Private sector reform planning - should we use CEST yet? Private sector reform planning - should we use CEST yet?
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  1. #1

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    Default Private sector reform planning - should we use CEST yet?

    Hello all. We're trying to get our ducks in a row on IR35 from a private sector perspective from a client advisory perspective. A few are trying to establish a strategy at the moment, and - while helping them with that - we've been fielding some questions about whether or not CEST is worth consulting at this point in time (or ever, IMHO), and advising private sector clients to stay away. Is that correct?

    Our feeling in-house is that it's not set up for private sector usage yet, as per various communications we've had from some of our trade association partners, and there are some updates due to be made to it, although when they will surface seems to be open to speculation at the moment...

  2. #2

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    CEST isn't designed for a particular sector. It's to determine if a position is inside or outside. It shouldn't make a difference.

    The problem is CEST is no good for anything at the moment and is deeply flawed so I'd avoid bringing it up (unless it determines you are outside of course)

    If your client is big enough why not suggest they speak to someone that is offering a service to help them determine the rules and work with them to alter their practices. QDOS amongst others are offering this so worth a look.
    Last edited by northernladuk; 21st June 2019 at 14:14.
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  3. #3

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    I think it is impossible, in principle, to develop a CEST-like tool for IR35 that both reflects the bulk of existing case law and does not over-fit it and, thereby, become completely useless in predicting future case law. There are just too many dimensions to IR35.

    The only value in CEST, now and in the future, will be to evidence an outside IR35 position that you can take to HMRC and say, "suck on that, you cretins". In terms of actually determining status, that will always need an expert looking at the contract and working practices in the round.

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    Quote Originally Posted by jamesbrown View Post
    I think it is impossible, in principle, to develop a CEST-like tool for IR35 that both reflects the bulk of existing case law and does not over-fit it and, thereby, become completely useless in predicting future case law. There are just too many dimensions to IR35.

    The only value in CEST, now and in the future, will be to evidence an outside IR35 position that you can take to HMRC and say, "suck on that, you cretins". In terms of actually determining status, that will always need an expert looking at the contract and working practices in the round.
    Agreed (naturally).
    Qdos Contractor - IR35 experts

  5. #5

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    Yes, I'd say your response is correct.

    I'd sooner clients didn't focus on or rely on using tools/crutches at all, although I appreciate they provide a quick way to document the evaluation process.
    Their use is reductivist and doesn't help in enlightening clients at all about a situation they could turn into a very real competitive advantage: when this situation is properly understood and applied, their company will attract the best flexible workforce talent at no extra cost to themselves.

    At the risk of reductivist myself, clients really just need to ask themselves: "is this role providing a service to us for however long, or a business as usual fixture requirement that we ought to fill permanently or by FTC but haven't because we didn't want the expense/hassle of doing so".

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    The other argument that might sway the client's FD is the financial one. Moving people to inside IR35 will cost the client at least 15% extra since they will have to pay ErNICs and Apprentice Levy or they can persuade their contractors to take a 20-25% rate cut to recover their new overheads. Since those contractors will also be losing their ability to charge expenses, the likely outcome is that they will walk away, quickly, and so damage the client's ability to deliver stuff - and if it won't, why have they got contractors in the first place...

    Moving from a replacement labour model to a deliverables-based one might add a little overhead to the hiring process (possibly avoided by moving it from HR's dead hand across to procurement who will understand the requirement properly and won't be dictated to by the agency) but will walk around IR35 and so maintain the financial status quo ante.
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  7. #7

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    Quote Originally Posted by Qdos Contractor View Post
    Agreed (naturally).
    Is QDOS actively engaging with large clients and agencies/software houses, writing directly to some, to promote this position, rather than just publishing guidelines for clients to refer to if they wish, as others seem to be doing?

  8. #8

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    Quote Originally Posted by JohntheBike View Post
    Is QDOS actively engaging with large clients and agencies/software houses, writing directly to some, to promote this position, rather than just publishing guidelines for clients to refer to if they wish, as others seem to be doing?
    Yes they are but obviously they can only do so much for free.
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    Quote Originally Posted by northernladuk View Post
    Yes they are but obviously they can only do so much for free.
    well, it would be useful to know who has been contacted directly and what feedback if any has been received. I would expect for example that Spring would have been contacted, not just because they are a high profile agency, but because they are part of a much larger conglomerate. What about software houses like Computer Sciences Corporation and Tata Consultancy Services or Tata Technologies Ltd? These software houses appear to be big players in the market place. CSC was heavily engaged in NHS projects, although I don't know their current involvement. Tata's IT organisations support both the steel and automotive industries. So they also are a big player.

  10. #10

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    Useful to who? Useful how?

    Not sure how much engagement you are expecting for free.
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