LinkedIn and your IR35 Status

LinkedIn and your IR35 Status

We all know that to be considered outside IR35 that you have to satisfy a number of conditions. Chiefly these relate to Direction and Control; Right of Substitution and Mutuality of Obligation. But in addition, other factors are considered. Amongst other things, the question of whether you are Part & Parcel of the organisation you are contracting to, or in business on your own account (IBOYA) is becoming increasingly common.

In recent weeks, I am increasing asked whether a contractors LinkedIn profile would have any impact in a status enquiry. While I do not believe it would be a material factor, and is unlikely to stand up in court, if you are saying on LI that you are “Lead Project Manager at Lloyds Banking Group” rather than “Director at Joe Bloggs Ltd contracted to Lloyds Banking Group on the ABC change project” then at the very least you are going to have one less awkward question to ask.

It’s a small part of a very large jigsaw but establishing yourself on LinkedIn as IBOYA at the very least confirms your mindset.

You’d also be well advised to avoid terms such as “when I worked at” or “I was employed to do X” as these would suggest an employed position rather than that of an independent consultant. Similarly, you’d want to keep an eye on the endorsements and recommendations, to ensure that the language used there is appropriate too.

I must reiterate that this is not a major part of any IR35 defence strategy but is merely good housekeeping and might help avoid unnecessary stresses should HMRC actually coming knocking. Picture the scene, you’ve spent the afternoon asking questions from the badly dressed HMRC agent, then he asks in his best Columbo accent “Just one more thing, you’ve been telling us all day how you’re an independent consultant in business on your own account, yet your LinkedIn profile says your job title is Business Analyst and your employer is Royal Bank of Scotland. Can you explain that?”

Oil & Gas giant Wood declares on IR35 reforms

Oil & Gas giant Wood declares on IR35 reforms

Wood, the oil and gas company based in Aberdeen, have today notified all of their PSC contractors of their plans post April 2020.

Wood are currently working alongside tax consultancy Grant Thornton to review the status of all UK-engaged contractors and they aim to have this process completed by mid-December and the contractors notified early 2020.

A couple of key points are that Wood are not using the CEST tool to make these determinations and they are being conducted by the Wood managers, not a central function. This is good news as the managers will be more attuned to the working practices and therefore better able to make the important decisions.

If the contract is judged to be outside of the scope of IR35, then it will remain in place after April 2020 although there is an indication that this maybe under revised contractual terms. We expect this will most likely be under a Statement of Works type of arrangement.

If the contract is deemed inside IR35, the options are as you would expect: either apply for a staff position or move to agency PAYE where “the rate will be reduced recognising the costs to be borne by the Wood engaging company e.g. costs like employer NIC.” Interestingly, there doesn’t seem to be an umbrella option.

It’s good to see that Wood are taking the lead on this and there are definite positives to take from the announcement but, as ever, the devil will be in the detail, and this won’t become clear until the reviews are completed next month. But it’s definitely good news that the blanket approach is NOT being taken.

If you’re at all concerned how the IR35 reforms will affect you, please feel free to contact us through the usual channels. We are very keen to engage with as many PSC contractors as we possibly can at this pivotal time in the contractor community.

HMRC update position on historical position post April 2020.

HMRC update position on historical position post April 2020.

In their policy paper “HMRC issue briefing: reform of off-payroll working rules” published on 22 October 2019, HMRC have stated that “have taken the decision that they will only use information resulting from these changes to open a new enquiry into earlier years if there is reason to suspect fraud or criminal behaviour.”

This is absolutely welcome news and will give contractors who are deemed inside IR35 a little comfort that their current contract will not be subject to enquiry purely because of a decision made by their engager.

It does not state that the information will not be used in the course of a random enquiry, or indeed an ongoing enquiry, just that it will not use the decision to open a new enquiry on the basis of it. The cynical among us might suggest that a whole screed of new enquiries could be opened up on “IR35 targets” before any decisions have been made.

This is definitely good news for contractors and its always good to hear HMRC communicate in clear, non-fuzzy language. Because we all know HMRC always do what they say, right?

It’s not the first time I’ve said this, and I’m sure it won’t be the last, but HMRC are a very fickle and capricious adversary and it is very difficult to second guess them.

More informaiton on this to follow.

RBS announce IR35 position

RBS announce IR35 position

Acumenica has seen an email which has been issued by one of RBS’s Staffing Solutions providers and it doesn’t look good.

The bank has stated that after 6 April 2020, most contractors won’t be able to work for RBS via their own limited company.  They will therefore be subject to PAYE deductions for income tax and National Insurance Contributions.

