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    Default Looking for some advice

    Hi there

    I started contracting this year with my first contract being a 12 month contract starting in July, prior to this i was an FTE for 15years for an IT company. There is no agency involved with this contract, the contract is between my new Ltd company and my client. My role is a Programme/Project manager type role, my client is a major IT software company and i am working on one of their customer's projects (the customer is a major Telco company in UK). My accountant (SJD) did an informal review of my contract and said it appears to be outside IR35 however, i've not had a formal contract review done.

    I did read up a lot on IR35 before i started contracting but i'm still a little worried about IR35 and wanted advice. My working practices and other aspects of this role i believe to be conducive to being outside IR35 such as

    - I work from home 100% of the time and i am not in my client's office (ever)
    - My contract states the number of hours per week but i can choose when i start my work on a particular day, usually i start anytime between 7am and 10am depending on personal circumstances that day
    - No one from my client oversees my work or tells me what to do, on the very rare occasions i have to provide updates for my work area it would be to the client's customer, not to my client
    - I have taken out all the required insurances (professional indemnity etc.)
    - I use some of my own equipment to do my work from my home office but the client's customer does stipulate that i use their laptop

    My hope when starting this contract was that i would get maybe 3-5years in this role as i have good contacts in the client's customer having worked for the client's customer (not the client) in the past. But i am worried that if i get 3-5 contract renewals, each contract being 12 months would it be deemed inside IR35?

    I have no plans to take on other clients in parallel with this one, although i could potentially explore that if it helped with IR35 status, but my understanding was that each contract is viewed on it's own merit so not sure that would help?

    Any advice for me to try to ease my worries on IR35? Can i pay someone to offer me formal advice and if so any recommendations?


    Thanks in advance

  2. #2

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    Quote Originally Posted by bigroncolemand View Post
    I started contracting this year with my first contract being a 12 month contract starting in July, prior to this i was an FTE for 15years for an IT company. There is no agency involved with this contract, the contract is between my new Ltd company and my client.
    Interesting. Where did the contract come from? The client provided it?
    My role is a Programme/Project manager type role, my client is a major IT software company and i am working on one of their customer's projects (the customer is a major Telco company in UK). My accountant (SJD) did an informal review of my contract and said it appears to be outside IR35 however, i've not had a formal contract review done.
    First mistake but one that need not be repeated. SJD are accountants, not R35 specialists. Go to someone like QDOS or Baur And Cottrell and get specialists to handle your contracts.
    I did read up a lot on IR35 before i started contracting but i'm still a little worried about IR35 and wanted advice. My working practices and other aspects of this role i believe to be conducive to being outside IR35 such as
    A good start, most don't and aren't even vaguely aware of IR35 but that is changing very quickly with April 2020 coming up, something very pertinent to you but will go in to that later.
    - I work from home 100% of the time and i am not in my client's office (ever)
    Not really a pointer. Permies can work from home/remotely as well. That's just a contractual agreement.
    - My contract states the number of hours per week but i can choose when i start my work on a particular day, usually i start anytime between 7am and 10am depending on personal circumstances that day
    That's OK. Shows a lack of D&C but it could be argued perms on WFH can do that.
    - No one from my client oversees my work or tells me what to do, on the very rare occasions i have to provide updates for my work area it would be to the client's customer, not to my client
    This is good as it's proving a lack of D&C but I'd be very surprised if this is really true. Problem is when you are with a consultancy working for a client D&C can be from either party so someone must be directing you to some extent to give you work, checking milestones etc.
    - I have taken out all the required insurances (professional indemnity etc.)
    Irrelevant. That is a contractual requirement.
    - I use some of my own equipment to do my work from my home office but the client's customer does stipulate that i use their laptop
    Fairly irrelevant as well.
    My hope when starting this contract was that i would get maybe 3-5years in this role as i have good contacts in the client's customer having worked for the client's customer (not the client) in the past. But i am worried that if i get 3-5 contract renewals, each contract being 12 months would it be deemed inside IR35?
    This isn't good. Time isn't directly a factor in IR35 but it does erode your defense and you can look very part and parcel. The longer a gig goes on the stronger the argument is you are filling an enduring perm position and will also be under D&C because you'll just be given more and more work. 3-5 years isn't contracting territory and any sane client should be getting a perm in.

