Reply to post: Re: Heads we win, tails you lose

HMRC claims victory in another IR35 dispute to sting Nationwide contractor for nearly £75k in back taxes

SimonC

Re: Heads we win, tails you lose

Basically comes down to SDC, you're not hiring contractor Bob, you're hiring Bob Service Ltd, so they could send anyone. Much like when I had my chimney swept with Pete The Sweep, I was dismayed to find the guy that showed up was in fact, not Pete himself. Of course, it did not matter.

If I demand pete and only pete, then it's a red flag that my relationship with Pete The Sweet Ltd. is actually not a service/provider but potentially one of employment.

However it falls away when other factors are revealed.

The LED contract would purchases and fits the lights. This puts financial risk onto him, if the client changes their mind or is unable to pay (goes bankrupt), he'd be out of pocket. He also has to manage cash flow, if he's installing £3,000 of lights across the office, he needs to have £3,000 in cash while the invoice is paid. Financial risk is a big indicator. As an IT contractor, there's no risk of that type. Your only financial liabilities are car mileage, equipment, and insurances. But these aren't job-specific so it's hard to argue.

The work he's providing is also strictly agreed, his job is to install LED lighting in all of the offices. It'll be a case of say, 30 lights must be fitted. He'll likely charge a fixed fee, therefore incurring additional financial risk because if there are delays or the work proves more difficult, or there are issues sourcing the lights, he will have to suffer the extra time it takes to complete. It's unlikely he would charge per hour for a job of that nature, whereas an IT contractor would.

He probably also has additional jobs, not just one single job. This is consistent with a service company. He might order the equipment, do some other work in the morning, come in in the afternoon, etc.

He chooses his own scheduling. They don't say, you must work from 9-5 every day, because that might not even be possible, and it might be impractical - if he is waiting for things to arrive, then he's not going to sit there on an office chair staring out of the window all day. An IT contractor might do exactly that.

They can't move him to another project, for example if they say while you're here, could you just wire in a few new sockets? It's not part of his agreed work and it's not consistent with a service company if he says yes, unless a new contract is created/agreed or the existing one modified. Once he starts looking like a handyman, that's when he looks like an employee.

I think HMRC has shot itself in the foot though going forward. I'm an IT contractor and I'll be moving onto a new Outside IR35 contract from April. Everywhere is super paranoid so they'll be coming up with a compliant statement-of-work driven model, I suspect that plunges nice and deep into service company territory so there's no ambiguity. And I'll continue to do what I've been doing for the past several years already, only this time HMRC will not be able to pull a 'gotcha' because it will be fully above-board using their own assessment tool. The tool that is designed deliberately to place you inside IR35 by being epically misleading will now backfire and mark everyone sensible enough to care about their IR35 status as safe. Wouldn't surprise me if they pulled it once they realised it's actually helping people prove they're outside.

I'm currently on a fixed project, I work ~8-4pm occasionally work from home as I see fit. The client has a fixed budget so I'm not always called in, they just tell me to work less/more days to fit, which is a strong indicator of being outside IR35 (employees don't get told, work 3 days this week and we'll pay you less, 5 days next week and we'll pay you more). I'm working on a specific project, everything is timescaled and estimated, and I'll be gone when the project is completed unless they want to sign a new contract.

But I am also insured up the wazoo in case I get investigated, which is annoying. I've heard of HMRC making life a living hell for people who are completely innocent just due to them investigating, demanding meeting after meeting, all kinds of documents, evidence, etc.

It is quite hard to maintain an income when you're being called away all the time. Scary stuff.

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