Confirmation of Arrangements letter (sample feedback)

[northernladuk]

Don't forget...... One of the most important things about getting this signed is getting the right person to sign it. HR bod signs it and stands up in court and says he doesn't know about the answers to some of the questions then the whole thing falls apart. Line manager stands up and says I guess it was ok but I don't handle contracts then the same thing.

[Gemma at Qdos]

The difference between the two is not overly clear cut. From an IR35 perspective, with substitution it is still your company which is contracted to do the work and your company is still responsible for the work carried out. With subcontracting, you effectively pass on that responsibility to the subcontractor and they are responsible for the work carried out. Subcontracting can indeed hold relevance to your IR35 status depending on what the subcontractor was doing and level of remuneration.

dagenheis, I couldn't see any other red flags no. With regards to PI, there is not always a requirement in the contract as there is no legal requirement to hold the insurance, but remember that the insurance bolsters your IR35 perception (it gives you 2 points in HMRC's Business Entity Test) showing you have financial risk. It can also help with getting contracts if you already have it. For example, a client has the choice of two contractors of equal worth, but only one already has the required insurance to undertake the contract. Who do you think they will choose?

Remember that the confirmation of arrangements is not a legally binding document but is there to assist you with proving your working practices should the need ever arise.

[GB9]

The difference between the two is not overly clear cut. From an IR35 perspective, with substitution it is still your company which is contracted to do the work and your company is still responsible for the work carried out. With subcontracting, you effectively pass on that responsibility to the subcontractor and they are responsible for the work carried out.

May I introduce you to BP versus the US Government and responsibilities. Its the same here BTW.

[dagenheis]

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dagenheis, I couldn't see any other red flags no. With regards to PI, there is not always a requirement in the contract as there is no legal requirement to hold the insurance, but remember that the insurance bolsters your IR35 perception (it gives you 2 points in HMRC's Business Entity Test) showing you have financial risk. It can also help with getting contracts if you already have it. For example, a client has the choice of two contractors of equal worth, but only one already has the required insurance to undertake the contract. Who do you think they will choose?

Remember that the confirmation of arrangements is not a legally binding document but is there to assist you with proving your working practices should the need ever arise.

I agree, PI can used as an indicator to demonstrate that Ltdco is managed as a business to mitigate financial risk so it's goot to keep the cover. However, I don't think its a blocker to bag a contract as it's fairly quick to find PI cover but it would be irrelevant when LtdCo are recommended to have it for IR35 reasons.
BTW, my client changed his mind about the defective work bit and prefers to answer this as 'No' as they would cancel the contract under "incompetence clause".
Cheers!

@northernladuk
I am reviewing this with the line manager who is also my client contact on the contract. I am sure it will be a dead duck if HR is involved but the idea is to confirm the working practices with someone who is directly involved on the services provided.

As it's not a legally binding document, I guess that's all I can do for now to record some details of arrangements. The line manager may leave the company in 6 months or he might take a diffeent stance if the situation arises.

[northernladuk]

@northernladuk
I am reviewing this with the line manager who is also my client contact on the contract. I am sure it will be a dead duck if HR is involved but the idea is to confirm the working practices with someone who is directly involved on the services provided.

As it's not a legally binding document, I guess that's all I can do for now to record some details of arrangements. The line manager may leave the company in 6 months or he might take a diffeent stance if the situation arises.

I don't think your line manager is the right person though. I don't think he will have the authority to confirm those arrangements I wouldn't think. It isn't legally binding but it is a very important document should you get investigated. I imagine if they look at the CoA and manage to pick a hole in it, say the RoS, then it leaves your contract wide open for attack. If you don't get the right person to sign it and can make it stick in an investigation I think it could cause you more problems than it solves. It should be signed by someone that reflects the company approach to your contract. Your comment about the manager leaving is a prime example of why I don't think he is the guy. He is giving a personal opinion.

I would be interested to see if QDOS respond with who they advise and their thoughts on getting the wrong people to sign it.

[Gemma at Qdos]

We recommend going to whoever you directly interact with (which is probably not HR) and has the most knowledge on the way that you work. This is generally the person that you liaise with and/or report to. "Line Manager" isn't a very IR35 friendly term so I'm avoiding it

The confirmation of arrangements form is designed to determine the reality of your working relationship with your client, and should not be confused with confirming the contract. It is important to have it confirmed by somebody who actually works with you and can confirm your situation as opposed to someone in HR, who yes will understand the contract, but will unlikely have any real understanding of how you actually work and your real working practices. HR may often, for example, decide that you do not have autonomy over your method of work etc because they often have little understanding of how contractors operate (this is of course a generalisation).
The confirmation of arrangements is still useful even if said person leaves the business, as it will have been completed by somebody who worked with you at the time. This is part of its purpose as if you were investigated by HMRC and the person you reported to had left, who is going to confirm your arrangements? HR. Again, they will understand the contract but they may not understand how you really work or understand the questions in relation to IR35. It is actually in this situation where a lot of problems for the contractor arise in an enquiry.

Hope that helps

[northernladuk]

Interesting. Not what I thought so I stand corrected. Thanks Gemma.

[Gemma at Qdos]

no problem at all

[dagenheis]

good stuff, thanks Gemma. Your response clarified the key concern I had as I know that my client contact (responsible for my contract) is thinking to change jobs ;-)

[Cosmokramer]

I am in the process of getting a CofA letter signed off by the client.

They are not adverse to it but are thinking more along the lines of - what do I as the client get out of this.

I took the approach that if there were to be an investigation then there may be a chance that the client may have to attend tribunals / meetings with HMRC etc. So the CofA could potentially avoid this, saving them time and money.

Their response was that they have no employment obligations and no risk of enquiry from HMRC. The risk of IR35 lies solely with the contractors. Which is all true of course. So in their opinion it does not give them any protections etc.

Are there any other points I could make to highlight that it may be in their interest (and not just mine) to get this CofA in place?