Is this contract drifting into IR35?

**simondolan** · 21 December 2006, 12:03

Mail me over a copy of your contract - I'll take a look FOC if you wish.

Originally posted by Limited

Hi, usual apologies if this is covered elsewhere - and sorry that this has turned into a long post

I work in a fairly niche market with plenty of different customers for short projects working direct, through agency or another consultancy. So I rush around with laptop, get statement of work for everything I do, quite a bit of financial risk in some of my work etc etc

but - most of the time the contract is quite undefined - eg work on project x for up to 20 days, dates and times to be agreed. I'll sit down with the client and plan the work and the days that I will be on site. They only pay for the days I use and if its looking like its going to take longer then I tell the client and they decide whether to order more work. All standard stuff and not MOO I guess

So I started work with a new customer a few months ago. The usual vague requirements. Agreed to deliver up to 60 days work. Obviously fixed dates cannot be worked out that far in advance as I still have to fit it around other clients, so we agreed to aim for 4 days a week (now 3). And so we started on pretty much the same basis as I would do with any customer.

So over the months its started to feel like I actually work there (even though part time). I've never really worried about IR35 before as I guess I've never even come close, but is it possible that this contract is drifting towards IR35 as they now want to buy some more days? I didn't start with that intention and my T&Cs are the same as for all my assignments (certainly not a sham in those cases)

Some facts
- HR requires I have a pass to get in building due to length of time I'm there
- practicallity requires I have my own desk, pc, login, email account
- was invited to the xmas party (didn't go because I was ill)
- I do decide which days I come in so that I can fit other work in - but usually try to fit around what this client needs
- I try to match working hours to not look like I'm skiving
- I get a constantly updated list of (quite detailed) requirements and priorities from the PM (does this count as control?)
- While waiting for other areas of the project to catch up I have done some work on other areas of the system (didn't hear the alarm bells)

Any thoughts please? I know I could pay for some advice but thought I'd try and get some for free

thanks

**Flubster** · 21 December 2006, 12:04

You're in IR35 and I'm ringing Gordo right now.

**Limited** · 21 December 2006, 12:06

thanks for the offer simon, but T&Cs have been checked already. SOW just refers to T&Cs. But it is the reality of the situation that I'm worried about

**Flubster** · 21 December 2006, 12:07

Originally posted by simonsjdaccountancy

Mail me over a copy of your contract - I'll take a look FOC if you wish.

Obviously too much time on your hands. You should be in wind-down mode. On the other hand, I have a few contracts here to be reviewed in you fancy something to do this afternoon.

**simondolan** · 21 December 2006, 12:09

Originally posted by Flubster

Obviously too much time on your hands. You should be in wind-down mode. On the other hand, I have a few contracts here to be reviewed in you fancy something to do this afternoon.

Sure - no problem

**Denny** · 21 December 2006, 12:22

Originally posted by Limited

Hi, usual apologies if this is covered elsewhere - and sorry that this has turned into a long post

I work in a fairly niche market with plenty of different customers for short projects working direct, through agency or another consultancy. So I rush around with laptop, get statement of work for everything I do, quite a bit of financial risk in some of my work etc etc

but - most of the time the contract is quite undefined - eg work on project x for up to 20 days, dates and times to be agreed. I'll sit down with the client and plan the work and the days that I will be on site. They only pay for the days I use and if its looking like its going to take longer then I tell the client and they decide whether to order more work. All standard stuff and not MOO I guess

So I started work with a new customer a few months ago. The usual vague requirements. Agreed to deliver up to 60 days work. Obviously fixed dates cannot be worked out that far in advance as I still have to fit it around other clients, so we agreed to aim for 4 days a week (now 3). And so we started on pretty much the same basis as I would do with any customer.

So over the months its started to feel like I actually work there (even though part time). I've never really worried about IR35 before as I guess I've never even come close, but is it possible that this contract is drifting towards IR35 as they now want to buy some more days? I didn't start with that intention and my T&Cs are the same as for all my assignments (certainly not a sham in those cases)

Some facts
- HR requires I have a pass to get in building due to length of time I'm there
- practicallity requires I have my own desk, pc, login, email account
- was invited to the xmas party (didn't go because I was ill)
- I do decide which days I come in so that I can fit other work in - but usually try to fit around what this client needs
- I try to match working hours to not look like I'm skiving
- I get a constantly updated list of (quite detailed) requirements and priorities from the PM (does this count as control?)
- While waiting for other areas of the project to catch up I have done some work on other areas of the system (didn't hear the alarm bells)

Any thoughts please? I know I could pay for some advice but thought I'd try and get some for free

thanks

Although you have some flexibility around your working arrangements with the client, I would still suggest that you are dangerously bordering on IR35 inclusion even if you do fit your work around other client work (which is in your favour). However, there is too much permission being sought and you don't have a formal Schedule of Works drawn up detailing what significant pieces of work need to be completed within the specified contractual period. This points to implied MOO as it is your time (and on site?) that is deemed siginficant and because you are given any bits of work to make up the time rather than the contract focusing on the work that forms the basis of the contract in the first place.

