Writing this to my client, in advance of April 2020

[ChimpMaster]

Does this look OK, is it comprehensive or would you add/remove anything?

-------------------------------

Dear [Client Co director]

[Client Co]’s contract with [MyCo] Ltd is due to expire on Oct 1st. We understand that contract negotiations can take time, so I felt it necessary to contact you now, with only 4 weeks left on the current agreement.

The following is important, should [Client Co] wish to engage further services.

The government is introducing changes into U.K. law that we all need to be aware of, so I thought it best to discuss sooner rather than later. These changes are the Intermediaries Legislation (otherwise known as “off-payroll working rules” or “IR35”) and will be introduced by government in April 2020 but can impact agreements arranged prior to this.

This new legislation will apply to all consultants working in the private sector from April 2020 onwards. The law is already in place within the Public Sector. I expect that the legal team at [Client Co] are already aware.

With regards to:-
- [MyCo]’s contract
- its actual working conditions and
- the HMRC-administered CEST test (please refer to the legal team about this)
its employment status is clearly outside of the Intermediaries Legislation and so does not fall within the remit of IR35. It is important that [Client Co] are aware of this because it is they who must report each consultant’s employment status to HMRC, come April 2020. Any contracts or payments that span close to April 2020 will be in scope of review.

I would welcome the opportunity to discuss this further either with yourselves, or with the legal team at [Client Co] prior to any new contracted work being arranged.

Director,
[MyCo] Ltd

[Paralytic]

What relationship do you have with the client? I'd speak to them first before sending this - then say you'll follow it up with an email.

[BrilloPad]

What has prompted you to think about writing this? Are ClientCo aware of the 2020 changes?

I take it there is no agency involved?

[ChimpMaster]

My relationship is good/open but not direct to the legal team. And of course I want to put things in writing. I don't work on-site (any more) so I have little face-to-face chance to discuss this, but more importantly there is no one specific that I could discuss this with at the client.

I am direct to client - no agency involved. Reason for writing now is that the contract is due for renewal and I'd rather the IR35 issue be sorted out earlier rather than later.

If the client does renew, they are likely to offer a 6 month contract and this will take mean getting paid into April, and therefore liable for the in/out IR35 determination.

I really don't think the client has a clue about April 2020 so I'm taking charge.

I will wait until the Treasury's Spending Round on Sept 4th before sending this email, but I'm not expecting any changes to this policy then.

You guys think it's a bad idea, or too early perhaps?

[mudskipper]

Does this look OK, is it comprehensive or would you add/remove anything?

-------------------------------

The government is introducing changes into U.K. law that we all need to be aware of, so I thought it best to discuss sooner rather than later. These changes are the Intermediaries Legislation (otherwise known as “off-payroll working rules” or “IR35”) and will be introduced by government in April 2020 but can impact agreements arranged prior to this.

These are changes to the Intermediaries Legislation which will take effect from ...

IR35 exists and has done so for 20 years - your letter gives the impression that IR35 is being introduced.

[BrilloPad]

I really don't think the client has a clue about April 2020 so I'm taking charge.

You guys think it's a bad idea, or too early perhaps?

IMO its an incredibly bad idea. They don't have a clue. It does not affect you personally - its their lookout.

I would wait until they raise the "issue" then decide what to do.

But thats just my take on it.

[jamesbrown]

These are changes to the Intermediaries Legislation which will take effect from ...

IR35 exists and has done so for 20 years - your letter gives the impression that IR35 is being introduced.

Agree with that.

Also, before you worry about any of this, have your confirmed their status w/r to the Companies Act definition of a small business? It sounds like they are medium or large ("legal team"), but the whole approach is moot if they qualify as small.

[jamesbrown]

You guys think it's a bad idea, or too early perhaps?

I don't think it's necessarily a bad idea, worded correctly, and not too early (although it might be for them ). The sooner you can inform yourself (and perhaps even them), the better.

[northernladuk]

What relationship do you have with the client? I'd speak to them first before sending this - then say you'll follow it up with an email.

This for me. Have a couple of chats and see how the land lies first. An official looking mail like that (if was better worded) looks too heavy handed straight off the bat for me

[WordIsBond]

Hmm. Direct to client.

What's their payment record? Do they pay within a week, a month, three months?

I'd probably write a letter like this, I think it is a good idea, but of course it depends on the people involved and how they'll react.

If they aren't ready and don't want to think about it then their payment schedule comes into play. Since you are direct, you could negotiate an extension to mid-March if they'd commit to paying before April. In fact, you could do a full six months if they'd promise to pay before the sixth, and that would let them kick this down the road for six months. Otherwise, they pretty much have to think about it now. I've got clients that I could get that kind of turnaround if it were to their benefit. It could never happen with an agent in between but being direct it just might.

The best plan is to guide them to an outside determination, obviously, but failing that if you can defer it by taking an extension for which you will have full payment before 6 April is an option. That also has the advantage of being able to take advantage of the slim possibility that the new regime could kill this monstrosity.