IR35; have you walked away?

[jamesbrown]

As far as IR35 is concerned, the working practices are paramount; the contract is there to explain any areas of uncertainty.

As for RoS, they clearly want you but that doesn't mean you can't have the right to sub subject to their approval as to the subbie's competence and qualification, such approval not to be unreasonably withheld.

However IR35 is a minor issue if you are direct. Apart from the low likelihood of you being under D&C anyway, you should have a lot more control over the arrangements with things like payment terms and rework, as well as clearly defined deliverables. Why prat about with a contract that requires a review anyway, use one of the standard IPSE ones, or even work to a simple Purchase Order (like what I does for various bit of freelance work), and get well way from any risk of being seen as an employee.

I agree with a lot of this, but I take issue with a couple of points: 1) that a Purchase Order alone places you in a better position; it doesn't, it just leaves fewer things specified, meaning that an investigation is less likely to end quickly (HMRC couldn't care less about that the implications of a PO, except that it leaves many things unspecified); and 2) that there is a materially reduced risk of working direct; the risk is somewhat lower in the sense that there isn't the possibility of a conflicting agency contract, so I partly agree, but otherwise, it's no different than working via an agency. Anyway, you'd be nuts to work with a PO that isn't backed by T&C (this isn't all about IR35, afterall), and I'm sure you're not suggesting otherwise - but this is really no different than working from a contract.

Anyway, the working practices are paramount, and they need to be backed by a sensible contract that reflects the reality. In other words, you start with your intentions about WP, and you base the contract on that. Actually, this is one (although not the most important) reason that I prefer not to use a contract template (other than my own one), because it's pretty pointless to start adapting a template (if your main focus is avoiding the need for a contract review), and I'd prefer to base a contract on my actual requirements for WP rather than a template that is primarily motivated by IR35. YMMV.

[jamesbrown]

who failed it on D&C and RoS.

In principle, you only need lack of MoO, but it wouldn't be very sensible to proceed on that basis, especially given that it's lack of MoO. Perhaps for lack of D&C, which is generally simpler to demonstrate (and, in my view, more powerful), or RoS if it's likely to be backed by an actual substitution, but trusting to lack of MoO alone is taking a significant risk, assuming it reflects the reality.

[malvolio]

I agree with a lot of this, but I take issue with a couple of points: 1) that a Purchase Order alone places you in a better position; it doesn't, it just leaves fewer things specified, meaning that an investigation is less likely to end quickly (HMRC couldn't care less about that the implications of a PO, except that it leaves many things unspecified); and 2) that there is a materially reduced risk of working direct; the risk is somewhat lower in the sense that there isn't the possibility of a conflicting agency contract, so I partly agree, but otherwise, it's no different than working via an agency. Anyway, you'd be nuts to work with a PO that isn't backed by T&C (this isn't all about IR35, afterall), and I'm sure you're not suggesting otherwise - but this is really no different than working from a contract.

Anyway, the working practices are paramount, and they need to be backed by a sensible contract that reflects the reality. In other words, you start with your intentions about WP, and you base the contract on that. Actually, this is one (although not the most important) reason that I prefer not to use a contract template (other than my own one), because it's pretty pointless to start adapting a template (if your main focus is avoiding the need for a contract review), and I'd prefer to base a contract on my actual requirements for WP rather than a template that is primarily motivated by IR35. YMMV.

A PO is for a specified, bound deliverable (even if only, as in my case, n days of consultancy support in a specific arena). You would be hard-pressed to create an employment relationship if that was the extent of the contractual obligations. So it is nowhere near as risky as any kind of agency contract.

The IPSE direct engagement contract was written by Egos specifically for your kind of engagement, if you want the full monty in place. It will be far better than anything you can write yourself or adapt from anywhere else, and is free. Download a copy and have a careful read. Details are here

[jamesbrown]

A PO is for a specified, bound deliverable (even if only, as in my case, n days of consultancy support in a specific arena). You would be hard-pressed to create an employment relationship if that was the extent of the contractual obligations. So it is nowhere near as risky as any kind of agency contract.

