Where a contract accurately reflects the actual working practices and reality of the project, HMRC and tribunal judges will use the contract to determine IR35 status (this position is confirmed in HMRC’s own ESM0507 employment manual).
Here I include some helpful tips to consider when reviewing your company’s contract for IR35.
A clause allowing the right to send a substitute to the end client instead of yourself is an important indicator of genuine self-employment.
Should your company actually exercise the substitution clause any investigation into the contract’s IR35 status would likely end immediately. A clause allowing your company’s staff (i.e. you) to control how you provide the services requested, where you provide the services from, when you provide those services and what equipment you use will also likely result in an outside of IR35 verdict.
A clause which indicates that the agency and/or end client are not obliged to find additional work for your company to complete will help to demonstrate that you are an external subject matter expert only required for a specific piece of work and that no party has any further responsibilities or obligations.
A clause which demands that your company corrects any defective work that it has produced in its own time and this time will, therefore, be unbilled help to show that you are running a real business and taking real financial risks.
Any clauses that restricts your company’s ability to work for other clients or that requires you to ask for permission to take time off should be removed.
Please note that the above hints are only a high-level summary and therefore professional insurance-backed contract review advice should be sought from the likes of Qdos.
Posted By
AR Tax Accountants
£59/month accountants for contractors, freelancers, consultants, interims and locums
The above information is just for guidance purposes only and is not a substitute for professional advice and consulting the legislation.
