Accountingweb IR35 article for clients

[northernladuk]

So let's take a specific historical example. Computer Sciences Corporation used to provide IT support in a number of areas for MG Rover. They did this by using a mixture of permanent employees and contractors. The employees tended to be managing teams of contractors. How would this structure have fared under the new rules?

The article you linked in your first post answers your question. 2nd paragraph in case you are struggling.

Do we have examples of public sector clients using software houses who are exempt and where the software house is applying the rules?

The pertinent reading is on the 2nd page in the sticky I linked. A link to an article from Kate Cottrell covers the scenario for Public sector clients/consultancies but this is largely irrelevant now as it was confusing the distinction between a public sector client or a private sector client so isn't confusing anymore. So your question about examples of PS via consultancies doesn't work. The private client is now caught so doesn't matter if the end client is public or private anymore. Revert back to the 2nd paragraph of your link
IR35 reforms: Where consultancies are caught

edit
Some CSC contractors provided their services to MG Rover from CSC premises and through an agency. I currently supply my services through a software house to a client and do not reside at the client's site. Additionally there is no intermediate agency. So how would that structure likely fare under the new rules?

The article you linked in your first post answers your question

The only way to be exempt is to provide a service not people.

P.S. When they talk about intermediaries here they are not talking agencies. Again, explained in the 2nd paragraph of your own article.

P.S.S Don't get the end user of the chain mixed up with who is paying for and consuming your services. It should be a lot clearer if you get that right first. It was an issue back in PS days but not now.

[JohntheBike]

The article you linked in your first post answers your question. 2nd paragraph in case you are struggling.

The pertinent reading is on the 2nd page in the sticky I linked. A link to an article from Kate Cottrell covers the scenario for Public sector clients/consultancies but this is largely irrelevant now as it was confusing the distinction between a public sector client or a private sector client so isn't confusing anymore. So your question about examples of PS via consultancies doesn't work. The private client is now caught so doesn't matter if the end client is public or private anymore. Revert back to the 2nd paragraph of your link
IR35 reforms: Where consultancies are caught


The article you linked in your first post answers your question

The only way to be exempt is to provide a service not people.

P.S. When they talk about intermediaries here they are not talking agencies. Again, explained in the 2nd paragraph of your own article.

P.S.S Don't get the end user of the chain mixed up with who is paying for and consuming your services. It should be a lot clearer if you get that right first. It was an issue back in PS days but not now.

"2nd paragraph in case you are struggling" if this is the statement you are referring to -

The current public sector IR35 rules include a fully contracted-out service exception and this exception is expected to form part of the private sector IR35 rules from 6 April 2020.

then I could contend that is the case in my current setup. All IT support functions are provided by the software house. But I guess it isn't at all clear yet if the end client will be exempt from applying the rules.

"The only way to be exempt is to provide a service not people"

So how can any service be provided without people? Would a contracted out service mean that the contract between the end client and the software house would not name any individual? So if that contract did name an individual, this wouldn't be classed as a contracted out service? Would this be the deciding factor?

[northernladuk]

"2nd paragraph in case you are struggling" if this is the statement you are referring to -

The current public sector IR35 rules include a fully contracted-out service exception and this exception is expected to form part of the private sector IR35 rules from 6 April 2020.

No. This.

he original IR35 rules were introduced with effect from 6 April 2000 and can apply where an individual (a worker) personally provides their services through an intermediary to an end-user. The intermediary is commonly the worker’s personal service company. The use of the term worker here does not mean they have statutory “worker” status for employment rights purposes.

then I could contend that is the case in my current setup. All IT support functions are provided by the software house. But I guess it isn't at all clear yet if the end client will be exempt from applying the rules.

The answer to this is in the paragraph I pasted above.

"The only way to be exempt is to provide a service not people"

So how can any service be provided without people? Would a contracted out service mean that the contract between the end client and the software house would not name any individual? So if that contract did name an individual, this wouldn't be classed as a contracted out service? Would this be the deciding factor?

A fully managed service at X cost that covers all the man hours, admin, hardware, whatever. The client of your client just sees a figure and a service. They don't care about how it's provided.

You provide a daily rate for a bum on seat providing personal service.

[JohntheBike]

No. This.




The answer to this is in the paragraph I pasted above.

"The only way to be exempt is to provide a service not people"


A fully managed service at X cost that covers all the man hours, admin, hardware, whatever. The client of your client just sees a figure and a service. They don't care about how it's provided.

You provide a daily rate for a bum on seat providing personal service.

"A fully managed service at X cost that covers all the man hours, admin, hardware, whatever. The client of your client just sees a figure and a service"

There have been issues which tend to indicate to me that this is the relationship between the software house and the end client. However, it remains to be seen what will happen from next April.

and thanks for the clarification.

[northernladuk]

"A fully managed service at X cost that covers all the man hours, admin, hardware, whatever. The client of your client just sees a figure and a service"

There have been issues which tend to indicate to me that this is the relationship between the software house and the end client. However, it remains to be seen what will happen from next April.

and thanks for the clarification.

The complication came with the fact a private company provides to PS therefore do the PS rules apply. Now it's everyone it won't really matter. The only slight issue could be if you are just body shopped on to your clients client site but that's pretty rare so I guess the determination will be who pays you and you do work for. I don't think they'll be as caught up in the client of your client as they were before so most likely going to stop with who you contract for.

