IR35 - Move outside and invoice direct. Restrictive Covenants?

[CalmEddie]

Hi from a lurker

Doing a lot of work with a client which is largely advisory. On taking on the role, accountant said IR35 friendly, all looked OK but we're all still cautious right?

Very large ClientCo handles all non-employee engagements through their preferred resource house, mainly an agency with some added value. Anyway, agency is taking the safe road and deeming everyone to be inside IR35.

Clientco wants me to continue, I've said not a hope on current terms. Hypothetically, I can invoice direct. It got me wondering about Restrictive Covenants. I know they're often a work of fiction, but ClientCos are put off by tangling with such things.

So where a contract says you can't go back to the client within x months - anyone got any creative suggestions for making that more palatable for a nervous end client?

[northernladuk]

Hi from a lurker

Doing a lot of work with a client which is largely advisory. On taking on the role, accountant said IR35 friendly, all looked OK but we're all still cautious right?

The cautious people would have had their contracts reviewed by a specialist, not their accountant.

Very large ClientCo handles all non-employee engagements through their preferred resource house, mainly an agency with some added value. Anyway, agency is taking the safe road and deeming everyone to be inside IR35.

It's not for the agency to make the determination, its the client. The agency will just handle you in whatever capacity the client deems.

Clientco wants me to continue, I've said not a hope on current terms. Hypothetically, I can invoice direct. It got me wondering about Restrictive Covenants. I know they're often a work of fiction, but ClientCos are put off by tangling with such things.

They aren't a work of fiction at all. They are all very valid legal clauses. The reason you might think they are a work of fiction is that there are only specific situations they will stand up. There has to be a party losing out financially due to the other parties actions. if there is the clause will be pretty rock solid.

So where a contract says you can't go back to the client within x months - anyone got any creative suggestions for making that more palatable for a nervous end client?

Your options are to get the client to negotiation with the agency to forget the handcuff in his instance with the promise/threat more more work in the future. The other is for the client to pay off the agent to get out of the handcuff.

Going direct and hoping it won't hit is probably the worst idea ever and is the only one that makes the handcuff valid. The agent will lose revenue due to this and will have a solid case.

Handcuffs have been discussed on here endlessly. Use the google search method by typing in
handcuff site:contractoruk.com/forums

Tons of reading on all the nuances of your situation there.

[ladymuck]

As NLUK said, the restrictive covenant is not really a viable way forward without some hefty negotiations.

As I see it:

The client has to assess the role, issue a SDS to you and the agency. The agency then processes payments according to that.

You don't really need to go direct. You just need all entities in the chain to understand their roles and responsibilities.

[CalmEddie]

Useful info, many thanks!