Company Contractor IR35 Policy to Take All Freelancers Outside IR35

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Contractor IR35 Policy
Contractor IR35 Policy

Company Contractor IR35 Policy

A company has just issued its contractor IR35 policy. The company will amend its contracts with the companies that it supplies in order to make sure that it is designated the fee payer. Those contract changes will mean that the companies it supplies with services will no longer have to worry about being investigated and fined by HMRC.

Questions on the company’s contractor IR35 policy

  1. How does the company keep its contractors and clients outside IR35?
  2. Why do their client companies not have to make an IR35 status determination?
  3. What is their relationship with their contractors re IR35?
  4. How will they assess their contractors’ IR35 status?
  5. How will they roll out their contractor IR35 policy to their contractors?
  6. How good is this news on IR35 to all contractors?
  7. How much will this farce cost the country?
  8. What do the Conservative Government plan next for freelancers?

How does the company keep its contractors and clients outside IR35

This agreement will make sure that contractors are working in a manner which shows they are outside IR35.

Any changes to their contractors’ working practices and contracts will be made shortly too.

The company delivers managed services to their client companies. They say they do not operate as an agency or intermediary.

The company believe that their clients accept this. This means that their client companies will not have to make an IR35 status determination for those contractors who carry out work for the company.

Why do their client companies not have to make an IR35 status determination

They demonstrate this by the following:-

  1. the way they win work through procurement and through price negotiation.
  2. via master service agreements and statements of work expressed in their contracts with their clients
  3. via the many ways their teams operate and via the way they are managed by an Engagement Manager

They know this model works as they have won many public sector contracts over the last couple of years where the IR35 reforms are already in place.

What is their relationship with their contractors re IR35

So, their position in relation to their contractors is that they are the end client and the fee payer. Therefore the legal obligation to determine the status of their contractors is theirs and not their client companies.That applies whether the contractors are using a personal service company or an umbrella company.

They will conduct assessments of their contractors to show reasonable care prior to creating a Status Determination Statement for each contract they have with heir contractors.

How will they assess their contractors’ IR35 status

They will not use HMRC’s Check Employment Status for Tax IR35 tool as their primary means of assessing their contractors’ employment status. However, they will use it to audit their own determinations.

So, here are two next steps for them prior to April 2020.

How will they roll out their contractor IR35 policy to their clients

Firstly they are working with their current clients to make their consulting relationships with them is explicit. They will make sure they have reliable SOWs in place.

They will use their experience of this in the public sector to help their existing clients. New clients will inherit the new contracts and working practices.

How will they roll out their contractor IR35 policy to their clients

Secondly, they will work with their contractors to tighten up their contracts to make their relationship explicit and the determination process auditable.

They will make these new contracts available for view to their contractors shortly.

They will also issue IR35 determinations of their contractors in February after the changes have been made.

How good is this news on IR35 to all contractors

This Company’s contractor IR35 policy is very good, and refreshing, news for contractors.

With the big banks once again copying each other and issuing blanket bans on contractors using personal service companies it looked like the future for contracting as we know it was bleak.

We’ve always said that it is relatively easy for companies and their contractors to avoid IR35. All it needed is some changes to contractors contracts with the companies (via their agencies) with the resultant changes to their working practices.

How much will this farce cost the country

However, this is all an expensive waste of time for this company and for all the companies who will have to go through this process They’ll end up in the same position as before but with lots more red tape and ongoing costs.

When the Government say that these IR35 reforms will bring in £3 billion in 4 years are they calculating the net Cost / Benefit by subtracting the cost to every large firm throughout the land?

The answer to that is No. Anyone doing a proper Cost / Benefit Analysis would show that this will cost the country money rather than make the country money.

What do the Conservative Government plan next for freelancers

And the Government announced in the Queen’s Speech that they are going to extend IR35 further. They said “We will increase fairness and and flexibility in the labour market by stopping employers and workers experiencing significantly different outcomes from flexible forms of working.”

Not again!

Why?

The Government’s contractor IR35 policy appears to be that they want to abolish them all.

Treasury Minister Jesse Norman said recently when answering a question in Parliament on IR35 “There is only 10% compliance in this area”.

One presumes he, Boris and Sajid intend to make the other 90% ‘compliant’ too.

Companies can help contractors stay outside IR35 like this company are doing. See our article How Companies Can Help Contractors Stay Outside IR35

See also 18 Ways to Stay Outside IR35 Courtesy of the Special Commissioners

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Comments

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1 COMMENT

  1. A sensible approach and the actual way ‘true’ contractors should be engaged – on a proper, outcomes and services based engagement. This is the exact model we advocate with all of our clients and advise the industry to use. Clean and clear separation of accountability and ownership. We’ve been doing this for 25+ years and now advise legal, insurance and staffing/recruitment organisations on how to build this model properly!

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