[JohntheBike]

The complication came with the fact a private company provides to PS therefore do the PS rules apply. Now it's everyone it won't really matter. The only slight issue could be if you are just body shopped on to your clients client site but that's pretty rare so I guess the determination will be who pays you and you do work for. I don't think they'll be as caught up in the client of your client as they were before so most likely going to stop with who you contract for.

I guess that if the software house makes the determination, this might be better for me as I believe they only have 30 contractors working for them. So the software house might not take a blanket approach like the client may do, who have contractors working directly for them through agencies. MyCo's contract is with the software house and they pay MyCo. They also issue the purchase order. I rarely attend on the client's site, just one visit in two years. Also I rarely attend on the software house site. I work exclusively from home and this is stated in the contract. I've had my contract assessed by Abbey Tax and it is outside of IR35. So my interest is who will make the determination of my status after April 2020, that is if I'm still in contract.

[northernladuk]

Dunno about guess. Looks pretty black and white to me.

You assumption about the software house more likely to determine you are outside is seriously flawed though. What's the perm to contractor split in what you are doing? That many contractors in a smallish operation sounds top heavy and you being there for 2 years as well. On that information alone it sounds like are using the contractors as flexible perms. Part and parcel is also a problem on longer gigs.

Again there isn't enough information about the size of said software house but if its small to mid they may not have the knowledge or money to spend on IR35 consultants to help them with their determination and could opt to swap a good number of contractors to inside or offer perm than run the risk of the unknown.

Contract might be outside but working practices can trump that.

If the roll out goes anything like the PS one then a lot of clients will be erring on the side of caution and it will take time for outside gigs to start coming out.

Size of client, contract to perm ratios, attidue to risk and so many more variables will come in to play so wouldn't assume you're safe until you are given an outside contract on April the 6th.

[JohntheBike]

Dunno about guess. Looks pretty black and white to me.

You assumption about the software house more likely to determine you are outside is seriously flawed though. What's the perm to contractor split in what you are doing? That many contractors in a smallish operation sounds top heavy and you being there for 2 years as well. On that information alone it sounds like are using the contractors as flexible perms. Part and parcel is also a problem on longer gigs.

Again there isn't enough information about the size of said software house but if its small to mid they may not have the knowledge or money to spend on IR35 consultants to help them with their determination and could opt to swap a good number of contractors to inside or offer perm than run the risk of the unknown.

Contract might be outside but working practices can trump that.

If the roll out goes anything like the PS one then a lot of clients will be erring on the side of caution and it will take time for outside gigs to start coming out.

Size of client, contract to perm ratios, attidue to risk and so many more variables will come in to play so wouldn't assume you're safe until you are given an outside contract on April the 6th.

Without wishing to reveal any details, I can assure you that the software house is very large, both in employees and turnover. It may very well have more contractors than the 30 or so that I'm aware of, but that figure I believe represents the number of contractors the software house provides to the client, who is also very large both in employees and turnover.

"You assumption about the software house more likely to determine you are outside is seriously flawed though"

I'm not assuming that. I'm actually assuming the opposite. However, what I'm intimating is that it is more likely I'll be able to negotiate with the software house than the end client, because my contract is with the software house. If they won't negotiate, I'll retire as I'll be 72 by then. However, given what the end client has advised me, they may not be happy with the software house if this happens. There have been incidents in the past when the end client has over ruled the software house with regards to my position.

"What's the perm to contractor split in what you are doing?"

I have two permanent understudies in India. So three in total.

"you being there for 2 years as well"

I've been with the end client for almost 19 years. I'm an old mainframe dinosaur. But then crocs and gators have been very successful also!

"Contract might be outside but working practices can trump that."

yes, I'm very well aware of that. Remember I've been to the EAT.

Supervison - I work exclusively from home and rarely go on site, so no one directly supervises me in person or remotely
Direction - no one directs what I do because my knowledge of the application I support is extensive and only I have been able to determine how to fix some very serious issues in the past. I've also done this for other applications not under my control when requested by the client.
Control - no one controls what I do. If there is an issue, I alone decide what is necessary to recover the situation.

"so wouldn't assume you're safe until you are given an outside contract on April the 6th"

I've had my contract professionally assessed by Abbey Tax and they have judged it outside. I also have case law in my favour, which as I've already advised, warned off HMRC when they came after me in 2000.

In any event, as I've said, if I am still in contract in April 2020 and what I'm offered doesn't suit me, I'll just retire. I really don't want to fight the system anymore. However, I've just beaten an agent of HMRC in court for charging an incorrect VAT amount on an import. They now have a CCJ against them, with whatever consequences that has for that business. They only paid up when confronted with the bailiffs. So I'm not averse to a fight if necessary.

[malvolio]

looks like I've been watching in the wrong organisation's fora!

The same points and criticisms were made over there as well...

[JohntheBike]

The same points and criticisms were made over there as well...

well, all I can say is that there is far more information being disseminated here and not all over there or here are against me. However, over there is a has been for me.

edit
and it would appear that over there is also a has been for others here

and just to set the record straight, some officials over there have acted towards me in a somewhat less professional way than that organisation's title would suggest.