The All Things IR35 Related Thread

[dowie]

Let me pick one that works where I do. IT role.

They attend organised company events and social gatherings.
They report to a line manager which is the same as many employees who completely dictates what that persons work is, how, where and when it is done and to what time.
They have to abide by the exact same SLAs as employees and are not doing project work. They cover BAU requests and general day to day tickets and have seemingly endless work available.
They have rigid fixed working hours and location set by the employer, to which they cover a shift pattern.
They use all company facilities and equipment in the same way employees do and attend company update meetings about how well the company is doing.

Standard tbh.. it is a bit of a con, individual contractors at most places I've worked will have access passes, logins for various IT systems, company e-mail addresses etc.. they're basically part of a team, are familiar with a project and can't easily be substituted. They've typically had a job interview of sorts too, not as extensive as a perm employee but still.

The exceptions are perhaps more generic stuff like someone comes in to do some leadership training they deliver to many companies or some scrum expert comes in for a week to convert some teams to scrum and delivers some standard lectures/training etc. those guys aren't in a team, don't have a company ID/pass - they'll have a guest pass issued or will be escorted, they don't have logins for the change request/ticket system, they're not using the company gym or attending the Christmas party, at most they might help themsevles to some free food and drinks during breaks etc..

Despite what the contract might say on paper to avoid IR35 the typical individual developer or data scientist contractor who has been working on a project for say 4 months with a team realistically can't just switch in another guy for 1 week, that replacement would have no clue.

Pretty much all the contractors I've worked with are basically hidden employees, it's been a total scam for years now.

 

[dl8860]

So does that mean my builder who is going to rennovate my property is a inside IR35 disquised employee?

Im technically his line manager and i tell him what to do and when.

I also gave him a deadline too.

Try the 3 actual important tests.

Mutuality of obligation - are you obliged to give him another job after he finishes the current one? Unless you have a very strange written up contract, then the answer will be no. Vice versa, he isn't obliged to do the next job you ask him to.
Right of substitution - is it ok for him to bring a mate or have someone else to come along and do the same work? going to assume yes
Control - you might be telling (or rather I'm sure, 'asking'!) him what work to do, but you aren't generally going to be telling him how to do it. Up to him what tools/methods he uses so long as the end result is what you've asked for.

Unless deliberately strangely contrived, there will never be a situation where a builder is following working practices that make him a disguised employee.

Doesn't seem like you have a strong handle at all on disguised employment, are you working inside or outside?

 

[jonneymendoza]

Try the 3 actual important tests.

Mutuality of obligation - are you obliged to give him another job after he finishes the current one? Unless you have a very strange written up contract, then the answer will be no. Vice versa, he isn't obliged to do the next job you ask him to.
Right of substitution - is it ok for him to bring a mate or have someone else to come along and do the same work? going to assume yes
Control - you might be telling (or rather I'm sure, 'asking'!) him what work to do, but you aren't generally going to be telling him how to do it. Up to him what tools/methods he uses so long as the end result is what you've asked for.

Unless deliberately strangely contrived, there will never be a situation where a builder is following working practices that make him a disguised employee.

Doesn't seem like you have a strong handle at all on disguised employment, are you working inside or outside?

LOL i was actually being sarcastic when i asked if my builder is inside or outside IR35

 

[Kenai]

Also, I personally know people who worked as contractors for hmrc

Why is this something of note?

IR35 was never about eliminating contractors, so it's not weird in any sense that HMRC use contractors for certain work.

Or do you mean you know people who contracted to them on an obviously 'disguised employee' arrangement?

 

[dl8860]

LOL i was actually being sarcastic when i asked if my builder is inside or outside IR35

Well I know you didn't think he actually might be inside, but you were making a point that by the description of someone else's coworking sounding like a disguised employee, it sounded like the same might apply to your builder.

 

[jaybee]

snip...

Pretty much all the contractors I've worked with are basically hidden employees, it's been a total scam for years now.

Yeah, and if and when I were to join the club so to speak, I was looking forward to the proposed changes in IR35 as I wanted to milk it like others have done for decades, and reap the full benefits of contracting in the same way. Why shouldn't we frankly. With the U turn on it, yeah you can still make more contracting inside IR35 but it's typically not often as much and won't be enough of a difference over permie roles to sway a lot of people for the other disadvantages to contracting. Most employers for IT roles I see that go out to market these days for contractors typically post that the role is inside IR35 for a number of reasons I should imagine.

