IR 35 Friendly contracts – “Project Based” of utter importance.

[2uk]

How is your contract schedule worded ? Do you have clearly defined deliverables part of a specified project ? According to Lawspeed this is the single most important point in an IR35 friendly contract along , of course, with corresponding actual working practices.


http://www.lawspeed.com/providers/ir...schedules.aspx

[Moscow Mule]

I'm interested in how folks who do support roles manage to get themselves outside of IR35? I always thought it would be impossible, but clearly some are acheiving it?

[VectraMan]

And how is this not completely incompatible with having a contract term (which is how most of us work)? And for that matter, it doesn't seem to fit very well with being paid per hour/day either.

[malvolio]

I'm interested in how folks who do support roles manage to get themselves outside of IR35? I always thought it would be impossible, but clearly some are acheiving it?

People alwayw think it fails on D&C, since for example you have to be on site at given times. However, since you can't actually fulfil the task unless you are on site at the same time as your clients' staff, it's hardly D&C, is it? Add a decent substitution clause, and the MOO is no different to anyone else (as in although it's unlikely a support weenie will have no work to do, if it does happen there's still no obligation they should be paid) and Robert is your mother's brother.

As I keep saying - and one day people will listen - only the lazy or terminally dense contractor needs to be inside IR35. Incidentally, QDOS's relaxation of the rules under which they offer TLC35 seems to indicate they agree with me.

[ruth11]

"As I keep saying - and one day people will listen - only the lazy or terminally dense contractor needs to be inside IR35."

Malvolio
Having read some cases lately regarding people who have lost appeals against the IR when their contract appears to be water-tight outside IR35 (and working practices for that matter), how can you say something like this? It would appear that the IR are being a lot more picky about what they concede as being outside IR35 and are twisting things around in order to get their way.

One such case (already mentioned in another thread - sorry for the dodgy formatting):

IR35 Synaptek Ltd v Young STC543 - Personal service companies (operating Salary & Dividend) and agencies
Even with concurrent clients, working your own hours, using your equipment and professional indemnity insurance, you can still fall under IR35 provisions
Key lessons from this case
 There is no single test that discriminates between contracts of service (employment) and contracts for services
 If there is a master-servant relationship and a specified individual commits to completing work it is likely to be a contract of service
 Different weights can be applied to different provisions of contracts; being "in business on his account" could be outweighed by, for example, an obvious "master-servant" relationship
 Contracts that specify exact hours and for a fixed period are more likely to be considered contracts of service than those focusing on specific project deliverables.
Summary of the case
Background
Gordon Stutchbury provided software engineering services to clients through his own company Synaptek Ltd and via a contract with agency NES. Synaptek did not contract directly with EDS, the client.
Why did the Inland Revenue act?
The IR considered that had there been a direct relationship between Mr Stutchbury and EDS, it would have been a contract of service, not a contract for services, and despite there being other concurrent clients during the period, concluded payments were Mr Stutchbury's personal income.
Why did the contractors appeal?
Synaptek's appeal was based on:
 There being little reasoning in the IR's case, apart from cited cases
 The IR incorrectly used some cases to illustrate their arguments; they "misdirected themselves in law"
 There were points of law relating to the IR creating a hypothetical contract, contracts normally being concerned with points of law and the IR's investigations dealing with fact
 Mr Stutchbury's right of substitution and the want of mutuality of the relationship with EDS
 Concurrent clients during the work for EDS, including other clients on the same site as EDS
 Mr Stutchbury worked no specific hours (eg nine to five), came and went to suit his own schedule and assisted other companies on site during the working day
 The contract with NES, saying Synaptek was responsible for its own training, provisions of equipment, insurance and indemnifying NES
 Mr Stutchbury using his own reference books as tools of trade on site with EDS.
Who won and why?
The contractor's grounds for appeal appeared strong and many were classic IR35 defence strategies. However, the IR won because the judge considered:
 Time was the issue in the contract, a standard 37.5 hour "working week", not specific project deliverables
 Although there was the right of substitution, the right was never sought and also required permission from the client
 When the IR created a hypothetical contract between EDS and Mr Stutchbury, this mixed fact and law and the High Court considers only points of law
 Concurrent clients were mostly evenings and weekends; Mr Stutchbury was mostly on site at EDS during the week
 That Mr Stutchbury was in business for himself was outweighed by other factors of the case
 There is now significant case law challenging whether the employer's obligation to provide work (want of mutuality) is in all cases an essential element of a contract of service
 Mr Stutchbury was integrated with EDS employees and was sufficiently integrated to require a line manager
 Being exposed to financial risk was limited to the insolvency of NES.
Although seemingly quite comprehensive, the terms of the agreement between NES and Synaptek did allow the IR to challenge Mr Stutchbury's status as a contractor being in business for himself, and the Judge agreed with their conclusion

[malvolio]

Csn't be arsed to wade through those cases and point out the counterarguments, except to note they are all several years old.

1400+ cases have been taken to the commissioners, 3 were lost, none less than five years ago. Two of those were certainly winnable had they been run today.

IR35 is dead, there is no point trying to argue otherwise. HMRC are trying another line.