IR35 - Confirmation of Arrangements

[meanttobeworking]

In the circumstances where a client is relatively knowledgeable on IR35, and is as keen as the engaged contractor to ensure the contract and working arrangements fall outside, it seems to me that a simple Confirmation of Arrangements letter signed by both parties would do a lot to help. Similar to the IPSE template, it should just say:

We, the undersigned, confirm that during the engagement referenced <here>:

1) Although the initial intention is for the services to be provided by <contractor name>, should their availability change during the course of the engagement then <client> is prepared in practice to honour clause <enter contract clause number> which allows for <ltd name> to provide a suitable substitute, over which <ltd name> will retain responsibility for quality of work and payment.

2) Although it is expected for <client> to provide <ltd name> with a verbal or written brief on the project, <ltd name> will maintain direction and control of <contractor name> or any substitute, and significant changes to the initially agreed brief (such as a change to the project) will not be made without agreement from both parties, along with any appropriate update to contract documentation. This is in line with clause <enter contract clause number> of the contract.

3) Although the referenced engagement is expected to last for a specific time, variations to the requirements may mean that the requirement for services of <ltd name> may reduce (with <client> under no obligation to pay for this time or provide alternative work) or increase (with <ltd name> under no obligation to provide additional time or agree to another engagement following on from the existing one). This is in line with clause <enter contract clause number> of the contract.

Given that you'd only need one of these points covered for a basic IR35 defence, you could even do away with one or two of them if contentious (although obviously all three is ideal).

I just threw this together and I'm sure it could be improved, but this is about the principle, not the specific wording. If it's not this simple, why not? And if it is, why aren't we all just doing it?

[JohntheBike]

In the circumstances where a client is relatively knowledgeable on IR35, and is as keen as the engaged contractor to ensure the contract and working arrangements fall outside, it seems to me that a simple Confirmation of Arrangements letter signed by both parties would do a lot to help. Similar to the IPSE template, it should just say:



Given that you'd only need one of these points covered for a basic IR35 defence, you could even do away with one or two of them if contentious (although obviously all three is ideal).

I just threw this together and I'm sure it could be improved, but this is about the principle, not the specific wording. If it's not this simple, why not? And if it is, why aren't we all just doing it?

why aren't we all just doing it?

because the clients are dictating how the market works?

[meanttobeworking]

because the clients are dictating how the market works?

Yours might be

As I said, the context is that the client *wants* to engage contractors on an outside basis, but that both parties might feel more comfortable with an explicit statement on their position. Previously it was only in the contractors interest to record evidence, but now it's of equal importance to the Client. So Client can show due diligence ("see, they definitely weren't expecting to get paid for work not done") and Ltd Co can do the same ("see, they were definitely happy to accept a substitute in reality, and my co retained D&C")

[Hamlet]

I just threw this together and I'm sure it could be improved, but this is about the principle, not the specific wording. If it's not this simple, why not? And if it is, why aren't we all just doing it?

I've taken this approach with my client, a large financial, and they are at least considering it. Immediate project manager is on board, but it needs sign off from various places within the bureaucracy, so they may well yet hold to the "PAYE only" line purely out of risk aversion.

Not enough people are aware that the case law hasn't changed, but I think that message is slowly getting through. I'm hearing a lot of rumours from across the City of clients wavering from their firm initial positions.

[meanttobeworking]

I've taken this approach with my client....

Interesting. I'm working on the (perhaps naive) view that a client's main motivation for blanket ruling inside is to remove risk, but demonstrating that this risk can be mitigated in other ways opens their eyes to the benefits of engaging properly outside too. e.g. no work, no invoice, etc.

[edison]

It will be interesting to see if this takes off. I've got clients to sign these types of letters a few years ago but when I worked at a bank in 2017, the agency specifically told the client not to sign them.

[Hamlet]

Interesting. I'm working on the (perhaps naive) view that a client's main motivation for blanket ruling inside is to remove risk, but demonstrating that this risk can be mitigated in other ways opens their eyes to the benefits of engaging properly outside too. e.g. no work, no invoice, etc.

Yeah there's a reasonable chance that in 18 months or so we'll be in quite a good place... lots of educated clients working with contractors to ensure status is clear cut. Indeed it's not impossible that we end up seeing this reform as a net benefit. But right now there's a learning process going on. And clients are understandably reluctant to be one of the inevitable initial guinea pigs dragged through the courts.