Therefore RBS will not engage with most limited company contractors after 29th February 2020 and they will either be expected to engage through an umbrella or use the staffing solutions firm’s PAYE solution. Presumably NatWest and Ulster Bank will also take the same position.

Whilst this is obviously not great news, there is a chink of light in that they have stated they will “most contractors will not be able to work for RBS” which suggests that some will. We expect when the details comes down, it may well be that this is similar in approach to Tescobank in that contractors need to start working on a more business-like footing to be considered appropriate for contracting positions. 

It’s also telling that RBS’s default will be Umbrella or agency payroll which may well leave the door open for a reversal should things change.

All Acumenica clients who are affected by the news can be assured that we are working hard on a solution. We’ve a ways to go but we’re confident we can continue to support you beyond April 2020.

Will the Off-Payroll Extension have any retrospective implications?

Will the Off-Payroll Extension have any retrospective implications?

With many end-clients deciding to make blanket decision and deem all contractors inside IR35 after April 2020, we’re asking what impact could this have on the contract if you have previously deemed it to be outside. Surely, it stands to reason that, if you’re inside after April 2020, then if you were engaged on exactly the same terms before April 2020, the whole for this contract would also be deemed inside, and therefore open you up to further scrutiny from HMRC and perhaps ultimately a status enquiry?

HMRC have stated that they “will not carry out targeted campaigns into previous years when individuals start paying employment taxes under IR35” and that “decisions about whether workers are within the rules will not automatically trigger an enquiry into earlier years. They key words in these sentences are “targeted” and “automatically” both of which add a layer of ambiguity to the statements. 

I guess it comes down to how much you trust HMRC to stick to their word. At Acumenica, we remain to be convinced that HMRC will be able to resist the allure of such low hanging fruit. The Treasury will come under enormous pressure to ensure that these changes are a success and will seek to maximise the tax recovery. Your current contract may well be in their sights.

So what’s to be done? If you believe that the changes could make you an increased target there are a few things that you can do between now and April:

  • If you haven’t already done so, get your current contract and working practices reviewed. Either use the HMRC’s own CEST tool or get an independent review carried out. While this might not help prevent an enquiry opening, it will perhaps help close it down quite quickly.
  • Consider not accepting your contract under the new terms. Might be a bit extreme, but if you really and truly believe you’re outside IR35 have the courage of your convictions and walk away. If you don’t accept the new terms there are two benefits: (a) There won’t be a link between the contracts and therefore HMRC are less likely to look closely, and (b) If enough people do this, the client will be forced to sit up and take notice.
  • Close down your company. Granted this will not prevent HMRC reviewing your contract status per se, but it will make it more difficult, and this could be a survival of the fittest play: HMRC won’t be able to investigate every contractor and are likely to pick off the easy targets. If you’re seen as a difficult target, they may well move onto someone else.
  • Get some tax enquiry insurance. If you do become the subject of an enquiry, it’s very expensive and very stressful. Make sure your advisers are up to the job to help with the stress bit and get some insurance to defray the cost/ Acumenica clients can get this via the office for £159 offering £100,000 in cover for fees  and costs arising as a result of an enquiry. 

It’s important to note that even if you take the steps recommended above, you might still be selected for enquiry. On the other hand, even if you do nothing, you might NOT be selected. HMRC are a fickle bunch and it can be very difficult to second guess them. Best advice is to keep compliant, do all the right things, plan appropriately and keep your fingers crossed.

Tescobank declares position on IR35

Tescobank declares position on IR35

Tescobank has become the latest financial services company to announce their plans in light off the proposed Off-Payroll Extension next April.

Tescobank are currently in a holding pattern while they assess the options for managing off-payroll resource, but in the meantime:

Any new contracts and contract extensions can be offered but are limited to the end of March 2020

For existing contracts which have an end date beyond March 2020, Tescobank will expect on 1st April 2020 that the contract is inside IR35 and treat it accordingly.

Crucially, there will be no rate adjustment.

So, that looks like another inside blanket decision. However, Tescobank have conceded that when hiring on a consultancy basis, if it is a truly flexible resource brought in to deliver a specific outcome, it’s less likely to be in scope of IR35 but will still need to be assessed under the current legislation. 
This position reinforces the guidance in our article Want to Avoid IR35? Stop Acting Like An Employee. If Tescobank will engage flexible resources on an outside IR35 basis, then you need to ensure that your services are delivered on a truly flexible basis.