Secrecy Agreement and IR35

[Clanky]

I've been a contractor for 10+ years mostly in process engineering design, and work through my Ltdco.

In my latest contract the clientco does consultancy for various paint & chemical manufacturers, who on the outside are potential competitors to each other. i was therefore asked to sign a secrecy agreement agreeing not to divulge any processes, equipment or materials between clients.
Read through the agreement, couldn't see anything wrong with it, so signed it on behalf of my Ltdco.

A few days later quite a snotty e-mail came round from the MD insisting that these secrecy agreements be signed, and IR35 was no excuse for not signing them. It appears a few contractors would not sign the agreements due to them possibly affecting their IR35 status.

I've asked numerous engineering contractors inside and outside the company, and can't get a viable answer regarding these agreements and IR35.

Can anyone give me a reason why signing this agreement would jepordize my IR35 status? Can anyone clarify the situation between secrecy agreements and IR35?

[Clare@InTouch]

I've been a contractor for 10+ years mostly in process engineering design, and work through my Ltdco.

In my latest contract the clientco does consultancy for various paint & chemical manufacturers, who on the outside are potential competitors to each other. i was therefore asked to sign a secrecy agreement agreeing not to divulge any processes, equipment or materials between clients.
Read through the agreement, couldn't see anything wrong with it, so signed it on behalf of my Ltdco.

A few days later quite a snotty e-mail came round from the MD insisting that these secrecy agreements be signed, and IR35 was no excuse for not signing them. It appears a few contractors would not sign the agreements due to them possibly affecting their IR35 status.

I've asked numerous engineering contractors inside and outside the company, and can't get a viable answer regarding these agreements and IR35.

Can anyone give me a reason why signing this agreement would jepordize my IR35 status? Can anyone clarify the situation between secrecy agreements and IR35?

I'm not sure why it would effect IR35 without reading the contract in full. Could it be there was a clause that undermined the standard contract, or put you under full control of the client? Can you ask the other contractors why they refused to sign?

Having a confidentiality clause or schedule isn't unusual, so in intself that wouldn't appear to be the problem.

[centurian]

Is the agreement between your LtdCo and ClientCo, or are you being asked to sign personally as an individual.

If it's the former, businesses have confidentially agreements between them all the time.

If it's the latter, it might not invalidate IR35, but it would give HMRC something to get their claws into.

ClientCo would prefer the latter so you are personally liable rather than a LtdCo that could be easily liquidated.

[ASB]

It is common to sign NDA's in both a personal capacity and also for there to be an agreement between the companies.

Think about it. If you didn't personally sign it then there is absolutely nothing to stop you taking a contract (using a different company) or a job with one of the competitors and then exploiting the knowledge.

Sure, the company you used to work for might get it in the neck from them because the company is in breach but what do you care having moved onto pastures new?

I'm not suggesting the OP would do this, but he wouldn't be prevented from doing so with an NDA only between his co and the client co.

[malvolio]

As a general rule, if everyone has to do it, permies and contractors alike, it has zero impact on IR35.

[TykeMerc]

I'd read the agreement carefully, but I'd probably be comfortable signing it. Mind you I'm not averse to things like security clearance which has a far greater personal element than a commercial NDA.

I suspect it's less threatening in IR35 terms than some of your fellow contractors have painted it.

[Wanderer]

Lots of companies have NDAs, there is nothing wrong with that. I don't see that it's anything do invoke IR35 paranoia.

[Clanky]

Clare - This Secrecy Agreement wasn't part of the original Ltdco - Agency - Clientco contract which was pretty standard and no problem. In fact, one contractors reason for not signing was because it wasn't part of the original contract, and therefore wouldn't take the chance with his IR35. The wording of the agreement was pretty basic and imo there was nothing untorward in it.

Other reasons given for not signing was as centurion hinted. The agreement was drafted with an individual (staff person) in mind. All i did was put my Ltdco name in the space for name and signed at the bottom 'for and on behalf of' my ltdco, so can't see a problem.

Another issue seemed to be the 'control' aspect but no-one seemed to be able to give specifics of why this applied.

Overall, those who haven't signed the agreement seem to have varying reasons for not doing so.

I am reasonably confident that my IR35 status isn't affected, but thought i would ask the question and see if there was something i was over looking.

Cheers

[Fred Bloggs]

In my experience, a lot of the time when fellow contractors have done/not done things "because of IR35" it is in my opinion because they have either an out of date or a sketchy knowledge of what IR35 means. The empasis of IR35 compliance continually changes as cases are won and lost, therefore, you need to keep up to date with current thinking on it. I think that's one of the benefits of being on here. Regarding an NDA, if you sign it as a company director, I don't think there are any issues it is a normal, regular commercial arrangement.

[malvolio]

Clare - This Secrecy Agreement wasn't part of the original Ltdco - Agency - Clientco contract which was pretty standard and no problem. In fact, one contractors reason for not signing was because it wasn't part of the original contract, and therefore wouldn't take the chance with his IR35. The wording of the agreement was pretty basic and imo there was nothing untorward in it.

Other reasons given for not signing was as centurion hinted. The agreement was drafted with an individual (staff person) in mind. All i did was put my Ltdco name in the space for name and signed at the bottom 'for and on behalf of' my ltdco, so can't see a problem.

Another issue seemed to be the 'control' aspect but no-one seemed to be able to give specifics of why this applied.

Overall, those who haven't signed the agreement seem to have varying reasons for not doing so.

I am reasonably confident that my IR35 status isn't affected, but thought i would ask the question and see if there was something i was over looking.

Cheers

Like I said - if everyone has to do it, it's not D&C. Fine to ask questions, but please read the answers as well...