Contracting direct with a client

[Bobo]

Hi

Does anyone have any experience or views on whether there are any implications to contracting directly with a client. I heard that HMRC this as a direct employment rather than a contract so there may be IR35 implications.

[SeanT]

Hi

Does anyone have any experience or views on whether there are any implications to contracting directly with a client. I heard that HMRC this as a direct employment rather than a contract so there may be IR35 implications.

You heard wrong

[TheFaQQer]

Does anyone have any experience or views on whether there are any implications to contracting directly with a client. I heard that HMRC this as a direct employment rather than a contract so there may be IR35 implications.

Not sure where you heard that but it's not correct.

In theory, contracting direct with a client means that you get the chance to ensure that the contracts are accurate reflections of the working practices and expectations, and you can make sure that the relationship is clearly a B2B arrangement rather than just shipping in a temp employee to avoid NI.

In practice, you're more likely to face payment delays / longer payment terms than you would via an agency because there is no concept of factoring the invoice as the agent does unless you pay for this yourself. 60 or 90 day terms aren't uncommon (IIRC, Carillion changed to 120 day terms last year) and you may have to chase for late payment / non-payment if the client is not used to dealing with contractors.

I prefer a direct contract because at least I know what all the paperwork says rather than having things hidden between agency and client that you will never have any visibility of.

[northernladuk]

You shouldn't be hearing. You should be researching and understanding IR35 so you can make the decision.

[Bobo]

Not sure where you heard that but it's not correct.

In theory, contracting direct with a client means that you get the chance to ensure that the contracts are accurate reflections of the working practices and expectations, and you can make sure that the relationship is clearly a B2B arrangement rather than just shipping in a temp employee to avoid NI.

In practice, you're more likely to face payment delays / longer payment terms than you would via an agency because there is no concept of factoring the invoice as the agent does unless you pay for this yourself. 60 or 90 day terms aren't uncommon (IIRC, Carillion changed to 120 day terms last year) and you may have to chase for late payment / non-payment if the client is not used to dealing with contractors.

I prefer a direct contract because at least I know what all the paperwork says rather than having things hidden between agency and client that you will never have any visibility of.

Thanks

[Bobo]

You shouldn't be hearing. You should be researching and understanding IR35 so you can make the decision.

isn't that what I'm doing on this forum!?

[northernladuk]

isn't that what I'm doing on this forum!?

Not really. You are asking a question that having a very basic understanding of IR35 would have saved you having to ask.

IR35 is pretty complex so if this is a problem then what else don't you know that you should?

[NotAllThere]

Hi

Does anyone have any experience or views on whether there are any implications to contracting directly with a client. I heard that HMRC this as a direct employment rather than a contract so there may be IR35 implications.

The idea of IR35 is that if the agent wasn't there, would the contract be effectively one of employment?

So, you're going direct - which means there's no agent (aka "intermediary"). The question becomes "is the contract one of employment?"

Get it now?

[saptastic]

Not really. You are asking a question that having a very basic understanding of IR35 would have saved you having to ask.

IR35 is pretty complex so if this is a problem then what else don't you know that you should?

Not everyone has the answer to every IR35 question and sometimes its reassuring to validate. That is what forums are for.

[jamesbrown]

The idea of IR35 is that if the agent wasn't there, would the contract be effectively one of employment?

So, you're going direct - which means there's no agent (aka "intermediary"). The question becomes "is the contract one of employment?"

Get it now?

Not quite. The intermediary in IR35 is the Ltd company through which the individual is operating. The goal is to establish a hypothetical contract directly between the individual and the end client and then to determine whether the arrangement looks like one of employment. Having an agency in the chain (or five agencies, or ten agencies plus a consultancy) doesn't change the question posed.