Who to ask about IR35 status Who to ask about IR35 status
Page 1 of 2 12 LastLast
Posts 1 to 10 of 16
  1. #1

    Still gathering requirements...


    Join Date
    Apr 2012
    Posts
    93

    Default Who to ask about IR35 status

    Given a contract chain that looks like this:
    My company->Agency->Consulting firm->End-client

    End-client is a sizeable international charity, turnover definitely >£10m. Apart from core security IT functions they outsource everything. (Which doesn't mean that getting C-level sign-off on IR35 status is going to be easy). I'm working on a project; when the project is delivered early next year, the role ends, and we've already been discussing a possible support contract for the future based on number of incidents per billable time period.

    Either the consulting firm or I can exercise a right of substitution. The end-client already asked if I could send in a replacement when I mentioned to them I would be unavailable for a period, although the timeframe didn't work for getting someone up to speed.

    Do I need to try and get sign-off about IR35 determinations from the end-client, the consulting firm, or both? It's definitely the farthest outside IR35 I think I've ever been, but actually proving that per these new HMRC stipulations is the challenge. It would be quite absurd (and I think very open to challenge) if the end-client judged me inside IR35 to save on hassle.

  2. #2

    More time posting than coding


    Join Date
    Jul 2019
    Posts
    337
    Last edited by Paralytic; 21st October 2019 at 09:23.

  3. #3

    Double Godlike!

    malvolio's Avatar
    Join Date
    Jul 2005
    Location
    Walking in the garden, dreaming of Olivia...
    Posts
    11,407

    Default

    "Early next year" is too imprecise. You need to ensure the final payment is made before the end of March to escape the new rules. However it appears on the face of it that your client is the consultancy, not the end client. Read the quoted guidance very carefully...

    An ongoing support contract, properly drafted, should be a mile away from IR35 anyway. I assume that will be between you and the consultancy, so they need to accept a proper B2B contract for the service, else you're back to square one.
    Blog? What blog...?

  4. #4

    Still gathering requirements...


    Join Date
    Jan 2016
    Posts
    99

    Default

    Quote Originally Posted by malvolio View Post
    "Early next year" is too imprecise. You need to ensure the final payment is made before the end of March to escape the new rules. However it appears on the face of it that your client is the consultancy, not the end client. Read the quoted guidance very carefully...

    An ongoing support contract, properly drafted, should be a mile away from IR35 anyway. I assume that will be between you and the consultancy, so they need to accept a proper B2B contract for the service, else you're back to square one.
    So if a chain ia layed out like so Contractor -> Agency -> Consultancy (Small company under 50 people, essentially a software shop) -> End client, then I don't need to worry about IR35 as my client is exempt due to the size?

  5. #5

    More time posting than coding


    Join Date
    Jul 2019
    Posts
    337

    Default

    Quote Originally Posted by cannon999 View Post
    So if a chain ia layed out like so Contractor -> Agency -> Consultancy (Small company under 50 people, essentially a software shop) -> End client, then I don't need to worry about IR35 as my client is exempt due to the size?
    I'd be *very* wary assuming that. You'd be daft to think that HMRC won't have considered that people would try band together to set up a "small consultancy" to try to avoid the need for a determination.

    See this (old but still relevant): IR35 reforms: Where consultancies are caught

    Effectively, if the work the contractor is doing for a client would otherwise be classed as employee work, it falls under IR35, nomatter the chain of command from that client to the contractor's PSC. A question that can help here is: Is the consultancy providing a resource or a service?


    (I'm mostly ignoring the "don't need to worry about IR35" comment above, but want to add that you always need to worry about it - remember the only change in April 2020 is who makes the determination)
    Last edited by Paralytic; 21st October 2019 at 10:00.

  6. #6

    Double Godlike!

    malvolio's Avatar
    Join Date
    Jul 2005
    Location
    Walking in the garden, dreaming of Olivia...
    Posts
    11,407

    Default

    Quote Originally Posted by Paralytic View Post
    stion that can help here is: Is the consultancy providing a resource or a service?


    (I'm mostly ignoring the "don't need to worry about IR35" comment above, but want to add that you always need to worry about it - remember the only change in April 2020 is who makes the determination)
    Nobody said that. Understanding IR35 and behaving as a service providing professional is a key part of your job as a contractor, something some of us have been saying for at least 15 years. If more people took notice of that kind of thinking, we'd all be a lot better off (in several senses!)
    Blog? What blog...?

  7. #7

    More time posting than coding


    Join Date
    Jul 2019
    Posts
    337

    Default

    Quote Originally Posted by malvolio View Post
    Nobody said that.
    ???

    cannon999 specifically said that if engaging via a consultancy of less than 50 people

    then I don't need to worry about IR35 as my client is exempt due to the size?

  8. #8

    Still gathering requirements...


    Join Date
    Jan 2016
    Posts
    99

    Default

    Quote Originally Posted by Paralytic View Post
    I'd be *very* wary assuming that. You'd be daft to think that HMRC won't have considered that people would try band together to set up a "small consultancy" to try to avoid the need for a determination.

    See this (old but still relevant): IR35 reforms: Where consultancies are caught

    Effectively, if the work the contractor is doing for a client would otherwise be classed as employee work, it falls under IR35, nomatter the chain of command from that client to the contractor's PSC. A question that can help here is: Is the consultancy providing a resource or a service?


    (I'm mostly ignoring the "don't need to worry about IR35" comment above, but want to add that you always need to worry about it - remember the only change in April 2020 is who makes the determination)
    I should probably rephrase. I am 100% sure that my working practices put me well outside the IR35 as I am providing a service. I choose my hours, where I work and choose which work I accept and which I do not accept. Sometimes I will work 20 hours sometimes I will work 30, and other times 50. I am deffinitely in control of the service I am providing and I actually run a company on the side which isn't related to my contracting one.

    However as I understand from April it's the client who makes the determination. So I need to understand who to kick about my determination status (bare in mind, the end client isn't located in UK!)

  9. #9

    More time posting than coding


    Join Date
    Jul 2019
    Posts
    337

    Default

    Quote Originally Posted by cannon999 View Post
    However as I understand from April it's the client who makes the determination. So I need to understand who to kick about my determination status (bare in mind, the end client isn't located in UK!)
    So the actual question is: who determines who is responsible for making the determination? The end client not being in the UK does add another layer of complexity.

    I'd be asking the people you have your contract with - the agency.
    Last edited by Paralytic; 21st October 2019 at 10:28.

  10. #10

    Super poster


    Join Date
    Dec 2014
    Location
    WTT Consulting Ltd - London and online
    Posts
    3,285

    Default

    To the OP - it's not your place to make the "in/out" determination. That falls on the end client and you have no (legal) say in that.

    The present supplied of people (consultancy) becoming a supplier of services (consultancy) will be looked at very carefully by HMRC and the consultancy is likely to be on the wrong end of tax liability, penalties etc if they are not really supplying services.
    Best Forum Adviser & Forum Personality of the Year 2018.

    (No, me neither).

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •