Risks involved in contracts running beyond April

[DevUK]

Apologies, I'm sure this must've been addressed in one of the many other threads but I can't seem to find the answer to this and I'm (embarrassingly) late getting up to speed with the IR35 business.

I'll keep the question brief, what are the risks involved in taking a contract today that would run beyond the reform in April?


Hypothetically, if I were to sign a 12 month contract today that was outside IR35, would there simply be a shift in liability for status determination in April or would something explicit need to happen in order for it to comply with new legislation?

Similarly, what if that contract were inside IR35, would that make a difference?


Given the fact that a client/agency typically takes around 2-4 weeks to process payments, the only contract left 'safe' to take (based on the answers to the above) are those that run until end of Feb(ish), which isn't a long time at all.

Any insight on this really appreciated.

[Anubis]

Please read this.

Any payment made from 6th April will allow your end client to determine whether you are inside or outside IR35. Anything prior to this will be for you to determine which side of the fence you sit on.

There is nothing stopping the client from saying part way through your outside contract "hey, circumstances have changed for us so we can only continue if you agree to be inside" - they of course may not do this and you can continue working outside as you do now (nothing changes and the client is happy to accept the risks involved and can prove you are outside).

I would accept your contract for now and in the next month ask them if they are happy to continue with current agreements going forward. You don't want to suddenly be told a week before the changes that they have determined you are inside and pay you in April - because it could mean you were inside all along.

[Syd]

Hi, not Op, I read the link from the previous reply.

Would I still be exposed if I switch from PSC to Umbrella at the same client (same role) in Feb 2020?

Sent from my SM-G935F using Contractor UK Forum mobile app

[eek]

Hi, not Op, I read the link from the previous reply.

Would I still be exposed if I switch from PSC to Umbrella at the same client (same role) in Feb 2020?

Sent from my SM-G935F using Contractor UK Forum mobile app

Yes - why wouldn't you be?

The Agency is the same - one month you are being paid via company x with little PAYE, next month being paid by company y with far higher paye and both the agency and end client are the same.

As we said when the the public sector changes were implemented the reports aren't exactly difficult and the agency reporting requirements were created for just this type of circumstance.

[DevUK]

Please read this.

Any payment made from 6th April will allow your end client to determine whether you are inside or outside IR35. Anything prior to this will be for you to determine which side of the fence you sit on.

There is nothing stopping the client from saying part way through your outside contract "hey, circumstances have changed for us so we can only continue if you agree to be inside" - they of course may not do this and you can continue working outside as you do now (nothing changes and the client is happy to accept the risks involved and can prove you are outside).

I would accept your contract for now and in the next month ask them if they are happy to continue with current agreements going forward. You don't want to suddenly be told a week before the changes that they have determined you are inside and pay you in April - because it could mean you were inside all along.

Thanks for the reply and link.

I should've been a bit clearer sorry - appreciate the client could react to the reform and insist on inside or terminate outside just to 'play it safe' but by risks I meant risks in terms of legal implications. Are contracts that run through April and beyond somehow invalidated/not compliant to the new off-payroll regs automatically because something or other needs to be done? Or could I now safely sign a 12-month contract with the only ("only") concern being that the reform could spook the client once the liability is theirs?

Thanks again.

EDIT: For some context, this question comes from concerns I've seen people voice around contractors being exposed if payment is made after April (even if the contract ends in March), but I'm confused how a contractor could be exposed at all here if a contract can still stand despite the reform.

[WTFH]

Thanks for the reply and link.

I should've been a bit clearer sorry - appreciate the client could react to the reform and insist on inside or terminate outside just to 'play it safe' but by risks I meant risks in terms of legal implications. Are contracts that run through April and beyond somehow invalidated/not compliant to the new off-payroll regs automatically because something or other needs to be done? Or could I now safely sign a 12-month contract with the only ("only") concern being that the reform could spook the client once the liability is theirs?

Thanks again.

EDIT: For some context, this question comes from concerns I've seen people voice around contractors being exposed if payment is made after April (even if the contract ends in March), but I'm confused how a contractor could be exposed at all here if a contract can still stand despite the reform.

I think you may be asking a less important question than the ones you need to ask yourself:
1. How long have you been contracted to this client?
2. If you remain at the client on another extension and it is deemed inside IR35, do you understand what that means to your previous time there?
3. Do you understand who is liable to pay the money HMRC may claim?

[DevUK]

I think you may be asking a less important question than the ones you need to ask yourself:
1. How long have you been contracted to this client?
2. If you remain at the client on another extension and it is deemed inside IR35, do you understand what that means to your previous time there?
3. Do you understand who is liable to pay the money HMRC may claim?

Thanks for the reply!

I'm not asking with regard to a specific contract, I'm currently out of a contract and I think, like many, I'm trying to decide on my next move. In case that move happens to involve a contract that went beyond the date - I'm trying to ascertain the risks involved in taking it.

1. As above, no particular client in mind
2. Definitely, I understand this to be a risk I wouldn't want to take. If I took on a contract now (outside) and the client happened to request a change to inside in April, I'd appeal it or move on.
3. I understand there's a shift in liability to the client as of April but previous to that it would've been mine, the contractor. I may be wrong here. I know I would be liable for paying money owed on any contracts investigated retrospectively if they were found to be inside.

[eek]

Thanks for the reply!

I'm not asking with regard to a specific contract, I'm currently out of a contract and I think, like many, I'm trying to decide on my next move. If that move happened to involve a contract that went beyond the date I'm trying to ascertain the risks involved in taking it.

1. As above, no particular client in mind
2. Definitely, I understand this to be a risk I wouldn't want to take
3. I understand there's a shift in liability to the client as of April but previous to that it would've been mine, the contractor. I may be wrong here.

If you don't know the answer to 3 you really need to do more research (hint it's you prior to April).

[DevUK]

If you don't know the answer to 3 you really need to do more research (hint it's you prior to April).

Isn't that precisely what I said?

[WTFH]

I'm not asking with regard to a specific contract, I'm currently out of a contract and I think, like many, I'm trying to decide on my next move. In case that move happens to involve a contract that went beyond the date - I'm trying to ascertain the risks involved in taking it.

OK, so it's a hypothetical situation. We could debate for pages what might or might not happen if you choose x or y and if you get an interview and if... and if... and if...

Get a general understanding of what it means - and there's good info on here already about that.
Then IF something comes along, see how that contract or offer weighs up compared with the info that's on here.