Having to upset clients just to stay on the right side of IR35

[jonftwtaylor]

Hi all,

Had an interesting experience with a client yesterday. I have a 3 month contract with them, which has started to roll over because the work is far more extensive than what could be completed in time, so i'm in the 4th month of it at the moment, and they are quite happy with that.

I get an email from the Project Manager telling me to stop work on my current project for a couple of days to add some high priority features to a different project. This other project is a project I developed for them last year, but that contract has long ended, and my current work schedule only describes work on my current project.

The problem is I had to refuse to do this other work, as them telling me what to work on and when (especially outside of the work schedule) would demonstrate direction and control by the client. It is even more frustrating because the other project is quite well developed and I enjoy working on it, so I would rather actually do the work!

Instead all that has happened is I have upset the client by insisting that they draw up another contract, or a work schedule amendment, instead of just getting started on the high priority work. I am damaging my reputation by not getting started on work I would actually like to do, making absolutely terrible business decisions, just because of this stupid IR35 legislation.

I guess i'm just bellyaching, but I would appreciate some views on it, and perhaps any stories of similar experiences from other contractors.

Cheers

Jon

[northernladuk]

At the end of the day you have to take each situation on face value and weigh up the risks. Is this a one off? Are they really just wanting to re-use your expertise or are they treating you like a permie? Is this evident in other things they do or is this a one off. You should be able to defend small issues like this but you need to understand that wider issue. One off or considered permie. If it is the latter then no amount of cajoling the client will work. If you do get investigated HMRC will come and speak to your client and he will tell them how you treat you regardless of how hard to you try to look like a business.

If this is a one off and there is no other options available to you then I would be tempted to swallow it but I would take a serious look at my situation there as a whole to see if this shows a fundamental difference in opinion of what you are between you and the client.

I presume that you are gathering other evidence to prove you are not inside such as different coloured badges, the way you ask for time off etc that you could use to prove this is a one of and it not to be an issue?

[malvolio]

Ermm...

An email constitutes a contract amendment if you both agree to it. Plenty of time to get the formal version added later, and it's seriously silly to lose work and reputation for the sake of contractual formalities.

PCG's Rule 1 for all contractors - never let the taxation tail wag the business dog.

[jonftwtaylor]

The company already has an army of contractors that they treat like employees, they assign tickets to people from a ticketing system and re prioritise projects and tasks as they see fit. Barely anyone has a work schedule in their contracts, in a lot of cases I am the exception in that I insist on doing things the correct way.

Since this is the culture of the organisation I have to constantly flight to protect my rights, which just makes me look petty compared to the other quasi-employee contractors that they have.

I work from my home, I never ask permission for holidays. I refused to go to their monthly employee catchup meetings and I refuse to have a clientco email address. I collect all of this as evidence that I am not an employee, as I'm certain if HMRC asked them they would just tell them that i'm essentially an employee, and I need to prove that it is not the case. I also have QDOS IR35 insurance just in case its not enough.

Overall the client actually likes me as I produce good results, but issues like this keep cropping up.

[malvolio]

The company already has an army of contractors that they treat like employees, they assign tickets to people from a ticketing system and re prioritise projects and tasks as they see fit. Barely anyone has a work schedule in their contracts, in a lot of cases I am the exception in that I insist on doing things the correct way.

Since this is the culture of the organisation I have to constantly flight to protect my rights, which just makes me look petty compared to the other quasi-employee contractors that they have.

I work from my home, I never ask permission for holidays. I refused to go to their monthly employee catchup meetings and I refuse to have a clientco email address. I collect all of this as evidence that I am not an employee, as I'm certain if HMRC asked them they would just tell them that i'm essentially an employee, and I need to prove that it is not the case. I also have QDOS IR35 insurance just in case its not enough.

Overall the client actually likes me as I produce good results, but issues like this keep cropping up.

You're missing the point. You can do ad hoc client-assigned work, providing that it doesn't conflict with your overall schedule of work (don't write code if you're there as a PM, for example) and provided both sides agree in writing to what is needed and when. To avoid D&C and to a lesser extent MOO, you need to be able to refuse work if it's outside your scope.

And FWIW cosmetics like a client email address are just that, cosmetic. If everyone has to do "something", it can't be a differentiator between employee and freelance. I can't do my job without a real client presence to put in front of their clients but that doesn't put me inside IR35.

[Kanye]

It sounds to me like you are letting the tail wag the dog to borrow the phrase above.

IR35 is important and you take what steps you can to remain independent, but this way of working could severely compromise your business.

Battling with them over stuff such as a company email address and one off or occasional extensions in scope is just likely to appear inflexible and damage your reputation with the client.

[craig1]

In the one HMRC audit I had many years ago, I was given informal advice to be more verbose in any invoicing or supplementary sheets to invoices, such as timesheets. For example:

Monday: Work as defined in Schedule A to Master Services Agreement, 7.5hrs
Tuesday: " "
Wednesday: Work as defined in Schedule A to Master Services Agreement, 4hrs. Ad-hoc request to perform specific billable task as described in email from Mr XXX dated Wednesday 9th October 2013, 09:00, 3.5hrs
Thursday: Continuation of ad-hoc request, 7.5hrs
Friday: Work as defined...

The idea is that if your contract is written properly, as it should be, then you can take extra billable work as agreed between you and the end client, get it authorised by the client then paid by the agency without fuss while still completely covering your back as a legitimate business. You are, after all, a properly authorised officer of your company with the power to contract on its behalf on even the most informal ad-hoc basis. Just be able to show proof of their offer of work, your acceptance and an overall contract that backs it up with rate, etc. Offer of work can be as vague as you want, it can be "go build me a couple of servers for project x", proof of acceptance can be a simple "OK" reply to an email. You can even have an overall pre-authorised offer/acceptance on a ticketing system if you agree in an email somewhere that any work ticket you take is a billable bit of ad-hoc work.

It doesn't have to be complex proving to HMRC that you're not doing employee work, it does need discipline in tracking and reporting that work though.

[VectraMan]

Yep. Flexibility and doing the job without causing problems should be the main selling point of contractors, and by refusing to do certain things, or insisting on certain things, then you're not doing that. If they start to see you as high maintenance (and after all the client has no reason to care about your personal tax situation), then replacing you with a permie will seem like a more attractive option. I'd rather be completely free to sell my product (i.e. my personal service) in any way I see fit, but IR35 ironically means you have to act less like a business.

[northernladuk]

It doesn't have to be complex proving to HMRC that you're not doing employee work, it does need discipline in tracking and reporting that work though.

This ^. There is being directed by a client and there is using your position to carry out extra work in a client (which is the standard business model of most IT outsourcers). The difference is how it is documented and executed.

[Untouchable1]

I have refused to do work in the past (picking damn oranges!) - http://forums.contractoruk.com/accou...b-profile.html

However, I definitely wouldn't make an issue out of this.

I think that if it is the same 'type of work' and a one off it shouldn't be a problem. I would handle this by sending an email along the lines of 'this is new work and not in scope for our current agreement. Happy to pick this up, but it will mean that it will push out (delay) existing project by x days'.

Untouchable1