I've known permi-tractors that have done over 10 years at the same company. I've also known many who are just rolling over 6 monthly contracts seemingly permanently, with the occasional "strategic break". Some of them on 1K day rates. They come along to employee "do's" and if it weren't for their badge, you would assume permie.
The All Things IR35 Related Thread
- Thread starter NVP
- Start date
Cookie cutter disguised employment. IR35 is such a big issue, if that's the right word, and it will have such a wide-scale effect across many industries. A large swathe of Oil & Gas is done through PSCs with contracts rolling from year to year. I'm sure losing a good chunk of the energy workforce is just what the country needs going forward...
Personally I would have no qualms moving to FTE if that is the way end clients want to go as a blanket rule, similarly to Barclays; but I'd be sat around that negotiating table for a long time to get what I think would be fair remuneration.
That's sometimes dealt with at large tech firms, the sort with plenty of freebies and serious money spent on parties, events and other perks. When contractors are excluded from being able to attend events etc.. they get quite miffed by it and complain about being treated as second class citizens...
Yep, this is when @NVP realises it's back to CoOp now.
So much misinformation in this thread.
What if I employ someone else?
What happens to company cars and assets?
All a lot to think about.
So much misinformation in this thread.
Nope, that's not the case. It's the end client/agent that now decides if you're inside or outside IR35, and, as Barclays have just shown, they can't be bothered to work it out for their contract workforce and blanket ruled them out.
- It's private (and remaining public) sector that are impacted, but it's a little different to the IR35 reform of 2017
- Don't think about joining forces with another contractor, you must have less than 5% interest in the company and be one of 15 employees. Not worth it.
- Your company will no longer trade, as it won't make a profit. Accountants are going to be pretty bored.
- If the company you work for do decide to keep you, you'll join their payroll.
What if I employ someone else?
What happens to company cars and assets?
All a lot to think about.
Don
The big issue that a lot of people are sticking their heads in the sand with is that when end clients take a blanket approach because ultimately they have neither the knowledge or competence to correctly assess contractors positions HMRC will potentially use that decision to open investigations into people when they decide to take a staff position.
It’s essentially the same as people who were staying in the same position but going contract.
It’s essentially the same as people who were staying in the same position but going contract.
Not if the contract ends prior to 1st April. If you chose to remain a contractor under contract past 1st April, then you can be investigated.
Don
I would disagree with that, HMRC can use the suggestion you are a disguised employee at any time from an IR35 decision, the 1st April date just determines where the liability lies, before (contractor) and after (end client).
No, because currently, it's you who decides if you are inside or outside, and that is very easy to manage with many "loopholes" such as substitution of workforce, signing of internal emails, branded stationery, etc. As of 1st April 2020, when the legislation comes into effect, it is the end client or agency who will determine the status of your IR35 eligibility, so all of the "loopholes" above pretty much become null and void. As you can't be bound by legislation until that legislation is in place, then HMRC can only investigate contracts running from April 1st 2020.
Don
Yes, but you could be “mistaken”! If the end client decides going forward that you are inside, then the only thing that has changed is who makes the decision.
HMRC have nothing stopping them going back 6(?) years if they believe you weren’t compliant during that time. And a decision next year that your position is inside IR35 would give them grounds to check whether you had been correctly assessing yourself in the years previous.
Jokester is absolutely right.
HMRC can go back up to 6 years to investigate IR35 non-compliance. (And that's without having to enact any retrospective legislation!).
It's telling that during debates around the retrospective Loan Charge, ministers felt it necessary to say that IR35 would not be applied retrospectively. As anyone who has had any dealings with HMRC will know, they are not to be trusted. IR35 can and will be applied post private sector off payroll determinations - just ask GSK contractors if you are in any doubt.
I think the point is. If HMRC knock on your door for previous 6 years, that, for most, would be very easy to establish that you were outside IR35 and can simply reference any of the above mentioned methods to support that. Post April 2020, that will not be so easy and the end client/agent will not want the hassle of proving to HMRC that you were or were not inside IR35. Are HMRC expecting the end client/agent to act on that information for the previous 6 years or are they asking you (as that is the legislation you were under) for those previous 6 years? The two outcomes could be very different, each with their own consequences.
As above, who proves that non-compliance for the previous 6 years? If it's you, easy enough, if it's the end client/agency then that is prior to their responsibility as defined in the legislation and should not be upheld.
As above, who proves that non-compliance for the previous 6 years? If it's you, easy enough, if it's the end client/agency then that is prior to their responsibility as defined in the legislation and should not be upheld.
Soldato
Any thoughts about perm roles being offered at normal perm rates, so a £600/day developer can expect at best an up to £80k perm salary? I always thought the premium was based on the flexibility - so without the flexibility there is no premium. I don't believe there will be much negotiation, and key-person risk will already be managed.
Obv, I am a perm!
Obv, I am a perm!
There's nothing simple or easy about proving IR35 compliance. It has nothing to do with your written contract and everything to do with working practices.
I don't necessarily disagree with you that it can be successfully defended, but I wouldn't be so sure it will be as easy as you say, and it certainly will not be quick. It will probably entail years of stress and court battles, with the associated costs of defending yourself.
In cases where the end client deems you inside IR35 (post CEST determination), there is a far higher chance that HMRC will look to investigate you for IR35 non compliance over the preceding 6 years.
There seems to be little correlation between contract rates and equivalent perm salaries.
I've heard of formulas being used - eg. 220 * day rate * 70%. But it probably differs depending on sector and the end client themselves.
Soldato
nvm
Soldato
I guess I'm referring to specific cases where I have perm and contractor equivalents so know the rates of both. The numbers above are a real example, another would be £55k versus £525/day. I really wanted to see whether the consensus from contractors was they they would expect to be able to negotiate above the standard salary (which is less which ever way you look at it) and what the basis would be.
I've just gone from a contractor to permanent and my salary + car allowance + bonus is pretty much bang on that formula. But that doesn't count all of the other benefits which contractors usually forget.
Don
But who wants a costly HMRC investigation as a result of a 3rd party decision not being lawfully correct, even though they were operating correctly. Sure if you know what your doing you should be able to demonstrate compliance easy enough, but I speak to plenty of people in my industry about IR35 and most people even where their role is outside don’t know what they’re doing and why they shouldn’t be inside and it will possibly cause them all sorts of problems.
As I said, heads in the sand!