New contract IR35 pre-cautions

[cojak]

I would get the contract reviewed to confirm that it is outside and ensure that my working practices remain outside.

Surprisingly webberg is not the final word in these matters.

[webberg]

This is very true.

Usually in matters relating to IR35, even in my own firm I am relegated behind at least two others with better knowledge and experience in this space.

I was however part of an internal discussion recently over the issue of the sort of permissions that a contractor would be required/advised/forced to request from an end client and how these might impact the "in/out" decision.

We put these into three classes as "helpful" (to an outside decision), neutral and unhelpful. In the contracts we had in front of us, (around a dozen), we had a mix of answers as you might imagine. We did however agree that giving notice of leaving a role was generally unhelpful unless the main reason was to allow the end client to arrange a suitable replacement service.

Even that decision was however tentative with me (tax) and our head of legal, arguing for unhelpful and our commercial and marketing people saying it was at worst neutral.

So, I have acknowledged that I was hasty and clumsy in jumping on one point that is at best adding little weight to a decision either way: that even in my own firm my views are not the final word on such matters: that a lot can depend on the circumstances.

For us this issue (and lots of others) demonstrate that no AI or software protocol is a substitute for reading the contracts and talking to those on both sides.

[hammertime1985]

Just be aware that the end client is under no legal obligation to give you a "confirmation" post April. If they refuse, outside of some contractual obligation (which in my view they would be unwise to have agreed to), you have little leverage.

Also a bit concerning that you need to "hand in notice". That indicates that rather than performing a set of services that are complete when they are complete, there is instead some continuing relationship that can be terminated by mutual notice giving. In the scales weighing "in/out", I would say that this is very much on the "in" side.

OK, if they are not legally obliged but they are willing to do it anyway as me accepting the role or not hinges on this, that puts me in a strong position for this? The initial contract is 6 months, so there is cross over, between now and April, hence the need for me to get this agreed in writing, otherwise I could potentially be getting payment for an inside role after April, when before I was outside.

Is there any templates / proposed wording that one could use to make this statement water tight? I've not seen any yet on any threads which i thought would have been raised by now as surely clients are offering contracts post April and there is a need for clients to be confirming this sort of thing after April?

[webberg]

OK, if they are not legally obliged but they are willing to do it anyway as me accepting the role or not hinges on this, that puts me in a strong position for this?

Is there any templates / proposed wording that one could use to make this statement water tight? I've not seen any yet on any threads which i thought would have been raised by now as surely clients are offering contracts post April and there is a need for clients to be confirming this sort of thing after April?

Only you can judge if you have a strong position.

There are no templates that I am aware of and certainly we will not be developing one.

This is because whilst the exchange of letters may bring you some comfort, in the event that HMRC decide that the decision was incorrect, they will ignore such letters. They will do so because they are not something that is part of the tax legislation.

Such letters may create legal rights and obligations on both sides, but these are not part and parcel of the role/service (unless of course they stretch to saying that an adverse HMRC finding on status gives you the right to leave. If that was the case though, the tax damage has already been done. Perhaps a better outcome would be if you could tie the client into assisting in the defence?)

I would also say that if I was advising a client I would recommend no such letter be signed.

[CompoundOverload]

OK, if they are not legally obliged but they are willing to do it anyway as me accepting the role or not hinges on this, that puts me in a strong position for this? The initial contract is 6 months, so there is cross over, between now and April, hence the need for me to get this agreed in writing, otherwise I could potentially be getting payment for an inside role after April, when before I was outside.

Is there any templates / proposed wording that one could use to make this statement water tight? I've not seen any yet on any threads which i thought would have been raised by now as surely clients are offering contracts post April and there is a need for clients to be confirming this sort of thing after April?

I have been trying to find the outcome of this too as I am in a similar position. You initially declare yourself outside from when the contract starts until April but then post it's down to the client to confirm. I can't see what would be wrong if the client confirms this in writing and if HMRC were to investigate and they didn't agree, post April it would be on the firm in any event?

[webberg]

I have been trying to find the outcome of this too as I am in a similar position. You initially declare yourself outside from when the contract starts until April but then post it's down to the client to confirm. I can't see what would be wrong if the client confirms this in writing and if HMRC were to investigate and they didn't agree, post April it would be on the firm in any event?

The client is obliged for all PAYMENTS made after 5th April 2020 to go through the steps required.

If that means assessing the contract that actually finished in say Feb/March but is PAID post 5/4/20, then that is their obligation and their risk if they get it wrong.