PCG and Revenue agree clearance procedure for IR35 contract opinions

In this issue:

• Contract Opinion Document
  
• PCG AGM & Conference
  
• Fringe meeting at Labour Conference
  
• New PCG draft contracts
  
• Client Briefing Document

If you experience difficulties reading this newsletter, a full copy is available on the web site

Contract Opinion document

During the JR, the judge made damning comments regarding uncertainty surrounding IR35 and the Inland Revenue’s handling of the legislation.

Already PCG has issued guidance to reduce the uncertainty - the “Audit” document is a checklist to demonstrate you are in business on your own account.

Recently a PCG team met with the IR and agreed further guidance aimed at reducing uncertainty. The Clearance Procedure document provides guidance as to what information you need to present to the Revenue to ensure they are aware of all relevant facts when they make an IR35 assessment of your business.

The purpose of the Clearance Procedure is:

• to ensure members understand what is required to pass the status tests,
  
• to assist members to apply those requirements in their working relationships
  
• to demonstrate to the Revenue wherever possible what the correct interpretation of status tests is in the situation of knowledge based contracting and
  
• to obtain Revenue agreement to practical guidance that assists PCG members to pass those status tests.
  

The Inland Revenue accepts our guidance as being objective and constructive. The PCG document will be passed to frontline Revenue Inspectors so that they are aware that information they receive which meets these guidelines should normally be adequate for them to issue a contract opinion without needing to seek further information – either from the contractor or the agent/client.

NB *Revenue Contract Opinions – PCG policy*

The development of this clearance procedure does *not* mean that PCG has changed its policy on seeking Revenue clearance. PCG has said all along that seeking a Revenue opinion on your contract is a matter for the contractor to decide taking into account the factors for and against. (see link below for further details)

The Clearance Procedure covers each typical scenario:

1. Written contract directly between client and service company.

2. written contract between service company and agency, copy of agency/client contract available to contractor

3. written contract between service company and agency, copy of agency/client contract not available

4. no written contract, but arrangements made directly between client and service company.

Most important of all is the suggested client confirmation letter. All contractors should seek to obtain such a letter whenever there is any question that the actual terms under which they are working differ from either those set out in their contract or might be in conflict with the terms of any other contracts in the chain between them and the client e.g. the agent/client contract.

A sample letter is provided. Full details:

PCG AGM & Conference

All members should have received our recent mailing, including conference details. If you have not yet sent in your booking form, please do so ASAP.

The conference is more than an opportunity to hear all the latest PCG news, as the programme and speakers will provide you with a first class overview of issues that matter in the industry.

Accountax, Bond Pearce and Anne Redston of Ernst & Young are giving papers, as well as specialist advice from a marketing consultant. The conference is an opportunity to make contact with real experts and relate key issues to your business. In addition, meeting other members and PCG associates (who are supporting the day in various ways) will give you contacts to help explore business opportunities.

NB. If you did not receive your mailing it may be you need to update your contact details

If your details are correct and there are no other reasons for delay (eg you are abroad) then please contact Jo Hinton Joanne@pcgroup.org.uk

PCG fringe meeting at Labour conference

The PCG fringe meeting will take place at the Quality Hotel in Brighton on Wednesday 3rd October. Members are welcome to attend – our speakers have confirmed their support. The fringe will address “The Case for Freelancers, Small Business and the Self-employed”

New PCG draft contracts

Version 5 of the PCG draft contracts is now available, including post JR updates. Anne Redston, partner at Ernst & Young, has reviewed the new contracts and has confirmed that

"Where the contract is put in place and it accurately reflects the relationship…then, based on current case law, the contractor will not be caught by IR35."

Client Briefing Document

PCG is gaining some early success and positive feedback from clients who have seen our client briefing document. Please point your clients to this (public) resource:

--

PCG Press