IR35 Chronicles XVIII

This is part eighteen of our serialisation of an IR35 enquiry. To access the previous parts please visit our IR35 Chronicles Index.

A dejected Neil Down telephoned his advisor following Dee Fender's e-mail to him attaching a copy of Mr Turpin's latest stonewall correspondence. They discussed and chewed over the salient points for approximately thirty minutes. Mrs Fender then once again enquired of Neil if there was any further information he had or could think of that would help counter Turpin's arguments. It was then that Neil revealed that Graham Hargreaves, his former Project Manager at BIG IT, had recently dropped him an e-mail, as the two hadn't been in contact for a while and Graham wanted to “touch base” with Neil.

Graham had recently left BIG IT following an acrimonious and bitter dispute between the two parties that had left Graham with little choice but to tender his resignation. He was financially compensated by his former employer as a goodwill gesture and this had allowed him to set up his own IT business. Amongst other things, Graham wanted some advice from Neil about contracting in general and also enquired as to how Neil's tax investigation was going.

Mrs Fender's ears pricked up at this news and, with excitement in her voice, asked her client if he would approach Mr Hargreaves again with a view to completing and signing the 'Statement of Working Practices' document. Now that he was no longer an employee of BIG IT Dee figured that the shackles may well be off and that he should be unrestricted from airing his views. Neil agreed and at once his spirits were lifted. He asked Dee Fender to e-mail him a further copy of the document as he had not saved the original. Mrs Fender acknowledged his request and gave explicit instructions that Graham should e-mail her a draft copy of the document for her perusal before it was eventually signed, dated and submitted to HMRC. That way she would be able to make suggestions about incorrect terminology and highlight any disparities. She made it clear that she would not attempt to tamper with the facts but rather assist in presenting them in their best light.

A few days later Neil Down again telephoned his agent to confirm that Graham Hargreaves was more than willing to fill out the 'Statement of Working Practices' and had offered to support Neil in any way he could. He told his advisor that Graham would be e-mailing the document to her shortly for her approval. Both the IR35 expert and client felt that just maybe the tide was turning in their favour.

A week later Dee Fender received the promised e-mail from Graham Hargreaves attaching the much anticipated 'Statement of Working Practices'. Due to being unaware of the machinations of IR35, Graham had used some employment terminology and had been uncertain how to answer a few of the questions. Mrs Fender therefore offered advice and guidance in re-drafting the document but at all times remaining true to the facts. Finally, the document was completed to the IR35 expert's satisfaction, signed and dated by messrs Down and Hargreaves, and was submitted to Mr Turpin at HMRC. The 'Statement of Working Practices read as follows (bold italics denote Graham Hargreaves own writing):

1. Please state the name of the person, firm or company providing the services………..BSOD Ltd.
2. What is the precise nature of the services……………………..IT consultancy on various projects.
3. When did the services commence …………………01/01/2006.
4. When were the services completed………………..30/06/2009.
5. If there is a requirement for the work to be done by a specific individual, the name of that person is:…………………………..Neil Down as representative of BSOD Ltd.
6. Should the person named at (5) above be unavailable, does the service provider have a right/obligation to provide a replacement worker at the service provider's own expense…………………yes, as far as I am aware.
7. Does the service provider have the right to undertake the work using any workers of the service provider's own choice, and at the service provider's own expense, provided the workers concerned have the requisite skills…………………….yes.
8. Does the service provider have the right to subcontract the services to another person, firm or company, provided the subcontractor has the requisite skills…………………….not known but unlikely.
9. What is the basis of payment? Wage or salary/commission/fixed price/hourly rate/daily rate or other, please specify…………………….hourly rate.
10. What are the location(s) at which the services are provided…………………….BIG IT site and BSOD Ltd premises.
11. Does the service provider have the right to provide the services at or from a place of the service provider's own choice………………………..yes albeit restricted.
12. If the services have to be provided at a place decided by the customer or client, what are the reasons………………………………necessity to work on BIG IT systems and interact with project team members and security.
13. Does the customer or client have the right to instruct the service provider to do other work not included in the services described at (2) above…………………….no, only request and negotiate.
14. How are the working hours decided? By the services provider/by the customer or client/by mutual agreement………………………..by BSOD Ltd but with reference to project deadlines.
15. Does the customer have the right to instruct the service provider about working methods……………..no.
16. What is the nature of any rules or procedures governing the customer or client's own workforce that also apply to the service provider……………………….health & safety & security.
17. What is the nature of the equipment that has to be supplied by the service provider…………IT and office equipment for work undertaken at BSOD Ltd's premises and mobile phone.
18. What is the nature of the equipment that has to be supplied by the customer or client………..laptop because of security reasons, temporary desk & chair.
19. Does the service provider have an obligation to compensate the customer or client for any damage or loss caused by the service provider's negligence……………yes, as do all contractors.
20. Does the customer or client expect the service provider to rectify any defective work at the service provider's own expense……………………..yes.
21. Does the customer or client prevent the service provider from doing work for other customers or clients during the course of this engagement……………………no, provided that the customer is not a competitor of BIG IT.
22. What is the nature of any benefits provided to the service provider's own employee's by the customer………………………..none whatsoever.

Signed on behalf of the customer or client:

Name:  Graham Hargreaves

Position: Former Project Manager at BIG IT

Signature…………………………………………………………………….

Date…………………………………………………………………………..

Signed on behalf of the service provider:

Name:  Neil Down

Position:  Director of BSOD Ltd

Signature…………………………………………………………………..

Date………………………………………………………………………….
 
The 'Statement of Working Practices' was accompanied by a letter from Graham Hargreaves that simply verified his credentials when he was a former employee of BIG IT, and also one of his old BIG IT business cards as further endorsement.

Dee Fender reaffirmed her previous arguments in her letter to Turpin and invited him to reconsider his opinion.

Next week:  Will Turpin relent?