Clearing some doubts regarding IR35

[Guest]

Hi,

I am going to start a new contract from the 29-06-2015 and everything seems fine other than in one of the documents titled "Company Assignment Schedule" which contains my name. And I was wondering if it is IR35 compliant and whether it is going to cause me any issues.

Contents of the document is as follows

"This is the Assignment Schedule to the Agreement for the supply of Services between <Agency> and <my limited company> whose registered office is at <my address> (the "Supplier"). Save where expressly varied in writing between <agency> and the Supplier, the terms of the Agreement shall apply in full, and the Agreement, the Consultant's Undertaking, any appendices, schedules or client specific documentation, and this Assignment Schedule shall form the entire agreement between the parties relating to the performance of the Services to the exclusion of all other terms.

As an authorised representative of the Supplier you confirm that the terms of the Assignment Schedule and the Consultancy Agreement are agreed and accepted by the Supplier.

For the purpose of this Assignment Schedule and its application to the Consultancy Agreement the following expressions shall have the respective meaning set out opposite them in the below Addendum."

Addendum

Client: <agency>

Commencement Date: 29/06/2015

Consultant: <My Name> of <Address of my company>

End Date: 31/12/2015

Fee: means the daily/hourly rate identified in the rates table below multiplied by the number of days/hours during which the Services are provided. Should less than the Working Hours be worked in any day then a pro-rata charge will be made for that day. If the Supplier is required to provide Services in excess of the Working Hours, additional charges will only be paid in accordance with the rates table below.

Description Rate Type Pay Rate
NORMAL TIME DAILY xxx.00

Invoice Frequency: means Weekly in arrears.

Notice Period: means 2 weeks. The Supplier may, by 2 weeks notice, terminate this Assignment.

Payment Term: means Weekly Paid 12 Days (Working Days, excluding Bank Holidays)."

There is some more standard text after in the document.

Regards,

Oli

[TheFaQQer]

Consultant: <My Name> of <Address of my company>

Consultant: <My Name> of <Address of my company> or any agreed substitute

That should cover it.

[Guest]

Consultant: <My Name> of <Address of my company> or any agreed substitute

That should cover it.

You mean by adding the "or any agreed substitute" bit should make the contract IR35 friendly?

I already spoke to the agency and they said they have 4500+ contractors around the country and they use that standard template when signing contracts with consultants. She also told me that it is 100% IR35 compliant but I asked her to confirm that in writing. There is no word from the agent as yet.

I am waiting for my accountant to get back to me as well.

What if the agency refuses to add that bit in the contract?

[TheFaQQer]

You mean by adding the "or any agreed substitute" bit should make the contract IR35 friendly?

I already spoke to the agency and they said they have 4500+ contractors around the country and they use that standard template when signing contracts with consultants. She also told me that it is 100% IR35 compliant but I asked her to confirm that in writing. There is no word from the agent as yet.

I am waiting for my accountant to get back to me as well.

What if the agency refuses to add that bit in the contract?

Every agency tells you that no-one has ever made a change to the contract. But they lie.

It's up to you what you do - having the wording would help if you were investigated, but if it's only the wording and that doesn't reflect the reality then it doesn't matter.

But I'd want the wording in the contract so that if I needed to use a substitute and the agency refused then there was an even clearer indication that they were the ones breaching the contract by not accepting a substitute ratehr than me walking away.

The wording comes from a Qdos review from a few years back where they recommended it from an IR35 perspective.

[mudskipper]

You've got time to get it professionally reviewed - don't take the agent's word for it!

[Guest]

It's up to you what you do - having the wording would help if you were investigated, but if it's only the wording and that doesn't reflect the reality then it doesn't matter.

I didn't get this bit..

The reality is I am soley going to provide the services via my limited company to the end client via the agency.

Apologies in advance for sounding naive.

[malvolio]

I didn't get this bit..

The reality is I am soley going to provide the services via my limited company to the end client via the agency.

Apologies in advance for sounding naive.

Not naïve, merely new to a complicated business...

One of the three key elements of an IR35 defence is the right to send in a substitute worker to complete the work, or any part of it. The logic is that this is not something an employee can never do, so clearly you aren't an employee.

However there are complications; your client is in his rights to ensure the sub is competent to do the work for example. If he is competent, you don't want a clause in your contract that says only you can do the job; that is personal service and strong indicator towards IR35.

Nothing about IR35 is clear or definitive. Get your contract reviewed by someone who knows what they're doing - Accountax, Bauer and Cotteril or QDOS are the usual suspects.

And get the Guide to Freelancing from www.ipse.co.uk and study it. You have no idea how much you don't know.

[jamesbrown]

Agree with Mal. Also, for what it's worth, it makes no sense for your name to appear anywhere on a contract for services (as opposed to a contract of service), except on the signature block where you're signing on behalf of YourCo. This isn't definitive, but it's just very odd/awkward to be personally named as a consultant and it makes no sense unless they're alluding to an expectation that you'll do the work personally. Do as Mal suggested and get your contract reviewed by someone that knows what they're talking about. Then join IPSE (or at least consider it).

[Guest]

Agree with Mal. Also, for what it's worth, it makes no sense for your name to appear anywhere on a contract for services (as opposed to a contract of service), except on the signature block where you're signing on behalf of YourCo. This isn't definitive, but it's just very odd/awkward to be personally named as a consultant and it makes no sense unless they're alluding to an expectation that you'll do the work personally.

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.

Do as Mal suggested and get your contract reviewed by someone that knows what they're talking about. Then join IPSE (or at least consider it).

I have sent all the documents to my accountant and am waiting to hear back from him in detail, but his initial response was "however it's not the best contract as it has your name on it, rather than your Ltd Co name etc."

[DaveB]

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.



I have sent all the documents to my accountant and am waiting to hear back from him in detail, but his initial response was "however it's not the best contract as it has your name on it, rather than your Ltd Co name etc."

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.