Advise needed following contract review

[The Lone Gunman]

Get the contract changed, and get insurance to cover a loss if taken to court. While Dragonfly was a bit of a blow, there still have been MANY wins against HMRC over IR35, and I'm sure there will continue to be. HMRC have probably got wiser over which cases they'll persue. An non-Ir35 contract together with not becoming part of the organisation is still, in my opinion, a pretty safe bet.

Part of the Dragonfly loss was due to the deliberate nature of the changes made to the contract wording to make it IR35 compliant. I would therefore assume that HMRC will chase this every time they see it.
You have to make sure that any changes you make to the contract are worded in such a way that it makes clear it is not a wording change to the contract but a real description of working practice.

[NotAllThere]

As for getting a higher rate, to be fair to them the client doesn't care about your personal tax situation and certainly isn't going to pay you more to make up for it, and the agent will just say that the client won't pay more. Forget it, in other words.

The OP asked if it would give him leverage with the agency. What the client will pay is irrelevant. He's negotiating with the agency. "I cannot take this contract because it is caught by IR35 - either change the contract, pay me more, otherwise, no deal.", seems to me to be an excellent negotiating position. "I can't take a contract that is not financially viable" is perfectly reasonable.

The agency aren't going to want the deal to go down, even if it means they have to take a cut in their margin. If terms can't be agreed, then that's the way it goes; but there's usually some scope for change.