 

[Bear]

Most employers for IT roles I see that go out to market these days for contractors typically post that the role is inside IR35 for a number of reasons I should imagine.

It’s nearly always because the client can’t be bothered to research what it means to have someone working outside IR35 for them or pay someone with specialist knowledge to do it as they deem it too much of a risk to bother as the onus on correct determination is on them.

 

[dowie]

It’s nearly always because the client can’t be bothered to research what it means to have someone working outside IR35 for them or pay someone with specialist knowledge to do it as they deem it too much of a risk to bother as the onus on correct determination is on them.

Well, you can see why, they know full well it's a blatant fudge tbh. so they probably aren't interested in taking that risk. HMRC amusingly perhaps can get away with it though.

Yeah, and if and when I were to join the club so to speak, I was looking forward to the proposed changes in IR35 as I wanted to milk it like others have done for decades, and reap the full benefits of contracting in the same way. Why shouldn't we frankly.

Because it's rather dishonest and you're not paying your way in society if you do it when you're really a hidden employee (which AFAIK is basically most people who are doing rolling 6-month gigs at a single client even if they have managed to get the right boxes ticked in theory to claim to be outside of IR35).

I mean some people even build up cash and then take it out as entrepreneur relief at 10%.

Within IR35 and paying your appropriate share of taxes it's still potentially useful for people to do though, some people have their careers stagnate and/or don't fancy taking on management responsibilities but still want to earn more money as an individual contributor, getting a nice day rate as a contractor is a way to do that and you have a bit more freedom to jump around whenever you get bored or fancy someting different as it's not seen a bad thing if you're a contractor vs if you were to jump employers frequently as a perm employee.

 

[ChrisD.]

I had a look at the contracting market, rates really haven’t moved that much since I made the switch to perm over 3 years ago.

 

[jonneymendoza]

Why is this something of note?

IR35 was never about eliminating contractors, so it's not weird in any sense that HMRC use contractors for certain work.

Or do you mean you know people who contracted to them on an obviously 'disguised employee' arrangement?

Because those contractors were working kind of in a grey area ie some stuff you can say they were inside ir35 and other stuff they was working outside ir 35.

So yea the latter

 

[jonneymendoza]

Yeah, and if and when I were to join the club so to speak, I was looking forward to the proposed changes in IR35 as I wanted to milk it like others have done for decades, and reap the full benefits of contracting in the same way. Why shouldn't we frankly. With the U turn on it, yeah you can still make more contracting inside IR35 but it's typically not often as much and won't be enough of a difference over permie roles to sway a lot of people for the other disadvantages to contracting. Most employers for IT roles I see that go out to market these days for contractors typically post that the role is inside IR35 for a number of reasons I should imagine.

Toss in the fact that inside ir 35 u get no beneifts so u migth as well just go perm.

IMO they should just remove IR35 nonsense and either you are a contractor? or you are a perm.

If you work as a contractor and get found out as a disquised perm then HMRC should say u are a permie since joining and you and the company are liable for tax owed as a perm staff.

Simple

 

[dowie]

Toss in the fact that inside ir 35 u get no beneifts so u migth as well just go perm.

You get (potentially) more money! It's a crude, flexible way to retain people when there are rigid pay bands, HR restrictions on pay rises etc.. for permies.

Being outside IR35 might have caused some moaning but plenty of the guys in the city still aren't going back to being permies, they still like the sweet daily rates they're on even if paying a more appropriate amount of tax.

 

[dl8860]

Toss in the fact that inside ir 35 u get no beneifts so u migth as well just go perm.

IMO they should just remove IR35 nonsense and either you are a contractor? or you are a perm.

If you work as a contractor and get found out as a disquised perm then HMRC should say u are a permie since joining and you and the company are liable for tax owed as a perm staff.

Simple

Your second and third lines are complete contradictions. The whole point of IR35 in this situation is to prevent disguised employees not paying fair tax. You say we should abolish IR35. Then you say HMRC should be able to claw back tax that they deem is due.

