Outside IR35 contractors 'shown the door'

[ComplianceLady]

I have now received an email from the agency on behalf of my client (who ultimately make the IR35 decisions)....

Our review of the legislation and initial findings indicate that a significant proportion of roles will be ‘In Scope’ of the regulations, meaning that X could become liable for any unpaid tax and NI in relation to those roles. However at this stage I cannot confirm the scope determination or impact for individual roles or contractors. I appreciate your eagerness to understand the impact of X determination for you personally, and ask for your patience whilst we complete our assessment.

They have indicated a timeline of one months time for the review to be done and communicated to each of the contractors. This isn't ideal for me personally, as ultimately i wanted the decision to be made in the new year (when I would have already left the client). Now I am thinking that I should probably hand my notice in very soon (one month notice) before any decision has been communicated to me. Currently, my role is outside. QDOS reviewed contract (and passed) and I have IR35 TLC insurance.

However, based on the wording "a significant proportion of roles will be ‘In Scope’ of the regulations" makes me extremely nervous, as whilst I believe my role is currently outside (and should also be post April), the client could be nervous and react the way the banks have done.

Any advice any of you have would be most appreciated....

I would actually be reassured (to a degree) as any smart clients that want to blanket assess will just swerve it by making a policy decision - that bypasses the risk of ET, retro tax for the contractor (possibly), need for appeal process and risks/obligations from IR35. Anyone who doesn't want to blanket assess (which I think will be lots of companies, just not the blue chips in highly regulated industries) will have an assessment process. If you're genuinely outside now there's a good chance the clients assessment will concur with yours.

Blanket assessments I think might be going for good, replaced by policy decisions so anyone who entertains the idea of a PSC has to be open to the idea of outside else why bother?

[DaveB]

Add Walgreens Boots Alliance to that list if the current rumours are to be believed. Meeting with pimp on Monday to confirm I suspect.

[cwcsolutions]

But, saying that, things are rarely as good or as bad as they first appear.

Savvy clients may well start hoovering up outside contractors. Give it 18 months and things will have settled, just not in ways that many of us can predict at the moment.

Those 18 month are going to be pretty rough I think though.

I predicted that the public sector would cease using contractors or force contractors to use umbrella companies, while sitting at the consultation table. This was because the umbrella company representatives said they were going to tell clients to drop PSCs, and when I told HMRC that blanket decisions will lead to overpayments and raised number of refund claims via personal tax returns, as HMRC had said it would stand by CEST results if they differ from the PSB’s determination, I got a shrug of the shoulders. When neither side of the fence is actually prepared to do the job properly, what hope was there?

Until recently, I had hoped that the private sector would see the value of contractors to their business and use their resources to meet the requirements of the new rules, but no..

So in a fit of near depression, I coined the phrase ‘domino effect’, not to scaremonger, but because that’s what I am seeing.. no attempt to check status which was the real aim of the IR35 Reform, and large businesses simply following the crowd. I expected that of the public sector, but I thought that the private sector would use the reform as an opportunity to firm up the use of contractors in their businesses. I hope that hirers quickly realise that this is what any good business should do.

So, I agree it will ‘sort itself out’ over the next few months to a year, and rather than walk away or challenge their hirers’ decisions, personally I’m advising people to accept payment under the deemed payment method, keeping their PSC live, so that when contracts start being properly assessed and offered on the correct basis, they’re ready to take them.




Sent from my iPad using Contractor UK Forum

[fidot]

personally I’m advising people to accept payment under the deemed payment method, keeping their PSC live, so that when contracts start being properly assessed and offered on the correct basis, they’re ready to take them.




Sent from my iPad using Contractor UK Forum

Fair enough provided that the advice is also to change client as well, to reduce the risk of retrospective action.

[DaveB]

Fair enough provided that the advice is also to change client as well, to reduce the risk of retrospective action.

That depends on the circumstances.

If a client makes a decision based on an assessment of IR35 that all roles are caught after April then yes, changing client would be prudent. If they make a policy decision as a business that they will not engage contractors working through PSC's after April then that is different. No IR35 assessment has been made, it is a business policy decision.

[GhostofTarbera]

On a not unrelated note, the Alcock case and the case that IPSE is supporting seem to have gone very quiet. Being cynical, perhaps they've been nobbled.

I think we need to forget ipse as “any hope” in the IR35 battle


Sent from my iPhone using Contractor UK Forum

[krytonsheep]

Until recently, I had hoped that the private sector would see the value of contractors to their business and use their resources to meet the requirements of the new rules, but no..

At every large tech company I've contracted at, the management are usually under pressure to reduce contractor count ( to replace with permies). The IR35 reform will probably be seen as a perfect excuse to do that. Eventually if they can't find the talent and projects are getting delayed, then they'll have to start considering hiring contractors outside of IR35.

[cwcsolutions]

Fair enough provided that the advice is also to change client as well, to reduce the risk of retrospective action.

Absolutely, although the same adviser working for both sides may not be acceptable, but certainly the contractor's position will be reported to the hirer/client, which is what is supposed to happen and why hirers will be required to pass the determination down the supply chain - to give a right of response, leading to a proper discussion. Better this than give up the ghost at the first hurdle.

[JohntheBike]

I think we need to forget ipse as “any hope” in the IR35 battle


Sent from my iPhone using Contractor UK Forum

frustratingly, I guess you are correct. I don't know the details of the case that IPSE were supporting, because I didn't renew my membership this year. However, the Alcock case was due to be heard in September, and there has been no word from Dave Chaplin on the outcome. I can only surmise, given my own experiences, that both cases have been nobbled.

[BoredBloke]

At every large tech company I've contracted at, the management are usually under pressure to reduce contractor count ( to replace with permies). The IR35 reform will probably be seen as a perfect excuse to do that. Eventually if they can't find the talent and projects are getting delayed, then they'll have to start considering hiring contractors outside of IR35.

Or the WIPRO guy gets on the phone and sells then their services for what the contractor would have cost but where IR35 does not apply. And no tax is due to HMRC because of it