IR35, retainer and an international client

[jawrence]

Hi there,

I am very new to the contracting world and have done some research on IR35 and am still unsure if I would be considered inside or outside.

I have found some topics on this which are quite dated and also didn't really fully enlighten me (https://www.contractoruk.com/forums/...n-company.html)

Overview:

I am a software engineer and my services are mainly helping to spec out a system, create it and then usually maintain it (fix issues and create new features).

I have one client at present who is based in Switzerland, I have never been asked to visit nor intend to. The contract we have is that I am expected to work a minimum period a month and so the invoices tend to be similar, they do sometimes burst depending on circumstances that month. I work from my own property using my own equipment, I am able to dictate (depending on spec and maybe other considerations) the tooling/languages/etc. I am not obliged to tell them when I take holiday. I am the only person currently working for my LTD so I would not at present be able to "send" a replacement, but I believe that someone with domain knowledge and enough experience would be able to pick up the work.

My main concerns about the contract and its IR35 status are the longevity of the contract (I can see it lasting a year, potentially more), and also the recurring/similar invoice charges which could look like salary.

How can I ensure I stay outside IR35 (am I right in assuming I should be outside)? What kind of contract should I be looking for this type of arrangement (it's almost like a retainer).

[TheCyclingProgrammer]

The thing with foreign clients is that it makes it much more tricky for HMRC to get any useful information out of the client in an investigation.

That said, purely based on what you've said, it doesn't sound like you'd be caught by IR35 anyway. Does your contract back up the working practices? Don't worry too much about the right of substitution - I think you've got direction and control covered and probably MOO too. What would happen if you told (not requested) the client that you would be unavailable for a given month and therefore wouldn't be billing them? If the answer is nothing (i.e. they wouldn't try and exert control over you and stop you) then IMO you've got nothing to worry about. Contracting on a retainer basis is a perfectly legitimate business strategy.

[malvolio]

Go here and then read this. It will explain much.

But on the face of it, you are not inside IR35, imho.

[northernladuk]

My main concerns about the contract and its IR35 status are the longevity of the contract (I can see it lasting a year, potentially more), and also the recurring/similar invoice charges which could look like salary.

Length of contract isn't really an issue, particularly just a few years. The problem really is when you take your eye off the ball and become part and parcel. The length of time causes you to fail other areas of the legislation. As long as you keep the main pillars, keep acting and being treated like a contractor you could go on for many years.

Doesn't matter what your charges, dividends or whatever look like. Tax legislation and law don't care what it LOOKS like. Don't worry about that. Also remember invoice charges are between your business and your client. They are nothing like salary. You've got to differentiate the difference between personal tax and business. Now you might ask the question if you give yourself the same dividend every month. That could look like a salary... but as I said.. it isn't so don't worry.

How can I ensure I stay outside IR35 (am I right in assuming I should be outside)? What kind of contract should I be looking for this type of arrangement (it's almost like a retainer).

Get your contract checked from people like QDOS, get yourself some insurance like IPSE+ or QDOS TLC35 and you are as covered as you can be. Contract is professional reviewed and is safe as it can be and you've got insurance just in case the very worst happens. Just make sure you understand IR35 and make sure your working practices stay outside.

[jawrence]

Thanks for the replies, very enlightening!

The thing with foreign clients is that it makes it much more tricky for HMRC to get any useful information out of the client in an investigation.

That said, purely based on what you've said, it doesn't sound like you'd be caught by IR35 anyway. Does your contract back up the working practices? Don't worry too much about the right of substitution - I think you've got direction and control covered and probably MOO too. What would happen if you told (not requested) the client that you would be unavailable for a given month and therefore wouldn't be billing them? If the answer is nothing (i.e. they wouldn't try and exert control over you and stop you) then IMO you've got nothing to worry about. Contracting on a retainer basis is a perfectly legitimate business strategy.

I just read through a thread of yours (https://www.contractoruk.com/forums/...agreement.html) and feel like this is quite similar to my setup. The contract we have at the moment is very lose and definitely needs tightening up and my client has stated they are happy to amend the contract in order for us to tighten up IR35 concerns. Do you recommend me signing up to PCG to get a template, or should I try a "call off day" approach?

[malvolio]

Thanks for the replies, very enlightening!



I just read through a thread of yours (https://www.contractoruk.com/forums/...agreement.html) and feel like this is quite similar to my setup. The contract we have at the moment is very lose and definitely needs tightening up and my client has stated they are happy to amend the contract in order for us to tighten up IR35 concerns. Do you recommend me signing up to PCG to get a template, or should I try a "call off day" approach?

It's IPSE, as per my earlier post.... and their contract templates are free to all these days.

But your should join anyway.