Statement of Work (SoW) being outside of IR35?

[gruntling]

My contact at current client is now talking of a possible Statement of Work (SoW) contract being outside of IR35.

I did a quick search on the forum but don't find much. Are there any sample SoW online as a reference since I'm interested to what they would contain - I assume deliveries and milestones with time estimates.

Is this a Golden Bullet if I can get (large and red tape suffering corporate) to do this? Any drawbacks?

[malvolio]

There are templates out there. Test your Google-fu.

However, it has to be realistic. It has to have an overall objective (e.g. build me a working website from scratch).It has to have defined, discrete deliverables. It has to link payment terms to those deliverables (as in you don't get paid for being there or doing stuff, only when you deliver one of the deliverables (ermm...)) It has to have quality and acceptance standards, as well as re-work requirements and costs. And it has to be clear over legal niceties such as non-payment, non-delivery, timescales, penalties and dispute resolution.

It also has to work through any of the intermediaries in the chain, such as the agency.

So it is not a simple three pager but something potentially quite complicated.

Dave Chaplin has done a lot of work on IR35 compliance and created a lot of material. Perhaps start from there for better explanations.

[northernladuk]

Will be very difficult to do for a big corporate. They need a requirement of a service first. Its not a matter of you explaining what you currently do but in a slightly different format. You have to deliver an outcome they need.

Then there is the problem this will be handled by a whole different group than HR so its likely you'll need to be on their preferred suppliers list and have possibly gone through some vetting.

Then there is the fact they'll likely want it to go out for tender to get a couple of offers and pick the best

And many more...

A bum on seat contractor chopping his work up in to phases and calling it a Sow is extremely unlikely to happen.

[GhostofTarbera]

My contact at current client is now talking of a possible Statement of Work (SoW) contract being outside of IR35.

I did a quick search on the forum but don't find much. Are there any sample SoW online as a reference since I'm interested to what they would contain - I assume deliveries and milestones with time estimates.

Is this a Golden Bullet if I can get (large and red tape suffering corporate) to do this? Any drawbacks?

No you are obviously been inside IR35 all along

Any investigation will out this in 1 second


Sent from my iPhone using Contractor UK Forum

[Fraidycat]

There is no specific type of SOW there are many types, the most relevant one to most contractors who work on a 'time and materials basis' is something like:

Level of Effort/Time and Materials/Unit Rate Statement of Work
"This is a flexible SOW that is frequently used for hourly service workers. It is simply based on work hours and the material needed to perform the service. The SOW describes the service being performed over a given period of time in a general way. It is often used for temporary or contract workers, or for delivery order contracts."

I have one of these in my contract, it is not very long, the client has lots of different projects, the SOW in my contract states which one of clients projects i will be working on during the contract, i cant be moved to other projects, like the permies/employees can be, without signing another contract and statement of work.

The one listed in my SOW (Project name XXX, internal number: 123456) , is the one the Technical architect described and demo'ed to me during the interview and is the one that I quoted my rate based on. If they want me to work on a different project i might want to re negotiate the t&c i originally agreed to when signing the new contract for the new project.

On its own this is not a 'Golden Bullet' but it all adds up with other outside IR35 indicators, and goes to show you are not just another disguised employee under the full direction and control of the client.

[northernladuk]

But that's no different to what we do already. A couple of extra clauses maybe but very easy to ignore when the client asks you to do something else. IMO that wont help your average bum on seat guy when he's shafting himself carrying on with other projects etc.

HMRC believes most contractors are inside ergo if that type of contract suits them then its failed already.

[Fraidycat]

But that's no different to what we do already. A couple of extra clauses maybe but very easy to ignore when the client asks you to do something else. IMO that wont help your average bum on seat guy when he's shafting himself carrying on with other projects etc.

HMRC believes most contractors are inside ergo if that type of contract suits them then its failed already.

Time and materials based contracts don't automatically fall under IR35. Even the HMRC CEST tool allows T&M based contracts to pass if there is minimal direction and control or genuine right to substitute.

And going forward after April, it is the clients problem. Not mine.

It will be in there best interest to manage my working practices and make sure they reflect the outside determination they have given me, they will be on the hook for the tax.

[malvolio]

Time and materials based contracts don't automatically fall under IR35. Even the HMRC CEST tool allows T&M based contracts to pass if there is minimal direction and control or genuine right to substitute.

And going forward after April, it is the clients problem. Not mine.

It will be in there best interest to manage my working practices and make sure they reflect the outside determination they have given me, they will be on the hook for the tax.

Yes, but you will have been overpaid by yhe same amount...

[eek]

Time and materials based contracts don't automatically fall under IR35. Even the HMRC CEST tool allows T&M based contracts to pass if there is minimal direction and control or genuine right to substitute.

And going forward after April, it is the clients problem. Not mine.

It will be in there best interest to manage my working practices and make sure they reflect the outside determination they have given me, they will be on the hook for the tax.

But as Malvolio and NLUK both say - few companies are going to take the risk.

We do time and material contracts but they are short term things with 2 week deliverables - nothing delivered = no payment.

[Fraidycat]

But as Malvolio and NLUK both say - few companies are going to take the risk.

We do time and material contracts but they are short term things with 2 week deliverables - nothing delivered = no payment.

When i used to work as a perm consultant, a lot of the projects were time and material based and most lasted several months and some multiple years.

Also a client can refuse to sign a contractors timesheet if they legit think you didn't put that much effort it in as the timesheet claims, but i have yet to see any client do this!
Because most managers don't want to rock the boat.

We already know most companies don't want to risk giving contractors outside IR35 contracts, but many will risk it and properly manage the risk by ensuring compliant working practices, because it gives them a competitive edge when looking to hire the best contracting talent.