I would adjust your commericial relationship with this client just to stay on the safe side.

**Limited** · 21 December 2006, 12:53

Originally posted by Denny

Although you have some flexibility around your working arrangements with the client, I would still suggest that you are dangerously bordering on IR35 inclusion even if you do fit your work around other client work (which is in your favour). However, there is too much permission being sought and you don't have a formal Schedule of Works drawn up detailing what significant pieces of work need to be completed within the specified contractual period. This points to implied MOO as it is your time (and on site?) that is deemed siginficant and because you are given any bits of work to make up the time rather than the contract focusing on the work that forms the basis of the contract in the first place.

I would adjust your commericial relationship with this client just to stay on the safe side.

Thanks

I've been trying to work out how to arrange this differently

normally if I arrange a site visit and its cancelled at short notice then I would still charge for that day - (MOO? - surely not)

sometimes I get v busy and would encourage customers to get a date in the diary quite a bit in advance

this is really a combination of both but with flexibility to suit me. Do I just need to expand the areas of work that I will be involved in my SOW. Now this project has gone live its difficult to work out a schedule of work other than
- today - fix things quickly before users notice
- tomorrow - think of good excuse why it works like that

**rootsnall** · 21 December 2006, 13:50

Sounds like you are one of the safer contractors amongst us. Stop worrying so much !

I'm not sure how true it is in reality but the perception I have always had is that if you are doing lots of different 'shortish' contracts you are an unlikely IR35 target. Take out some sort of investigation insurance to put an initial buffer between you and the taxman and I would think if they are only chasing relatively small amounts of money for each contract they won't bother. I know some contractors who have been at one client for years and would get slaughtered if they lost an investigation, if I was in that boat I would be more worried.

Does anybody know how much info the taxman has when they first decide to investigate you !?

Thinking about it they may only have your annual accounts and no idea of how the money has been earned. Would they only get to see your individual contracts once a full blown IR35 investigation is under way ?

**Denny** · 21 December 2006, 13:55

Originally posted by Limited

Thanks

I've been trying to work out how to arrange this differently

normally if I arrange a site visit and its cancelled at short notice then I would still charge for that day - (MOO? - surely not)

sometimes I get v busy and would encourage customers to get a date in the diary quite a bit in advance

this is really a combination of both but with flexibility to suit me. Do I just need to expand the areas of work that I will be involved in my SOW. Now this project has gone live its difficult to work out a schedule of work other than
- today - fix things quickly before users notice
- tomorrow - think of good excuse why it works like that

Again, you have to be very careful about charging when there is no work, even if it is cancelled at short notice with no prior warning. I would put in your own terms that there is a call out charge or 'on call' charge applicable for cancellation at short notice, however the work that was cancelled still needs documenting otherwise what are they cancelling apart from your time? You also need to ask yourself what justification would you have for charging an' on call' fee unless you had other work that was cancelled leading to material losses? In any event, if it was justified it should certainly be set at a rate that covers just your admin overheads not the same fee you would charge as if you were actually doing the 'work' (time) that was cancelled. After all, if you call out a plumber, and he arrives but you've fixed your own leaky tap, they don't charge out the entire rate for fixing the tap do they? They charge out a nominal rate to cover overheads and inconvenience of loss of business - usually a fixed rate of about £40-60.

If this is not the case, and there is no loss of business elsewhere, then an 'on call charge' is hardly applicable and could be deemed as an unlawful charge and could be recoverable by the client (isn't that what banks are having to do now they've been rumbled for excessive charges on late payment fees).

The whole point about being in business (IR35 exempt) is that there are real risks associated with the business and that you have invested in business opportunities that could result in a loss. What better way to demonstrate that except by not charging when there is no work (in the absence of no material losses gained from lost business elsewhere).

If you are still charging without the above being a probability then you are well within the realms of MOO and therefore could be deemed as acting as an employee as it implies that they have to provide you with work and you are entitled to be paid. Not good for IR35 exemption.

Is this contract drifting into IR35?