if they decide to inflict extra tax on you.

    I suspect that accomplishes what you want without being such a pain that they'll just get someone else.

    Does this contract even go past next 5 April? If not, this is NOT the time to be asking the question. To do so implies some Mutuality of Obligation to renew. I don't think you want to go there. This is really only appropriate if the contract on offer runs into next April. Otherwise, this is a question to raise at renewal time.

    If they ARE offering you a 12 month contract, you can raise the issue by asking to have it terminate 31 March 2019, and 'that lets us both assess how the coming IR35 reforms are going to affect contract terms in the new tax year.'

    That puts them on notice that something is out there without making a huge deal of it right now. Nobody wants it to be a huge deal right now, especially since it's just possible that Theresa May and Spreadsheet Phil might become backbenchers and we might get a Chancellor of the Exchequer who isn't trying to commit economic suicide, and puts a hold on this lunacy.

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