Clearing some doubts regarding IR35

[jamesbrown]

I did question the agent about that and I was told it is the standard contract they make all the consultants sign.

When I mentioned about the possibility of a substitute working in case if I fell ill etc, the agent immediately became defensive and mentioned that nobody other than me will be allowed to substitue me. I did mention that it is not going to be the case but I need that clause so that it protects me.

Btw they have made me apply for the disclosure sign up service.

The first thing to remember is that the contract doesn't protect you, in terms of IR35, unless it represents the reality of your working practices. In other words, if you cannot provide a substitute, the contractual clause is a sham, and it will be exposed as such following investigation. It's very important for you to understand the distinction (if any) between what a contract says and what your working practices show (so that you can ensure they are aligned). Status in terms of IR35 is based on working practices. That being said, you've been told by the agent that any substitution clause would be a sham. I wouldn't necessarily listen to the agent, but it isn't a good start. Get your contract and working practices reviewed - not by your accountant - and take it from there.

ps. it's also worth remembering that, in an agency relationship, the higher level contract between the agent and the client needs to be aligned with your contract, and that's something you won't get to see.

[Guest]

Btw my situation is exactly like the one on the follow thread.

http://forums.contractoruk.com/busin...-schedule.html

EDIT: I forgot to mention I have 3 other documents "Consultancy Agreement.pdf", "Consultants Undertaking.pdf" & "Contractor_Assignment Schedule.pdf" which only have references to my company and do not include my name anywhere.

[Contreras]

Your accountant is almost certainly not the best person to be reviewing this for you.

Go with QDOS, Bauer and Cottrell or one of the other well know IR35 review providers and get it done properly. They will negotiate with the agent on your behalf to get changes made. It's worth paying for the service.

olisun, Do this ^^ and do it now (so that the review won't cost extra to be expedited).

You are lucky that the agent hasn't waited until the final hour to send you a contract. That's a good sign. However they always say no other contractor has ever queried their standard contract and you just know that can't be true.

If you can't stomach the price of a full review in its own right then at least consider getting one the QDOS products that come with a 'free' IR35 contract assessment. e.g. Tax Enquiry Insurance or Professional Indemnity, assuming you are not covered for these by other means already.

[Guest]

olisun, Do this ^^ and do it now (so that the review won't cost extra to be expedited).

You are lucky that the agent hasn't waited until the final hour to send you a contract. That's a good sign. However they always say no other contractor has ever queried their standard contract and you just know that can't be true.

If you can't stomach the price of a full review in its own right then at least consider getting one the QDOS products that come with a 'free' IR35 contract assessment. e.g. Tax Enquiry Insurance or Professional Indemnity, assuming you are not covered for these by other means already.

I am going to go for the "IR35 Contract Assessment" first thing tomorrow morning. I am not sure if I need the full review at this stage.

[Guest]

Just to update this thread.

I got the contract reviewed and here is the outcome

"A FAIL result means that in our expert opinion your contract falls inside of IR35 meaning that you could be considered a disguised employee by agreeing to work to these terms. If the following changes could be made to the contract we would consider this contract outside IR35.

Clause 1.2 of the ‘Consultant’s undertaking’ could indicate that personal service is required. It is crucial with regard to IR35, that the contract is between two limited companies and an individual should not be bound by the same obligations. I would suggest that this clause is reworded to say, “’has noted those obligations placed upon the Supplier and undertakes to perform those obligations mentioned above.”

The agent also told me that the agency knows about this clause as they had to make the same changes for other contractors.

[jamesbrown]

Just to update this thread.

I got the contract reviewed and here is the outcome

"A FAIL result means that in our expert opinion your contract falls inside of IR35 meaning that you could be considered a disguised employee by agreeing to work to these terms. If the following changes could be made to the contract we would consider this contract outside IR35.

Clause 1.2 of the ‘Consultant’s undertaking’ could indicate that personal service is required. It is crucial with regard to IR35, that the contract is between two limited companies and an individual should not be bound by the same obligations. I would suggest that this clause is reworded to say, “’has noted those obligations placed upon the Supplier and undertakes to perform those obligations mentioned above.”

The agent also told me that the agency knows about this clause as they had to make the same changes for other contractors.

Should be quite easy to resolve. However, you need to bear in mind the reality of the situation and not just what the contract says.

[malvolio]

It's the right to offer a substitute that's the critical bit, combined with the right of the client to accept or refuse said substitute for clear role-based reasons such as experience in the required area (and a PM demanding that he hired you so only you will do does not meet that requirement).

It's not your problem if the client doesn't find any offered substitutes unacceptable for valid reasons; the point is that an employee - i.e. someone working under a contract for service - cannot have such a right hence you have to be working under a contract for services.

HTH...

[TheFaQQer]

I did question the agent about that and I was told it is the standard contract they make all the consultants sign.

The agent also told me that the agency knows about this clause as they had to make the same changes for other contractors.

Gosh - the standard contract that all contractors sign and they've never had an issue with suddenly has a clause that they know about and they've changed in the past.

Who'd have thought it?

[TheFaQQer]

It's the right to offer a substitute that's the critical bit, combined with the right of the client to accept or refuse said substitute for clear role-based reasons such as experience in the required area (and a PM demanding that he hired you so only you will do does not meet that requirement).

It's not your problem if the client doesn't find any offered substitutes unacceptable for valid reasons; the point is that an employee - i.e. someone working under a contract for service - cannot have such a right hence you have to be working under a contract for services.

HTH...

FTFY - "It's not your problem if the client doesn't find any offered substitutes acceptable for valid reasons..."

[jamesbrown]

It's the right to offer a substitute that's the critical bit, combined with the right of the client to accept or refuse said substitute for clear role-based reasons such as experience in the required area (and a PM demanding that he hired you so only you will do does not meet that requirement).

It's not your problem if the client doesn't find any offered substitutes unacceptable for valid reasons; the point is that an employee - i.e. someone working under a contract for service - cannot have such a right hence you have to be working under a contract for services.

HTH...

Yes, it is the right, but it needs to be not unreasonably fettered (i.e. the clear role-based reasons you mention). Beyond that, it needs to be applied consistently in the upper contract of an agency relationship, so that it's a real right and not contradicted elsewhere. Personally, I'd always be concerned if there was any suggestion (or evidence) of D&C, regardless of the other status indicators.