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Thread: IR35 Myths

  1. #1

    Some things in Moderation

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    Default IR35 Myths

    Just had a rather alarming conversation with someone who has had advice from a client that is incorrect from a 'traditional' (pre 06/04/20) IR35 pov.

    So - myth No.1:

    No, just having multiple contracts does not make you free from IR35. Each contract must be viewed on it's own merits and the contract and your working practices once in contract must show at least one of the three pillars:

    1. Right of Substitution (RoS)
    2. a lack of mutuality of obligation (MOO)
    3. a lack of Direction and Control (D&C)


    This is what HMRC has to say about it

    Someone is probably self-employed and shouldn’t be paid through PAYE if most of the following are true:
    they’re in business for themselves, are responsible for the success or failure of their business and can make a loss or a profit
    they can decide what work they do and when, where or how to do it
    they can hire someone else to do the work
    they’re responsible for fixing any unsatisfactory work in their own time
    their employer agrees a fixed price for their work - it doesn’t depend on how long the job takes to finish
    they use their own money to buy business assets, cover running costs, and provide tools and equipment for their work
    they can work for more than one client
    And notice the 'probably' bit. This applies to each contract - if you can work for multiple clients but can't decide in this contract what work, when, where or how you do it, then it’s probably inside IR35.


    See here for more information: Employment status: Self-employed and contractor - GOV.UK

  2. #2

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    Yup. It's also hardly surprising when you have news outlets like the DM propagating that myth.

  3. #3

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    Quote Originally Posted by cojak View Post
    No, just having multiple contracts does not make you free from IR35. Each contract must be viewed on it's own merits and the contract and your working practices once in contract must show at least one of the three pillars:
    Completely true. But to be fair, multiple concurrent contracts with different clients has been noted in case law as an indicator of 'being in business for yourself' as opposed to disguised employment.

    If you have multiple concurrent contracts and you have any brain at all, you'll almost certainly have had many opportunities to beef up your IR35 dossier with examples of places where you weren't under Supervision/Direction/Control, or where you've taken financial risk, etc. It isn't close to being a silver bullet but it makes it a lot harder for HMRC to argue that you are employed.

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    Some things in Moderation

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    But agents are using this as the sole reason for putting a contractor outside of IR35* and I think that many contractors will believe this to be the case.

    (*Or more to the point, getting contractors to accept their contract.)

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    Some things in Moderation

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    Thinking further though, how many agents will be happy knowing that they will only get a part of the contractor, not the whole 37.5 hours?

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