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Self-determining IR35 status post April by subcontracting from a "Small" consultancy?

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    Self-determining IR35 status post April by subcontracting from a "Small" consultancy?

    Hi everyone,

    I've recently been approached by a "small" consultancy who've evidently received work from one of the large banks who've got a blanket ban on engaging outside IR35 contractors post April. What they've basically said is that:

    - They agreed to an engagement with Big Bank Inc. on a SoW basis
    - They are now subcontracting for resource (i.e., possibly me!) to fulfil the work
    - They say that because they qualify as a small company for the purposes of IR35 reform (low enough balance sheet/number of employees/turnover), if I was engaged by them, I'd be able to set my own IR35 status.

    Anyone been approached with outside IR35 opportunities the same way recently? Any chance of taking up such an opportunity coming back at me?

    On one hand, can't see how... worst case scenario I can see is HMRC telling Big Bank Inc. they didn't avoid liability for determining my IR35 status by contracting with a small consultancy... though that would mean the liability for an incorrect outside IR35 decision would rest with... the Big Bank by definition right?...who could then pay the tax penalty or fight it in court.

    On the other hand it seems to be too easy a work around to be true, so happy to get any risks I'm failing to consider here.

    Thanks!

    #2
    Lloyd’s have declared all the contractors that work within outsourced scrum teams - outside IR35

    I think the big co will still have to determine


    Sent from my iPhone using Contractor UK Forum

    Comment


      #3
      Probably not an outsourced supply, so probably not you making the determination. It depends what the supply and associated contract between the bank and consultancy looks like though. If you’re working onsite at the bank and you have a bank person looking over your shoulder and telling you what/how, it’s probably a subcontracted supply of labour to the bank. If you work offsite and the bank isn’t aware of your existence and the small consultancy packages up your deliverables and is understood to have delivered them, then it’s probably an outsourced supply of services. On the one hand, you shouldn’t care, because the liability doesn’t rest with YourCo in any circs (save fraud or contractual clauses that attempt to shift liability). On the other hand, it’s good to know whether you’re working with a clueless supply chain that doesn’t understand the reform. I’d want to know...

      Comment


        #4
        Originally posted by jamesbrown View Post
        Probably not an outsourced supply, so probably not you making the determination. It depends what the supply and associated contract between the bank and consultancy looks like though. If you’re working onsite at the bank and you have a bank person looking over your shoulder and telling you what/how, it’s probably a subcontracted supply of labour to the bank. If you work offsite and the bank isn’t aware of your existence and the small consultancy packages up your deliverables and is understood to have delivered them, then it’s probably an outsourced supply of services. On the one hand, you shouldn’t care, because the liability doesn’t rest with YourCo in any circs (save fraud or contractual clauses that attempt to shift liability). On the other hand, it’s good to know whether you’re working with a clueless supply chain that doesn’t understand the reform. I’d want to know...
        If he's determining his own status, does he still not have liability?

        Sent from my SM-G965F using Tapatalk

        Comment


          #5
          Originally posted by genius View Post
          If he's determining his own status, does he still not have liability?

          Sent from my SM-G965F using Tapatalk
          Sure, if it really is an outsourced supply to a small company, then it’s business as usual for the OP. But there are no circumstances where the liability moves to the PSC when the client is required to make the determination (except fraud or contractual transfer of liability, which probably won’t work). So, for the OP, it’s either business as usual or the client is wrong and bears the risk, as they failed to supply a SDS. If I were the OP, I’d still want to understand the situation and, absent a SDS, I’d assume business as usual (and do my own due diligence, even if the client is wrong and liability rests with them).

          Comment


            #6
            Thanks I'm actually in the same, or a similar situation and wasnt familiar with the terminology you used, so this is a useful thread. What you described as the outsourced company scenario is pretty much me right now.

            My plan was and remains to carry on as normal, and to recognise the responsibility still lies with me.

            Although I don't really follow this bit "But there are no circumstances where the liability moves to the PSC when the client is required to make the determination (except fraud or contractual transfer of liability, which probably won’t work)."

            And what does SDS stand for?

            Sent from my SM-G965F using Tapatalk
            Last edited by genius; 10 January 2020, 01:31.

            Comment


              #7
              Originally posted by genius View Post

              And what does SDS stand for?
              LMGTFY
              'CUK forum personality of 2011 - Winner - Yes really!!!!

              Comment


                #8
                Originally posted by northernladuk View Post
                Wasn't asking you

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                  #9
                  Originally posted by genius View Post
                  Although I don't really follow this bit "But there are no circumstances where the liability moves to the PSC when the client is required to make the determination (except fraud or contractual transfer of liability, which probably won’t work)."

                  And what does SDS stand for?

                  Sent from my SM-G965F using Tapatalk
                  If it’s a supply of labour, then the (large) client is responsible for the status determination statement (SDS) and liable if they fail to provide one. The small company is the fee payer in that situation, not the client, and they assume the liability of the fee payer (liable in general, but not where the client fails to supply an SDS).

                  Comment


                    #10
                    Originally posted by jamesbrown View Post
                    Sure, if it really is an outsourced supply to a small company, then it’s business as usual for the OP. But there are no circumstances where the liability moves to the PSC when the client is required to make the determination (except fraud or contractual transfer of liability, which probably won’t work). So, for the OP, it’s either business as usual or the client is wrong and bears the risk, as they failed to supply a SDS. If I were the OP, I’d still want to understand the situation and, absent a SDS, I’d assume business as usual (and do my own due diligence, even if the client is wrong and liability rests with them).
                    Yes, that's exactly where I'm coming from on this - responses to my post have been quite helpful, so thanks!

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