A true B2B relationship should not touch IR35

[webberg]

I put a piece on Linkedin earlier and one of the responses struck me as interesting.

The individual asked what is to stop an end client removing all their employees and re-engaging them as inside IR35 contractors?

The net cost to the end client remains much the same.

However the end client no longer has to provide employee benefits. The example he quoted was maternity leave.

My initial reaction was "the end client can't do that!"

On reflection I'm not entirely clear that this will not happen.

[WordIsBond]

Unfortunately most umbrellas continue to load their quotes with unrealistic levels of expenses and salary sacrifice just to squeeze a little more into the take home.

This is close to deception in my opinion.

Since we were talking about choice of words, I'd call that a charitable choice of words on your part.

In the context here though whilst the language needs to sharpen up and be more precise and consistent, the actions underneath it are crucial.

True. And putting the words first can be putting the cart before the horse -- but if you are running into barriers, in an imperfect world, maybe the horse can help push the cart along a bit even if you can't get him past the cart to the front yet. Which was my point that getting the words right can help change how clients think about the engagement, which helps get actions where you want them.

Either there is a true services delivery where the end client is really and actually agnostic as to who does it:

Or there is a personal component to the work being done which is required, desired or otherwise unavoidable.

In my view, the first is so far outside IR35 that an assessment is not needed.

The second is almost always inside IR35 (at least in the eyes of HMRC who will start an enquiry with that view and make the facts fit it).

You are right about substitution, but it's hardly the only factor. Many contracts are outside because of the lack of Substitution, Direction, Control. Even CEST recognises that. Fixed price contracts are virtually always outside even if there's no substitution. A basic level of Mutuality of Obligation is also necessary to be inside, though HMRC seems to choose to ignore this factor.

[Snooky]

The I is for intermediary. The intermediary is your LTD. not the agency.
Although your point is fair.

Being pernickety, and also not really pertinent to OP's topic, ISTR it was dubbed IR35 because IR35 was the name of the section in the notes of the budget where it was first introduced. IR because it related to the Inland Revenue (HMRC hadn't consumed them at that point) and 35 because it happened to be the 35th budget note in that section. Officially it was known as the Intermediaries Legislation but we contractors needed a simple name for it.

God I'm old....seen too much of this ****

[Lance]

Being pernickety, and also not really pertinent to OP's topic, ISTR it was dubbed IR35 because IR35 was the name of the section in the notes of the budget where it was first introduced. IR because it related to the Inland Revenue (HMRC hadn't consumed them at that point) and 35 because it happened to be the 35th budget note in that section. Officially it was known as the Intermediaries Legislation but we contractors needed a simple name for it.

God I'm old....seen too much of this ****

thanks. Although Webberg beat you to it.

[JohntheBike]

I put a piece on Linkedin earlier and one of the responses struck me as interesting.

The individual asked what is to stop an end client removing all their employees and re-engaging them as inside IR35 contractors?

The net cost to the end client remains much the same.

However the end client no longer has to provide employee benefits. The example he quoted was maternity leave.

My initial reaction was "the end client can't do that!"

On reflection I'm not entirely clear that this will not happen.

Organisations have a habit of requiring individuals to re-apply for their own jobs, in an attempt to re-structure their business. My daughter is undergoing this stressful process currently. It isn't beyond the bounds of imagination that some ill informed senior person of an organisation might hit on this idea and use it so.

[malvolio]

I put a piece on Linkedin earlier and one of the responses struck me as interesting.

The individual asked what is to stop an end client removing all their employees and re-engaging them as inside IR35 contractors?

The net cost to the end client remains much the same.

However the end client no longer has to provide employee benefits. The example he quoted was maternity leave.

My initial reaction was "the end client can't do that!"

On reflection I'm not entirely clear that this will not happen.

Probably be caught under unfair dismissal, should anyone have the nous to pursue the case.

But it already happens. All those Social Workers, care assistants, hotel chambermaids and delivery drivers aren't company directors because they wanted to be...

[SimonMac]

Are you Dave or Pete:

IR35 is easily avoided, but it's time to get with the programme

[malvolio]

Actually, i was saying exactly that at least ten years ago.

HTH...

[webberg]

It's a very decent article and the pint about a business vs an individual is absolutely true.

However ....

It still comes down to a Tribunal starting with looking at what happens day to day, in the office, management mechanics and reporting.

Once they have that nailed, then they consider how you got there.

Yes, the sort of steps described in the article prior to getting the gig are helpful, but if they are window dressing that dissolves in the harsh light of real life, they will not add much to the equation.

There is a shift of mentality required by client and contractor, but it's one that has to happen EVERY DAY. Not just in the lead up to getting the position.

[ComplianceLady]

ok sorry for the verbose post, I was just trying to convey the point fully which (although you claimed to not see it) is that the strict B2B relationship is very close to the standard engagement many of us experience. I know the craic with IR35 conditions and how to mitigate - that's rather my point too. Why does every agency I've ever encountered not do this and persist in allowing permitractors to exist? Why engage and contact people using terms like roles, job description, interview, etc? Are they are just thick? Like you say, this has all been around 20 years - why doesn't anyone get with the ruddy programme?

Because every Client wants that. Because IR35 risk was the contractors, those that understand it ask for certain provisions to underline their outside status. It's not an Agency's role to educate those that don't understand it (though we do try). One positive about the reforms is that it forces clients to understand what a proper B2B engagement looks like.