IR35 - Back to first principles.... IR35 - Back to first principles.... - Page 2
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  1. #11

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    Part and parcel is something that happens over time and is the straw that could break the camels back in a close case. Fixed price is a pretty strong indicator that would trump part and parcel. I'd argue that a fixed price job wouldn't normally last ling enough for P&P to be an issue.
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  2. #12

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    Quote Originally Posted by northernladuk View Post
    I'd argue that a fixed price job wouldn't normally last ling enough for P&P to be an issue.
    Well, I was just asked to bid on a fixed price job with my former employer that will be at least a year. And since I was with them for more than 15 years and had such a senior role, I'd be part and parcel as soon as I became involved with them again. It would be almost impossible, because of personal relationships, to fight that -- people would just interact as they always did.

    It's fixed cost, I'm off site, no SDC (I'll be the one exercising SDC), using my own hardware, taking random days off at my discretion, ticking all the boxes to make sure I'm outside IR35, but I know the kind of phone calls that would happen, the advice, the interactions with sales, the coordination with their coders, etc, etc. I'll be asked to chime in on performance appraisals. I'm already on a retainer to provide "as we need it" work (20 hours a month, not much) that I'm operating under IR35, because I was just too much part and parcel to get outside IR35.

    So yeah, part and parcel can go with fixed price. Seems clearly outside IR35, though, even though the other work is inside.

    I bring it up to show that "part and parcel" isn't a silver bullet to solve this problem. I agree with Lisa that it is generally a good common sense guide. Perhaps, in an ideal world, it would have as much weight as the big three of substitution, MOO, and SDC. But it is also like SDC, it is hard to specifically define, so I'm not sure it would really bring us much further forward.

  3. #13

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    Quote Originally Posted by Jessica@WhiteFieldTax View Post
    Project work points to non integration, being part and parcel points to integration.

    Problem is although "part and parcel" is often talked about it doesn't have the status of the big three - mutuality, personal service, control, and in many cases, not all, it provides a sensible answer. Of course those the wrong side of the answer won't always agree.

    The presence of a permie doing the same need not be an issue - enageagement terms, recruitment methods, what happens at end of project all differentiate.

    Agree with your thoughts on project work. Ideally ought to be a clear passport out of IR35 for both sides (HMRC and contractors), although doubtless there would be a new avoidance industry around "making your workers project conctractors" and "HMRC anti-project avoidance teams"
    Yes, we're on the same page. I'd be supportive of a project-based criterion. I'm not overly concerned about the payment mechanism, as fixed price and T&M can both make sense in different contexts; by way of example, I've had contracts with both mechanisms for different parts of the same project. Likewise, you could obtain a project by bidding/tendering or through a traditional agency arrangement. Some of these things may be somewhat less indicative of employment (fixed price, tendering), but I don't think we'd want to over-prescribe the ways in which work is obtained, because there are different industry norms.

    Having a project with discrete scope and deliverables seems to be a good starting point. Of course, as you rightly point out, the problem with any simple rule is the scope for avoidance and I think that SDC is inevitably going to feature for that reason (i.e. simple rules will work on top of SDC in fixing inside cases and hopefully outside ones too). It's straightforward to identify when a contract is project-based via the schedule of work (i.e. named project, discrete deliverables, discrete timeframe). It should also be possible to identify when a project is real versus contrived. For example, it would be utterly impossible to formulate a project-based contract for the waitress scenario. For the secretary, it may be possible, but it would be hopelessly contrived and transparent. The point of project-based work is that you're contractually obliged to deliver a discrete project and nothing outside that. Anything else would require a new contract and negotiation.

  4. #14

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    I think eek's approach of going back to ask what each party really wants is stunningly sensible.

    However I have one point that is very important to me, but not easily testable and not perhaps part of any other parties' ideas, though I would bet that a lot of other contractors feel the same in their bones: I am not part and parcel of the client, ever, simply because I do not intend to be. I don't care whether the client wants a project milestone met or just a bum on a seat for a while, I don't care whether HR see me as an employee or not, I don't care how long the contract turns out to be, I don't care what anyone else thinks, I know that I am not and never will be part of the organisation (that is exactly why I am a contractor), I know that I have one single lifetime career, and that is freelance contractor.

    That's what I want recognised.

  5. #15

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    Quote Originally Posted by WordIsBond View Post
    So yeah, part and parcel can go with fixed price. Seems clearly outside IR35, though, even though the other work is inside.
    The weakness with part and parcel is that it's highly subjective, even more so than SDC, so I think it depends on the specifics of what is meant by integrated, as I mentioned above. I think project-based work makes sense. Being part and parcel in a more subjective sense, I'm less enthused about, because it's difficult to define and, aside from a few edge cases, difficult to identify. I think the nod to SDC is an acceptance that simple rules alone won't work, but from HMRC's perspective, SDC has the advantage of tying together a few pieces of legislation. Once you get into things like part and parcel on top of SDC, you're back at the current formulation of IR35.

