Consultant or Contractor

**Robwg** · 23 February 2007, 14:02

Nope - makes no difference at all.

**Cowboy Bob** · 23 February 2007, 14:02

Originally posted by Langkawi

Hi All,

Does it make any difference for tax or IR35 purposes if I am not a 'proper I.T. Contractor'.

You are an employee, not a contractor - hence IR35 does not apply.

Originally posted by Langkawi

I keep seeing all this stuff about IR35 and IT contractors but am confused as to why IT dudes have a different deal with big bad Gordon than the rest of us mere mortals.

IR35 is not specific to IT contractors, it affects all small businesses that work at client sites - builders, electricians, etc etc

**MickeyP** · 23 February 2007, 14:09

Would the fact that you were termed a Consultant rather than a Contractor in your contract have any bearing on IR35 however minor?

**Cowboy Bob** · 23 February 2007, 14:11

Originally posted by MickeyP

Would the fact that you were termed a Consultant rather than a Contractor in your contract have any bearing on IR35 however minor?

No. IR35 relates to how you conduct the job when on site. The contract itself is a bit of a red-herring in that and IR35 pass contract does not mean you are outside of IR35.

**oraclesmith** · 23 February 2007, 14:13

Originally posted by Cowboy Bob

You are an employee, not a contractor - hence IR35 does not apply.

Sounds like it. Langkawi - do you run a limited company ? If not, IR35 is nothing to worry about.

IR35 is not specific to IT contractors, it affects all small businesses that work at client sites - builders, electricians, etc etc

Too right. A mate of mine runs a building services firm and his subbies have to work for other clients occasionally so that he isn't seen as their employer. He doesn't want the employment relationship any more than they do. For builders etc there is the CIS scheme.

**MickeyP** · 23 February 2007, 14:22

Originally posted by Cowboy Bob

No. IR35 relates to how you conduct the job when on site. The contract itself is a bit of a red-herring in that and IR35 pass contract does not mean you are outside of IR35.

Ok thats fair enough. Hows about if the client at which you are working refers to you as a consultant during day to day activities? For example "This is our consultant Mickey P" when being introduced to a customer...

**Langkawi** · 24 February 2007, 17:07

Thanks for the feedback folks. In answer to a couple questions posed by repliers.

I am working via an agency on a contract to provide consultancy services to the financial organisation.

I am not an employee of the bank and have a choice between a PAYE or Ltd Comp contract with the agency. I am planning on setting up my own Ltd and using it. My contract would be between myself and the agency and likewise the agency have a contract with the bank.

Cheers,
Alan

**oraclesmith** · 24 February 2007, 19:59

Ok this is easy. You probably have contractors contract with the agency so you are a contractor.

Your contract is with the agency and what they introduce you as to the end-client is up to them. eg. employees of consultancy firms are usually introduced to clients as 'our consultant' but this doesn't distinguish between freelancers and employees. I mean, they're not going to introduce you as 'our contractor' are they? They could call you 'our project manager', 'our programmer' or whatever, but it doesn't affect your relationship with them.

The only difference being a 'consultant' would make is if you did ad-hoc consultancy - eg. directly selling consultancy days on specific (fixed price) pieces of work to various clients. In this case you would be easily outside IR35 because you would probably have multiple direct clients (or at least one or two current ones and some in the pipeline) and you would have to invest your own time and effort in unpaid pre-sales work, marketing, advertising and sales pitches etc. These consultants tend to sell days or fixed price work (eg. a finished website or system) on standard T&C's - they don't always have a contractors personal services contract in place.

You probably have a contract with the agency which says something to the effect that you will do X for us for Y months (typically 3 or more months), so you're really a contractor. Whether you are inside or outside IR35 depends on your contract wording and actual working practises - ie. whether you are expected (and do) act like a supplier or an employee.

In my opinion.

Consultant or Contractor