Supply of services with no named workers always outside IR35?

[WTFH]

We are in theory excluded, but the large banks are refusing to engage engage any small consultancies, even outside IR35, as a result of the proposed legislation, which has not even been enacted. They insist that our employees become employees of an umbrella. The proposed legislation was not intended to affect genuine businesses like ours that operate outside IR35, but it is destroying our business because of the negligent way that the government plans to implement the new rules, creating an unreasonable burden on our clients.

But anyway, this is getting off-topic.

It's not off-topic, you even put it in bold at the end of your first post:

Therefore why are end-clients not moving towards hiring named companies instead of hiring named individuals? This would get around all the problems of IR35.

You need to go to the few end clients who are doing this and ask them why.

Sure, the government are negligent in how they implement many things, but this has been known about for years, yet it's only now that a few people are "suddenly" aware of it.

Why are a few businesses using IR35 as the reason to throw out small consultancies that have >1 permanent employed consultants on their books?
Could be multiple reasons - your customer is lazy and doesn't want the hassle of going through the details for every single contractor who has been on site for the last 10 years to determine whether they are a disguised permie?
Your customer has decided that by having a preferred supplier list they can get bodies on site quicker?
Your customer has looked at the figures and realised that the number of consultants they have working full time, it would be cheaper to genuinely employ a few people?

Who knows why your customer has chosen that route, your first port of call is the customer. Perhaps look at other customers (maybe outside the banking sector) who aren't implementing rules like your customer is.

[NFH]

Additionally..... If they are your employees then PAYE is already being paid by you so no umbrella is required as that's what you already do.

Not true. The total amount paid by the client is not then in turn paid via PAYE to the employees. I know of no consultancy that does this, because they would make no profit if they did so.

There is something missing to your story.... Or are your 'employees' contractors?

Yes, sometimes we do use contractors, which never caused a problem in the past.

Please can we get this back on topic?

[WTFH]

Not true. The total amount paid by the client is not then in turn paid via PAYE to the employees. I know of no consultancy that does this, because they would make no profit if they did so.


Yes, sometimes we do use contractors, which never caused a problem in the past.

Please can we get this back on topic?

How many permanent employees does your company actually have?

i.e. if HMRC or your customer were to look at your last return for CoHo, is it 5? 10?

Also, is it the same business that you and Lango were talking about 5 years ago?
https://www.contractoruk.com/forums/...t=#post2041339

[cojak]

We are in theory excluded, but the large banks are refusing to engage engage any small consultancies, even outside IR35, as a result of the proposed legislation, which has not even been enacted. They insist that our employees become employees of an umbrella. The proposed legislation was not intended to affect genuine businesses like ours that operate outside IR35, but it is destroying our business because of the negligent way that the government plans to implement the new rules, creating an unreasonable burden on our clients.

But anyway, this is getting off-topic.

Sadly, this is not off-topic at all.

So it appears that you need to be ‘not big, but big enough’ when it comes to Small Company exclusion. That’s bloody rubbish.

I guess that you are going to need to find more enlightened clients to survive.

[eek]

Sadly, this is not off-topic at all.

So it appears that you need to be ‘not big, but big enough’ when it comes to Small Company exclusion. That’s bloody rubbish.

I guess that you are going to need to find more enlightened clients to survive.

No they are big enough for most companies but just happen to be at a very risk adverse customer who isn't interested in following the real rules due to HMRC putting the fear of God into their HR director.

[jamesbrown]

Sucks, but what you’re describing is a client/sector that has decided to engage suppliers differently. It’s a commercial decision. Yes, it has been precipitated by the changes to IR35 but, in another sense, it’s just business and they can change the way they solicit and write contracts at any time. There’s really feck all you can do about a customer that suddenly decides to become risk averse, IR35 or not.

[LondonManc]

Perhaps the punting for business model needs to change - if you are a consultancy, don't punt against cheaper contractors, punt against larger more expensive consultancies instead.

I now work for a consultancy and we have a TOM of only using contractors when necessary; as NFH hinted at, there's not as much margin for us on contractors and there's more risk of them leavin part way through (unless it was NLUK of course!).

[NFH]

Sucks, but what you’re describing is a client/sector that has decided to engage suppliers differently. It’s a commercial decision. Yes, it has been precipitated by the changes to IR35 but, in another sense, it’s just business and they can change the way they solicit and write contracts at any time. There’s really feck all you can do about a customer that suddenly decides to become risk averse, IR35 or not.

The question is not about whether there's anything we can do about clients taking this risk-averse approach. The question is why end-clients are not moving towards hiring named companies instead of hiring named individuals, which would arguably get around all the problems of the proposed changes to IR35.

[eek]

Perhaps the punting for business model needs to change - if you are a consultancy, don't punt against cheaper contractors, punt against larger more expensive consultancies instead.

I now work for a consultancy and we have a TOM of only using contractors when necessary; as NFH hinted at, there's not as much margin for us on contractors and there's more risk of them leavin part way through (unless it was NLUK of course!).

The one time I worked with a small consultancy I was surprised at how low their day rate was compared to what I was billing them. Mind you given the quality of the work they had done they really couldn't charge more.

Equally I don't think the real money is in bums on seats anymore. It's more about creating a process or package that you can repeatedly sell at a higher price than would otherwise be the case.

[jamesbrown]

The question is not about whether there's anything we can do about clients taking this risk-averse approach. The question is why end-clients are not moving towards hiring named companies instead of hiring named individuals, which would arguably get around all the problems of the proposed changes to IR35.

As I’ve told you above, you’ve misunderstood the legislation. The legislation constructs a *hypothetical* contract. The actual contract is just window dressing. The hypothetical contract *looks through* any and all intermediaries. Now you’re further misunderstanding your client. What matters is not what the ITEPA says or doesn’t say - the new legislation doesn’t even exist yet - but how the client wants to address risk as they perceive it. Risk is perception.