  6. #16

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    Quote Originally Posted by jamesbrown View Post
    The weakness with part and parcel is that it's highly subjective, even more so than SDC, so I think it depends on the specifics of what is meant by integrated, as I mentioned above. I think project-based work makes sense. Being part and parcel in a more subjective sense, I'm less enthused about, because it's difficult to define and, aside from a few edge cases, difficult to identify. I think the nod to SDC is an acceptance that simple rules alone won't work, but from HMRC's perspective, SDC has the advantage of tying together a few pieces of legislation. Once you get into things like part and parcel on top of SDC, you're back at the current formulation of IR35.
    Indeed. It is difficult to define but at some point it is pretty clear if you are or not. A large number of contractors would fail on the part and parcel test if there was one. Anyone that thinks they are employed a will do anything they are asked and attend things they shouldn't are P&P. I dont agree it's a given in any case like projects or even enduring roles as it's mentality. If there are assumptions made by the client and contractor and there is a relaxed relationship P&P is blatantly clear. It can't be measured but I do wish it would have been more part of IR35. JLJ case got stung because if it.
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  7. #17

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    Quote Originally Posted by jamesbrown View Post
    The weakness with part and parcel is that it's highly subjective, even more so than SDC, so I think it depends on the specifics of what is meant by integrated, as I mentioned above. I think project-based work makes sense. Being part and parcel in a more subjective sense, I'm less enthused about, because it's difficult to define and, aside from a few edge cases, difficult to identify. I think the nod to SDC is an acceptance that simple rules alone won't work, but from HMRC's perspective, SDC has the advantage of tying together a few pieces of legislation. Once you get into things like part and parcel on top of SDC, you're back at the current formulation of IR35.
    Agreed, the last thing that is needed is yet more subjective rules, where it depends on whom you ask what answer you get. The project-based approach does seem more fruitful and more (if not entirely) amenable to objective criteria.

  8. #18

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    Quote Originally Posted by northernladuk View Post
    Indeed. It is difficult to define but at some point it is pretty clear if you are or not. A large number of contractors would fail on the part and parcel test if there was one. Anyone that thinks they are employed a will do anything they are asked and attend things they shouldn't are P&P. I dont agree it's a given in any case like projects or even enduring roles as it's mentality. If there are assumptions made by the client and contractor and there is a relaxed relationship P&P is blatantly clear. It can't be measured but I do wish it would have been more part of IR35. JLJ case got stung because if it.
    I think that speaks to the SDC point though and the JLJ case is an interesting example. The latter portion of the JLJ case was lost on any number of things but, in particular, the transition from doing project-based work to rolling contracts that were not project-based and were, therefore, subject to a strong element of SDC. Being part and parcel in this case amounted to a subjective summary of a host of specific things w/r to integration, notably doing work that was not project-based and was subject to SDC. It was that break in the link with project-based work on which JLJ was most emphatically lost.

    Edit: quick summary of JLJ here for those interested.
    Last edited by jamesbrown; 22nd August 2015 at 21:06.

  9. #19

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    I think we are heading to a situation where the end client will need to issue a 1 page doc for all gross payments made for workers' services (including payments to agencies) clearly stating if the "project worker" or "temp" will be SDorC or not. If there's an agency in the chain this detail should be included in the employment intermediary report.

    This compulsory page should be part of the contract.

    If the end client gets their decision wrong (i.e. they say no SDorC even when SDorC applies) the end client will folk out the extra cash when hector comes knocking.

    Any end client not willing to make a in or out SDorC decision would need to put the "project worker" or "temp" onto payroll.

    It seems like the only unambiguous long term way forward.
    Last edited by JB3000; 23rd August 2015 at 08:17.

  10. #20

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    Quote Originally Posted by expat View Post
    I think eek's approach of going back to ask what each party really wants is stunningly sensible.

    However I have one point that is very important to me, but not easily testable and not perhaps part of any other parties' ideas, though I would bet that a lot of other contractors feel the same in their bones: I am not part and parcel of the client, ever, simply because I do not intend to be. I don't care whether the client wants a project milestone met or just a bum on a seat for a while, I don't care whether HR see me as an employee or not, I don't care how long the contract turns out to be, I don't care what anyone else thinks, I know that I am not and never will be part of the organisation (that is exactly why I am a contractor), I know that I have one single lifetime career, and that is freelance contractor.

    That's what I want recognised.
    I can see the viewpoint but sadly HMRC wants change. And they want to move the onus not on the individual to decide and review but on the end client (with guidance to decide). Sadly their suggested criteria is currently so broad everyone would be subject to it.

    Now an FLC type entity may be created and it may allow you to do just that. I think you can probably guess that my expectations of it succeeding are far lower than others elsewhere.. And even then I don't think it would be the safe harbour IPSE claim it will be. So I do think we need to try and identify something else.

    The idea of a simple set of rules with SDorC as the default position is probably what HMRC want (they categorically claim that they don't want added work given to them)..

    So far we seem to have:-

    Part and parcel (Secretary, Waitress) - clearly inside - very hard to define so probably not a suitable criteria

    Project based work (non contrived) - clearly points to being outside - easy to define - a none contrived spec or set of deliverables, a schedule and some corporate overview overall budget

    Looking at the examples we have to hand:-

    Ben the Lawyer - needs to be inside - could move to project based work but that would need to be on a customer by customer basis so a lot of small projects.
    Sarah the nurse - clearly inside (nursing is not project based).

    The other examples from CUK this week:-
    Backfill engineer (because between bid and contract win staff left) - clearly outside. project based.
    Additional University help - not project based so probably inside...

    The BBC bogus employment example:
    Help desk worker - (personally) clearly inside

    However some on here would argue that that help desk worker is one of our own. Personally I think its just a fixed term permanent job (identical to Ben the lawyer) but I can imagine there are people here like him who will dispute that...

    So what can we use to define a project in a what that isn't easily contrivable...
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