New contract with bizarre provision for payment for no work

[northernladuk]

The reviewer's gone back to the client to ask (essentially) why the client has refused to remove the part in bold, above. The client hasn't responded today.

So you don't actually know if it's failed the IR35 check it not at present?

[WordIsBond]

This is stupid. Shows how IR35 skews business.

It is normal for businesses to have compensation for cancellation of a contract. But IR35 and MOO concerns distort normal business relationships. Someone needs to kill Gordon Brown's idea once and for all.

[LondonManc]

I just see it as a B2B disengagement clause, nothing about MoO to it.

They're obliged to compensate you if they choose not to have you complete work stated; there is nothing in that clause about the obligation to provide you with work, or to compensate you if they cannot provide you with work not covered in the statement of work. In fact, it reads as quite the opposite to me. I'd carry on, leave the clause in and take the gig because it reads even more like a business contract than a contract of employment.

[TheFaQQer]

I just see it as a B2B disengagement clause, nothing about MoO to it.

They're obliged to compensate you if they choose not to have you complete work stated; there is nothing in that clause about the obligation to provide you with work, or to compensate you if they cannot provide you with work not covered in the statement of work. In fact, it reads as quite the opposite to me. I'd carry on, leave the clause in and take the gig because it reads even more like a business contract than a contract of employment.

I think that the disengagement clause is what it's meant to be, but it's badly worded for businesses that face the prospect of an IR35 investigation.

If there is an investigation, HMRC will attempt to use the clause as showing MoO and make it much harder to fight that. If you then go on to lose, and it is shown that you had taken professional advice and ignored it, you may well open yourself up to being fined as well as being charged back tax and interest. Additionally, you may find it hard to get decent professional representation if you had a review, the contract was deemed a failure, and you ignored that advice and took the contract as being outside IR35.

Reword or remove.

[LondonManc]

I think that the disengagement clause is what it's meant to be, but it's badly worded for businesses that face the prospect of an IR35 investigation.

If there is an investigation, HMRC will attempt to use the clause as showing MoO and make it much harder to fight that. If you then go on to lose, and it is shown that you had taken professional advice and ignored it, you may well open yourself up to being fined as well as being charged back tax and interest. Additionally, you may find it hard to get decent professional representation if you had a review, the contract was deemed a failure, and you ignored that advice and took the contract as being outside IR35.

Reword or remove.

Good point, never considered that. Reword or move on looks like it then.

OP, could the reviewer recommend something that would be IR35 friendly (or at least IR35 neutral)?

[fiddlesticks]

The client's come back today and said they've changed their mind and are happy to remove the section in bold. They've not said why they wouldn't remove it, or why they've changed their minds.

So I'm good to go - thanks for your thoughts people.

[fiddlesticks]

So you don't actually know if it's failed the IR35 check it not at present?

The reviewer didn't indicate whether it was marginal or fail, just that they weren't happy and wanted to negotiate it away. They did say it was down to MoO though.

[northernladuk]

Ask them what your situation is if the client refuses to change it.

[TheFaQQer]

Ask them what your situation is if the client refuses to change it.

Why? The client has removed it:

The client's come back today and said they've changed their mind and are happy to remove the section in bold. They've not said why they wouldn't remove it, or why they've changed their minds.

So I'm good to go - thanks for your thoughts people.

[northernladuk]

Why? The client has removed it:

I knew that...... It was just there for, erm, for conversational reasons and completeness in case anyone in a similar situation reads the thread after searching like.