When do end-clients have to and not have to determine IR35 status?

[JoJoGabor]

I'm not clear at what point the end-client does not have to determine such status. Here are some examples where all the work is for a discrete piece of work with fixed deliverables;

OK so we all know that clients will be responsible for determining IR35 status for one-man supplier companies, ie contractors
A large consultancy such as ATOS, providing IT services to end-client. I'm pretty sure End-client does not have to determine an IR35 status for each consultant used from ATOS

Somewhere in the middle there must be a line when IR35 kicks in, but where is it? So some other scenarios:

A small consultancy (less than £10m revenue) consisting of say 2 full-time directors and a number of permanent staff?
The same small consultancy hiring a contractor to work for the End-client. Is it End-client has to determine IR35 status for contractor but not consultancy permanent staff??
A larger consultancy (over £10m revenue), supplying contractors to work on the End-Client site.

FOr these scenarios is there any difference between delivering fixed scope/price pieces of work vs time and materials?

[northernladuk]

Have you considered that the legislations does not apply to small businesses and nothing has changed?

[JoJoGabor]

Yes, hence my different examples of a small consultancy and a large consultancy with more or less than £10m revenue

[jamesbrown]

You're confused.

If a consultancy is supplying their permies, as would most large consultancies, then IR35 is moot.

If a consultancy is supplying contractors to deliver a contracted out service, rather than labour, then the consultancy determines the status of its contract workers.

If a consultancy is a body shop that supplies contractors to an end client, then the end client determines the status of its contract workers supplied by the consultancy.

If an agency supplies contractors to an end client, then the end client determines the status of its contract workers supplied by the agency.

If the end client is a small company (Companies Act), then the PSC determines the status of its workers.

Generally speaking, the end client always determines the status and the fee payer always applies the deemed payment, unless the company is a small company. Most of your question are about "who is the end client?".

As for "delivering fixed scope/price pieces of work vs time and materials?", this matters primarily w/r to your actual IR35 status. I suppose it is also correlated with whether the service is contracted out or for a labour supply, because T&M is obviously a labour supply.

[Blert596]

I grabbed a very rushed 3 minutes with my "Line Manager" today (I'd hoped it would be longer) and asked him about what the company are doing ref IR35 status come April? His answer, although not surprising, was that I should take it up with the agency. I said I'd contacted the agency and they'd simply said check with CEST and ask your manager. He wasn't happy when I told him their reply and it seemed to put him on the spot.

I said that come April it was the companies responsibility to determine if contractors were inside or out. His answer was that he knows that the company are doing something about it but he doesn't know what.

Then just as he walked out he said somewhat dismissively that all contractors will have to pay tax. I said that we already do and he said, yeah but the same as everyone else. He then said, rather worryingly, that HMRC reckon that 93% of the companies contractors would be inside. Then he left to catch a train.

What worries me most is his remark about HMRC and whether or not they are already in contact with the end client, and if it may be the same scenario as GSK with a letter waiting for me when I get home.

If HMRC have asked for details, are the client required to tell the individual contractors?

[northernladuk]

Yes but to be fair your client manager isn't normally the person to ask. If its a larger company they'll likely have a contact in supplier management or HR that deals with contractors and its more likely to be their job to deal with this, not the IT staff.

Edit : just re-read and you state he says someone in the company knows so he's definitely the wrong person to be speaking to.

You sure there isn't someone else up the chain that has a better idea than the person you've engaged with?

[BlueSharp]

I grabbed a very rushed 3 minutes with my "Line Manager" today (I'd hoped it would be longer) and asked him about what the company are doing ref IR35 status come April? His answer, although not surprising, was that I should take it up with the agency. I said I'd contacted the agency and they'd simply said check with CEST and ask your manager. He wasn't happy when I told him their reply and it seemed to put him on the spot.

I said that come April it was the companies responsibility to determine if contractors were inside or out. His answer was that he knows that the company are doing something about it but he doesn't know what.

Then just as he walked out he said somewhat dismissively that all contractors will have to pay tax. I said that we already do and he said, yeah but the same as everyone else. He then said, rather worryingly, that HMRC reckon that 93% of the companies contractors would be inside. Then he left to catch a train.

What worries me most is his remark about HMRC and whether or not they are already in contact with the end client, and if it may be the same scenario as GSK with a letter waiting for me when I get home.

If HMRC have asked for details, are the client required to tell the individual contractors?

IMO it sounds like your all going to be hit with an inside position and the company are delaying announcing it until the last minute so they don't upset the permie-tractors.

[JoJoGabor]

Is it a large client you are working with? I imagine HMRC are targetting large companies with a large number of contractors for a potentially large return for them

[Blert596]

Yes but to be fair your client manager isn't normally the person to ask. If its a larger company they'll likely have a contact in supplier management or HR that deals with contractors and its more likely to be their job to deal with this, not the IT staff.

Edit : just re-read and you state he says someone in the company knows so he's definitely the wrong person to be speaking to.

You sure there isn't someone else up the chain that has a better idea than the person you've engaged with?

Yeah, I get that but I'd have thought that as he interviews and agrees terms/rates for the contractors in his department (70% of which are contractors) then he might have been a little more clued up in the way ahead, or even a little more helpful attitude wise, or at least steering me in the right direction. He certainly wouldn't be impressed if I started asking questions direct to HR or whoever.

IMO it sounds like your all going to be hit with an inside position and the company are delaying announcing it until the last minute so they don't upset the permie-tractors.

That's the feeling I'm getting, rightly or wrongly. It's been a massive topic of conversation, not just within our department, so workmate permies and managers alike are certainly aware of the situation on the workfloor.

Is it a large client you are working with? I imagine HMRC are targetting large companies with a large number of contractors for a potentially large return for them

Yes its pretty large. And I'd suspect at least 50% of the staff are contract.

[BlueSharp]

IMO the client is admitting to knowingly issuing outside ir35 contracts via agencies to avoid PAYE tax and Employee benefits. IF and it's a very big if a tribunal claim was won for worker rights (Pimlico plumbers for instance) would it stand to reason that the worker could turn around and ask for the tax due should also be covered as the client mis-represented the role via the agency either via an employment tribunal or other courts?

I was at a big corp over 3 years ago where 50-60% of staff were contractors, the whole lot have gone now with a sizeable number of permie redundancies. All off-shored to India and body shop replacements bought in. Now companies are having to pay more for UK staff again are we about to see another bout of off-shoring?