The IPSE direct engagement contract was written by Egos specifically for your kind of engagement, if you want the full monty in place. It will be far better than anything you can write yourself or adapt from anywhere else, and is free. Download a copy and have a careful read. Details are here

I beg to differ on the PO. I only ever work from a PO, but I'd never work from a PO that wasn't attached to either: 1) a contract or; 2) a list of T&C. I'd use the latter for a short/fixed price scenario, but very rarely TBH (almost always, it's a contract). Anyway, the point - as I think we both agree - is that the working practices are paramount, and a PO in itself doesn't imply very much; as I say, I always work from a PO, but it's almost always backed by a lengthy contract.

The IPSE direct engagement contract is useful, but it didn't meet my needs. For example, the idea of signing-off my IPR to the client is a definite no for me and IPR in general needs to be very carefully addressed; it cannot be done in a cookie cutter way (perhaps it can for some IT work, but not in my area). Also, there are some clauses (e.g. on AWR, DPA) that don't make any sense when dealing with international clients.

[malvolio]

I beg to differ on the PO. I only ever work from a PO, but I'd never work from a PO that wasn't attached to either: 1) a contract or; 2) a list of T&C. I'd use the latter for a short/fixed price scenario, but very rarely TBH (almost always, it's a contract). Anyway, the point - as I think we both agree - is that the working practices are paramount, and a PO in itself doesn't imply very much; as I say, I always work from a PO, but it's almost always backed by a lengthy contract.

OK, you run things the way you prefer, as do I.

The IPSE direct engagement contract is useful, but it didn't meet my needs. For example, the idea of signing-off my IPR to the client is a definite no for me and IPR in general needs to be very carefully addressed; it cannot be done in a cookie cutter way (perhaps it can for some IT work, but not in my area). Also, there are some clauses (e.g. on AWR, DPA) that don't make any sense when dealing with international clients.

So change them or strike them out.... It's a template, as long as you follow the comments and notes, t's guaranteed, it's commercially sound and about as IR35-proof as you can get.

[jamesbrown]

So change them or strike them out.... It's a template, as long as you follow the comments and notes, t's guaranteed, it's commercially sound and about as IR35-proof as you can get.

I didn't start from a blank sheet and write it all myself; there's no problem w/ using a template, modifying it, and having it reviewed for commercial and other aspects, and then adapting for the particular situation (and re-reviewed). I'm just saying that, if your objective is to avoid a contract review (you mentioned this above), it's very difficult to do this in practice, unless you're willing to accept a template contract that may not represent the reality of your working practices, let alone the desirable commercial aspects. The IPSE resources are great, in general, and are probably adequate for many situations, including in terms of IR35, but only if the template reflects the reality, and I dare say that many people using those templates don't dwell on this very much.

[PerfectStorm]

Yes, as per Cojak. I'm not an employee, disguised, or otherwise. I regard my business as bona fide and act accordingly.

And would your colleagues agree with that assessment?

[northernladuk]

In principle, you only need lack of MoO, but it wouldn't be very sensible to proceed on that basis, especially given that it's lack of MoO. Perhaps for lack of D&C, which is generally simpler to demonstrate (and, in my view, more powerful), or RoS if it's likely to be backed by an actual substitution, but trusting to lack of MoO alone is taking a significant risk, assuming it reflects the reality.

I agree. As has been mentioned a few times reality trumps contract but if it's direct and they won't budge on certain aspects such as RoS and D&C my alarm bells would be clanging very loudly. What happens if you get on site and you find you are indeed being directed and there isn't a hope of RoS? You are screwed. Remember RoS won't work in a majority of cases even though it's in the contract so you can fairly safely assume if they refuse to put it in they won't allow it. I would proceed very carefully with a contract in this state TBH.

[anthony]

I would proceed very carefully with a contract in this state TBH.

From the other comments and yours; this is my gut feeling. It's a pitty though, cause this would have been my first direct contract to expand the business.

[jamesbrown]

From the other comments and yours; this is my gut feeling. It's a pitty though, cause this would have been my first direct contract to expand the business.

Don't let the tail wag the dog though; it may still makes sense if you want to improve your pension situation or if there's something particularly valuable about this contract. It's also not impossible that a professional could negotiate better working practices for you (sometimes it's a case of unstoppable force vs. immovable object until you have the contracts specialists talk to each other), but any revisions would need to reflect the reality, as various posters have noted, and if the current problems are coming from someone that would potentially influence your working practices, it's doubtful. There are ways to mitigate risk too if you're in a borderline situation, but I wouldn't recommend this approach, as you need to show due diligence, in order to avoid penalties.