IR35 abuses by employers/clients

Ddeebbiiee

I am a contractor working in psychological at an independent school. The school have engaged my services as a selfemployed counsellor for the last 14 years. I have been issued with a contract covering  September to the end of the academic year (end of June) for every one of the 14 years. 

In starting talks yesterday the contractor told me they see me as employed and therefore coming under the terms of IR35. They told me they will be cutting my fee (by approximately half to two thirds) and advertising the role as two jobs; one of which I can apply for. 

I understood IR35 is an HMRC new rule brought about to deal with tax evasion.

I would take a huge drop in my fee in that I would take a huge reduction in my personal income and not be able to claim any travel or other expenses related to my self employment status.
Can anyone advise if this abuse of HMRCs IR35 and what appears to me to be a cynical manipulation of the intended purpose of this new HMRC ruling by taking  huge amounts of money away from contractors, is legally acceptable, and if so how it can be legally challenged.

p00hsticks

IR35 is not new - it's been around for at least 20 years, but I believe the rules have changed recently to put a stricter onus on employers to determine if people are genuinely self employed or should actually be regarded as being employed, in which case they will deduct income tax and national insurance from any payments.

It sounds as if the school are not willing to take the risk that you would not pass the IR35 criteria and so going forward are going to employ someone to take on at least part of the  role.  

It's been a while since I was a contractor, but from memory the sort of things you need to be asking yourself are

- Are you providing services for multiple clients ?

- Do you largely have autonomy in how you conduct your work, or do your clients tell you want to do ?

- Does your contract allow you to send a substitute person in your place if you were not available ?

- Do you provide the equpment for doing your job ?

The more you can answer yes, the more likely that IR35 won't apply, but at the end of the day it's now up to the organisation to decide, and many are simply deciding that going forward it's easier to simply assume that IR35 applies as a default. 

https://www.gov.uk/guidance/understanding-off-payroll-working-ir35

General_Grant

Ddeebbiiee said:

I am a contractor working in psychological at an independent school. The school have engaged my services as a selfemployed counsellor for the last 14 years. I have been issued with a contract covering  September to the end of the academic year (end of June) for every one of the 14 years. 

In starting talks yesterday the contractor told me they see me as employed and therefore coming under the terms of IR35. They told me they will be cutting my fee (by approximately half to two thirds) and advertising the role as two jobs; one of which I can apply for. 

I understood IR35 is an HMRC new rule brought about to deal with tax evasion.

I would take a huge drop in my fee in that I would take a huge reduction in my personal income and not be able to claim any travel or other expenses related to my self employment status.
Can anyone advise if this abuse of HMRCs IR35 and what appears to me to be a cynical manipulation of the intended purpose of this new HMRC ruling by taking  huge amounts of money away from contractors, is legally acceptable, and if so how it can be legally challenged.

From the school's viewpoint they would not want to pay more for your services than they do now.  As an employee you would have entitlement to paid leave and SSP which you don't have as self-employed.
You should have built into your self-employed rate an allowance for the lack of paid leave and considered the sickness aspect.  
Consider whether the new rate being offered looks reasonable when remembering the paid leave and what is like an insurance policy for SSP and the cost to the employer of employer's NI.

JohnDorian

If you have been at the same place for 14 years it is most likely you are a disguised employee.

steampowered

If you are really a disguised employee, then the school cannot reduce your hours or dismiss you, without that being an "unfair dismissal".

If you are working only for the school; and the school tells you what to do; and the school provides your equipment; and you are not allowed to use a substitute to do the job .... then you are likely in fact an employee rather than a contractor.

In which case you could ask to be treated as an employee and if they refuse or if they persist in reducing your hours, you could take them to an Employment Tribunal. The risk with this approach is if they decide you are actually a contractor they might just terminate your contract agreement, and then you are left bringing an Employment Tribunal claim to let the judge decide your status.

Thrugelmir

If you are based at the school. What travel and other expenses do you incur? 

motorguy

Thrugelmir said:

If you are based at the school. What travel and other expenses do you incur? 

He would have been able to claim mileage from his office (usually home) to his place of work

Sandtree

IR35 has existed for donkey years what has changed is who makes the determination and who is liable if the determination is wrong.

The very fact you have titled this thread "employers" would instantly suggest you are not an independent business and hence are inside or IR35 and so should be taxed as an employee.

unforeseen

motorguy said:

Thrugelmir said:

If you are based at the school. What travel and other expenses do you incur? 

He would have been able to claim mileage from his office (usually home) to his place of work

Not after 2 years he wouldn't. HMRC consider that if your contract exceeds 2 years or you know before that it will exceed 2 years at the same place then it is your permanent place of employment and you can not claim for the commute

p00hsticks

unforeseen said:

motorguy said:

Thrugelmir said:

If you are based at the school. What travel and other expenses do you incur? 

He would have been able to claim mileage from his office (usually home) to his place of work

Not after 2 years he wouldn't. HMRC consider that if your contract exceeds 2 years or you know before that it will exceed 2 years at the same place then it is your permanent place of employment and you can not claim for the commute

I;m not sure that this would apply here though - the OP (who I'm assuming from their username is actually female) says that they have had a succession of 9 month contracts running for the academic year from September to June, with a three month break in between each one.

unforeseen

I'm not an expert on tax but I would think that HMRC would look closely at those circumstances and consider it continuous with breaks due to school holidays. 

The rules for claiming state that period of continuous work can remain continuous even where there is a break in attendance.
One of the examples given involve a 3 month break.