    The fact you expect work for that length of time looks like a Mutuality of Obligation issue. You expect work and they expect you to do it. This is one of the main pillars of IR35 so pretty bad. This coupled with the 12 month contracts. That does not sound like a contract to do a specific piece of work. All in all just sounds like they've contracted a body on site to do anything they ask them to do and expect them to do it. You are effectively a perm with no notice period and not rights if the client needs to get rid. IMO this is your biggest problem.
    I have no plans to take on other clients in parallel with this one, although i could potentially explore that if it helped with IR35 status, but my understanding was that each contract is viewed on it's own merit so not sure that would help?
    No it wouldn't. IR35 is per contract. You can have one inside and one outside even if you had 2 in parallel.
    Any advice for me to try to ease my worries on IR35? Can i pay someone to offer me formal advice and if so any recommendations?
    As mentioned you need to speak to QDOS and would strongly advise getting a full working practices review and take out their insurances/take out IPSE+. I certainly wouldn't want to be in a 5 year rolling contract without it.

    But... a bigger problem you have is April 2020 and what the client is going to deem your role as going forward. It is pretty difficult to imagine an client wouldn't consider a role last 5 years inside, it just smacks of permiedom. Your client might not give a monkies about you which would be good for IR35 but their client can still treat you like a permie so your client really needs to on top of this. They will be held accountable for the determination so they can't lose sight of the how their client is treating you. Easy for them to think you are outside because they have nothing to do with you but that would be a mistake. I'd be suggesting they got a company in to help them with their determinations if they haven't already done so. Have a chat with them and ask them how their plans for April 2020 are going. If they give you a blank look then you've potentially got problems.

    EDIT : Added this an after thought.. I wonder what the situation is where you are working for the clients client. On paragraph states...
    The client, being the party that receives the work, must decide whether, if the PSC did not exist and taking all intervening parties out of the equation, the individual providing the actual work would be an employee of the client.
    So the clients client will be receiving the work so should it be on them to make the determination, but then if they take the parties out then they wouldn't be employing them, they'd be contracting a perm for their suppler, so guess not, but then again, if you take out the client you are contracted to then yes, they would consider taking an employee on for a gig lasting 5 years.

    I'm sure someone will challenge any assumption I've made where I've mentioned a timescale which is fine, IR35 is a very grey area but the one half win in the JLJ case came down to a long contract and eroded working practices. If I was HMRC further down the line, where would I go to maximise the money in for least out, and that would be a contractor on a 5 year gig. Many perms, don't last 5 years so a contracting one will look very juicy.
    Last edited by northernladuk; 6th August 2019 at 00:29.
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    A useful article about working with a clients client including relevant case law here...

    IR35 Implications of Interacting with Client Customers

    If you are planning on doing 3-5 years then this statement becomes very real.

    “an integral part of the EDS organisation rather than just being part of a team working on a project.”
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    Oh, and your gig is only as long as your notice period, and not even that. You can be canned on the spot so don't get complacent thinking you will there for that long as it's gonna hurt like hell when you get walked out of the blue.
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    Quote Originally Posted by bigroncolemand View Post
    My role is a Programme/Project manager type role, my client is a major IT software company and i am working on one of their customer's projects (the customer is a major Telco company in UK).

    My hope when starting this contract was that i would get maybe 3-5years in this role as i have good contacts in the client's customer having worked for the client's customer (not the client) in the past. But i am worried that if i get 3-5 contract renewals, each contract being 12 months would it be deemed inside IR35?

    If the contract and any renewal is based on a specific programme or project lifespan, so end of contract is the predicted end of project and any renewal is due to project overrun or starting a new project, then that is better than having an open ended contract where client moves you from project to project as they would a permie and the contact end date and renewals bear no real resemblance to the project start and end. Even better if you can get wording in the contract to say it is for a specific named programme or project so you can show that you are only intended to be at the client while that work is done, even if it takes years as many big programmes and projects do.

    A professional review where the reason for the IR35 determination is given in writing as evidence for any future investigation, backed up with insurance, is the standard way of mitigating risk once you've got the terms and working practices sorted so any review backs up your effort.
    Maybe tomorrow, I'll want to settle down. Until tomorrow, I'll just keep moving on.

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