 

[jonneymendoza]

Your second and third lines are complete contradictions. The whole point of IR35 in this situation is to prevent disguised employees not paying fair tax. You say we should abolish IR35. Then you say HMRC should be able to claw back tax that they deem is due.

Yes by stating that you are either a contractor or a permie.

Right now you have a permie, inside contractor, outside contractor....

Makes **** complicated.

It also forces many large corporations to hire permies as they cant just hire a disguised contractor anymore. They literally have to hire actual proper contractors with contracting terms like working anywhere they want at any time they wish without much if any authority.

Dont kid yourself. most of us love a contract like that where we just get on with the task at hand in the time we choose ourselves and implement the task the way we want to so long as it meets the spec/requirement.

It would force big corps to either hire more perm staff or have some balls and let a contractor work whenver and wherever they like if the skillset they need is in demand for there project/task.

Simple really but right now, a lot of big corps still want to man manage contractors. They want to control what they do,. when they take there lunch breaks, when to use the toilet and when to speak...

Na **** that. That is why i ditched being a permie as i cant stand that atitude anymore and love the freedom to work and apply my skills to a particular task at hand...

 

[jaybee]

Yes by stating that you are either a contractor or a permie.

Right now you have a permie, inside contractor, outside contractor....

Makes **** complicated.

It also forces many large corporations to hire permies as they cant just hire a disguised contractor anymore. They literally have to hire actual proper contractors with contracting terms like working anywhere they want at any time they wish without much if any authority.

Dont kid yourself. most of us love a contract like that where we just get on with the task at hand in the time we choose ourselves and implement the task the way we want to so long as it meets the spec/requirement.

It would force big corps to either hire more perm staff or have some balls and let a contractor work whenver and wherever they like if the skillset they need is in demand for there project/task.

Simple really but right now, a lot of big corps still want to man manage contractors. They want to control what they do,. when they take there lunch breaks, when to use the toilet and when to speak...

Na **** that. That is why i ditched being a permie as i cant stand that atitude anymore and love the freedom to work and apply my skills to a particular task at hand...

I hate performance review guff and company politics, especially in IT roles where you aren't even aligned with what the company even does as you are focused on the IT side. I hate all the woke events and sessions we have about black history, women in the workplace, LGBTQ stuff, requirement to keep attending the office 50% of the time, poorly implemented annual bonus policies.... literally everything about being an employee annoys me compared to the contracting life.

But then I remember I have a very secure job that pays ok for what I do, I get a good pension and good benefits and the company do generally care for us quite well. I remember I have a huge mortgage and several mouths to feed as the main bread winner... contracting is a risk for me with no real back up fund and I feel like I always have to keep myself up to date and in touch. It's a more exhausting life style in some ways. There is something to be said for "settling" for that permie role where I can have more relaxed days. Difficult one. IR35 proposed changes might have swayed me...probably not now.

 

[jonneymendoza]

I hate performance review guff and company politics, especially in IT roles where you aren't even aligned with what the company even does as you are focused on the IT side. I hate all the woke events and sessions we have about black history, women in the workplace, LGBTQ stuff, requirement to keep attending the office 50% of the time, poorly implemented annual bonus policies.... literally everything about being an employee annoys me compared to the contracting life.

But then I remember I have a very secure job that pays ok for what I do, I get a good pension and good benefits and the company do generally care for us quite well. I remember I have a huge mortgage and several mouths to feed as the main bread winner... contracting is a risk for me with no real back up fund and I feel like I always have to keep myself up to date and in touch. It's a more exhausting life style in some ways. There is something to be said for "settling" for that permie role where I can have more relaxed days. Difficult one. IR35 proposed changes might have swayed me...probably not now.

Permie is not that secure either but i hear what you mean.

And this is why contractors demand more may as there is more risk..

Its not about "cheating the system" or "dodging tax" We simply are at a much higher risk than a permie.

And as i am typing this, my current contract got terminated just like that because of the project being canned by the higher ups in charge. Nothing to do with my performance(i was only meant to be here for a month and that turned out to be nearly a year here)

So yea, this is why i and many contractors demand higher rates as we have higher risks and why should i go "inside IR35" with the same higher risks earning basically the same as a permie?