How does IR35 affect this scenario?

pmeswani · 21st August 2008, 13:25

I worked for a company about 10 years ago as a FTE / FTC for 2 years. I have applied for a job with them for a short term contract. Does IR35 come into play if I enter a contract with this company?

Also, they have put a clause in the contract (which is non-negotiable) where they are the only ones who can terminate the contract. I suspect I will fall foul of IR35 if I end up working for them on the short term contract. Any views / advice would be much appreciated.

DaveB · 21st August 2008, 13:32

IMO the gap between permanent employment and the contract is long enough that IR35 is irrelevant in this case. If you had stopped being a permie on a Friday and gone back as a contractor the following monday then yes, you would have been caught, thats what IR35 is intended to prevent.

As far the the notice period is concerned my understanding is that having the client able to give notice but not yourself, or rather your ltd co. is a good thing as far as IR35 is concerned since it disproves mutuality of obligation.

You could always get the contract checked out professionally for a proper answer.

malvolio · 21st August 2008, 13:38

HWS - neither of your queries are pointing to being IR35 caught; quite the opposite in fact.

pmeswani · 21st August 2008, 13:38

Quote:

Originally Posted by DaveB

IMO the gap between permanent employment and the contract is long enough that IR35 is irrelevant in this case. If you had stopped being a permie on a Friday and gone back as a contractor the following monday then yes, you would have been caught, thats what IR35 is intended to prevent.

As far the the notice period is concerned my understanding is that having the client able to give notice but not yourself, or rather your ltd co. is a good thing as far as IR35 is concerned since it disproves mutuality of obligation.

You could always get the contract checked out professionally for a proper answer.

If I get the contract, I plan to get it checked out before I sign it (unlike what I did with my current contract, but turned out that I was ok).... thanks for the response... was a bit nervy about the clause. Would have gone ahead with the interview regardless, but would have had to think long and hard before accepting the contract (if I get offered it).

NotAllThere · 21st August 2008, 14:06

Of course you not being able to give notice is bad for your business, so you might want to negotiate on that point.

pmeswani · 21st August 2008, 15:07

Quote:

Originally Posted by NotAllThere

Of course you not being able to give notice is bad for your business, so you might want to negotiate on that point.

I did ask the agency if this was negotiable. In the words of Little Britain. "Computer said no." As the contract is a shortish one and the rate is fairly good, I can't see there being a problem. The client itself is a reasonable company to work for (one of the major players in the IT world), so unless things go pearshaped, I should be ok.

NotAllThere · 21st August 2008, 19:00

TBH, I've never had a problem with no-notice.

pmeswani · 21st August 2008, 19:58

Quote:

Originally Posted by NotAllThere

TBH, I've never had a problem with no-notice.

It's not a major show stopper, but I haven't seen that type of clause before.

Turion · 21st August 2008, 21:10

Everything in a contract is negotiable. I've changed 'non-negotiable' no-notice clauses simply be insisting that they are equal or I don't take the job. As for IR35, no notice clauses are bad as you are obligated to finish the contract no matter what - hardly a pointer to being in business.

malvolio · 22nd August 2008, 07:08

Quote:

Originally Posted by Turion

Everything in a contract is negotiable. I've changed 'non-negotiable' no-notice clauses simply be insisting that they are equal or I don't take the job. As for IR35, no notice clauses are bad as you are obligated to finish the contract no matter what - hardly a pointer to being in business.

That's about as wrong as you can get, on several levels...

The definitive word on this is from Dave Smith of Accountax: assymetric notice periods are not a problem. the ability to step out of a contract is a good thing but not of earth-shattering importance. However, putting yourself in the position of having to work when there is no work to do, or for your client to pay you when there is no work to do, which is what a set notice period implies, is not a good thing. So get a notice period if you want, but be mindful of the impact on an IR35 defence.