IR35 Implications of a 12-month contract

[MojoDog]

Length of contract alone has no bearing. There are related factors that do have implications, such as becoming part-and-parcel or being viewed by the client as something other than an independent contractor, so your working practices need to remain sound, as the situation can evolve from being outside to inside (with case law backing that up).

That's interesting. Looking at the job description I think there's definitely potential for those factors to come into play.

Better check my Qdos subscription is up to date

[nomadd]

That's interesting. Looking at the job description I think there's definitely potential for those factors to come into play.

Better check my Qdos subscription is up to date

Good test case was: New IR35 ruling: Partial victory for JLJ Services v HMRC

Judge Howard Nolan ruled in a Bristol Tax Tribunal heard on 24 and 25 October 2011 that IR35 did not apply for the first three years of the contract, but after that Spencer had then taken on all of the characteristics of an employee.

You should be OK for 2-3 years - as long as your working practices are well outside of IR35.

[MojoDog]

Good test case was: New IR35 ruling: Partial victory for JLJ Services v HMRC

Judge Howard Nolan ruled in a Bristol Tax Tribunal heard on 24 and 25 October 2011 that IR35 did not apply for the first three years of the contract, but after that Spencer had then taken on all of the characteristics of an employee.

You should be OK for 2-3 years - as long as your working practices are well outside of IR35.

Thanks for that, I'll look into the details of that case.

Much appreciated.

[TheFaQQer]

Good test case was: New IR35 ruling: Partial victory for JLJ Services v HMRC

Judge Howard Nolan ruled in a Bristol Tax Tribunal heard on 24 and 25 October 2011 that IR35 did not apply for the first three years of the contract, but after that Spencer had then taken on all of the characteristics of an employee.

You should be OK for 2-3 years - as long as your working practices are well outside of IR35.

I don't think you can assume that you are safe for any period of time - the judge ruled at after the first 3 years of that particular contract, the contractor became seen as an employee by the client. That doesn't mean that you won't be seen by the client as an employee before that point - if they treat you like an employee after three months, then that doesn't help your defence.

[jamesbrown]

I don't think you can assume that you are safe for any period of time - the judge ruled at after the first 3 years of that particular contract, the contractor became seen as an employee by the client. That doesn't mean that you won't be seen by the client as an employee before that point - if they treat you like an employee after three months, then that doesn't help your defence.

Agreed, it's the nature of the relationship, evidenced by working practices, that matters. A contract can be inside to begin with or at any point after that. The determination is not based on time elapsed, it is based on the facts of the case and evidence of a changed relationship, whether that takes place following a renewal (as in JLJ) or slowly during any given contract, or suddenly.

[JRCT]

Agreed, it's the nature of the relationship, evidenced by working practices, that matters. A contract can be inside to begin with or at any point after that. The determination is not based on time elapsed, it is based on the facts of the case and evidence of a changed relationship, whether that takes place following a renewal (as in JLJ) or slowly during any given contract, or suddenly.

I hear this all the time on here that "it's not what the contract says, but what your working practices are".

I accept that, but unless HMRC come into the office with you and watch what you do, how does their investigation uncover that you're not designing a new database management system and are, infact, manning the photocopier and helping out on reception?

[jamesbrown]

I hear this all the time on here that "it's not what the contract says, but what your working practices are".

I accept that, but unless HMRC come into the office with you and watch what you do, how does their investigation uncover that you're not designing a new database management system and are, infact, manning the photocopier and helping out on reception?

Ultimately, if necessary, by talking to your client(s) (but starting with you - and you shouldn't talk to them directly). Your clients, in the UK at least, are obligated to answer questions from HMRC about the nature of your engagement. It doesn't hurt to have a Confirmation of Arrangements concerning your working practices. I don't think you'll hear anyone say "it's not what the contract says", because the contract matters and it may not be consistent with an upper contract (in an agency arrangement) or with your working practices. The working practices are ultimately what matter if the contract is silent on something or inconsistent with reality, but a consistent and compliant contract will save a lot of time and headaches in resolving discrepancies.

[TheFaQQer]

I hear this all the time on here that "it's not what the contract says, but what your working practices are".

I accept that, but unless HMRC come into the office with you and watch what you do, how does their investigation uncover that you're not designing a new database management system and are, infact, manning the photocopier and helping out on reception?

HMRC ask you and your client about the work that you do.

Contractor Weekly had a series of fictionalised blog posts about how an investigation looks, which are well worth a read.