Reply to: Terminate contract prematurely to support IR35 potential case?

[TonyF]

MOO - Client has obligation to provide work. The client isn’t providing work so not fulfilling any obligation.

You want to have a lack of mutuality of obligation.

If the client is obliged to offer work that's not a good thing.

[supersteamer]

LOL

The reason i am asking is that regardless of why you leave a contract, if you are being paid to sit around twiddling thumbs you are most likely inside IR35, REGARDLESS of how you terminate your contract.

Why?

ROS - not relevant
D&C - OP is not being directed or controlled if nobody is asking him to do anything.
MOO - Client has obligation to provide work. The client isn’t providing work so not fulfilling any obligation.

If a business wants to waste money asking another business do nothing then surely that’s bad management but not a tax issue.

[ProjectManager]

LOL

The reason i am asking is that regardless of why you leave a contract, if you are being paid to sit around twiddling thumbs you are most likely inside IR35, REGARDLESS of how you terminate your contract.

Thanks, I agree, good point.

The news that I might not be renewed generated instantly a whole raft of tasks to keep me more than busy for at least two days this week.

I will speak to my client rep and see what they think of the above mentioned approach of me leaving them early.

To confirm - I do my best to act like professional and only bill for what I have worked, I don't play -> stay calm and keep invoicing regardless of how tempting that might be.

[l35kee]

I am sorry but this is politically incorrect question and I am not going to answer it.

I can only say that I have my moral norms and I most of the time stick to them with some 10-20% deviations here and there.

I consider IR35 not fair hence why I am trying to cover myself to the maximum extent.

LOL

The reason i am asking is that regardless of why you leave a contract, if you are being paid to sit around twiddling thumbs you are most likely inside IR35, REGARDLESS of how you terminate your contract.

[northernladuk]

I am sorry but this is politically incorrect question and I am not going to answer it.

Politically incorrect?? Honestly?!?

Are we allowed to ask what you do the other 90% of the time or is that racist?

I can only say that I have my moral norms and I most of the time stick to them with some 10-20% deviations here and there.

Charging your client for only 10% of work fits in to those norms?

I consider IR35 not fair hence why I am trying to cover myself to the maximum extent.

As WiB says, cover yourself by acting like a business. Playing silly games to get a piece of paper to wave could end up being a complete waste of time.

Either that or just get TLC35 or IPSE+ and stop worrying.

[ProjectManager]

What are you doing now that you are only 10% utilised?

Are you:

A: Invoicing for 0.5 days a week.
B: Invoicing for 5 days a week.

I am sorry but this is politically incorrect question and I am not going to answer it.

I can only say that I have my moral norms and I most of the time stick to them with some 10-20% deviations here and there.

I consider IR35 not fair hence why I am trying to cover myself to the maximum extent.

[l35kee]

Hi NLUK,

There is no work, I am probably under 10-15% utilised at the moment, it has dried up in the past month or so and now is very quiet, dead quiet.

I am not 100% sure they will do as asked BTW, I am just trying to see if what I am thinking makes any sense and if it does then see what's the best way to do the above.

Thanks,
PM

What are you doing now that you are only 10% utilised?

Are you:

A: Invoicing for 0.5 days a week.
B: Invoicing for 5 days a week.

[WordIsBond]

IR35 too often skews behaviour, but we do well to act like businessmen and not let it get in the way of providing a great service to our clients. Sometimes, doing so actually helps with IR35, anyway. But even if it doesn't, my view is to let those chips fall where they may and provide good service.

[ProjectManager]

Thank you Sir, I do like the below approach very much and will most probably act in that direction!

Forget IR35, and operate like a professional and a businessman.

You've contracted to provide a service, and part of that is to provide the best value for money that you can. Because of that, and because you are an expert and a professional, your service is expensive, and it is no longer needed to bring the project to completion.

So write them a letter telling them that the project is drawing to a close, that the need for your service is minimal, and you recommend they reduce the cost with a mutually agreed termination of the contract after tomorrow. You agree to be available to them on an ad hoc basis over the next two weeks at £X / hour as needed, but you expect the need to be minimal.

You've appreciated the opportunity for your company to be part of this project, you believe it has been mutually beneficial, and you would be glad to consider future projects should they arise.

Act like a professional who cares about doing right by his client. Will it help your IR35 position? Of course. But don't try to manufacture a sense of hostility or abruptness, just act like a businessman who has provided a service, cares about doing right by his clients and not wasting their money, and wants to keep the door open for further business in future. In doing so, you'll be acting far differently from an employee, who would serve out his time and collect his full last salary payment. That will certainly be beneficial to you in any future IR35 case, but it also will leave the client feeling really good about the whole experience.

[WordIsBond]

Forget IR35, and operate like a professional and a businessman.

You've contracted to provide a service, and part of that is to provide the best value for money that you can. Because of that, and because you are an expert and a professional, your service is expensive, and it is no longer needed to bring the project to completion.

So write them a letter telling them that the project is drawing to a close, that the need for your service is minimal, and you recommend they reduce the cost with a mutually agreed termination of the contract after tomorrow. You agree to be available to them on an ad hoc basis over the next two weeks at £X / hour as needed, but you expect the need to be minimal.

You've appreciated the opportunity for your company to be part of this project, you believe it has been mutually beneficial, and you would be glad to consider future projects should they arise.

Act like a professional who cares about doing right by his client. Will it help your IR35 position? Of course. But don't try to manufacture a sense of hostility or abruptness, just act like a businessman who has provided a service, cares about doing right by his clients and not wasting their money, and wants to keep the door open for further business in future. In doing so, you'll be acting far differently from an employee, who would serve out his time and collect his full last salary payment. That will certainly be beneficial to you in any future IR35 case, but it also will leave the client feeling really good about the whole experience.

[Lance]

Thanks a lot all!

There is a bit of work now, I can bill good 2-3 days this week and perhaps 1-1.5 days next week, but I don't see any harm(negative impact to business/projects) in me leaving end of this week for example, there is nothing critical or that important happening next week.

My question is more around HOW to word it, perhaps an e-mail from customer's Mgt asking me to put tools down for example, or something of this sort?

I am a bit concerned that if I leave, regardless of wording I'd need notice period, I do not want to put some big fat lies in writing to bypass the notice period, I think it makes much more sense if my client asks me to leave due to lack of work.

If it's risky and sounds fishy I will just carry on to the end of the contract but if there is a reasonable chance to cover my back from legal perspective and improve my IR35 stance I am willing to bite the bullet.

Hope I am making sense.

Thanks,
PM

you could write to them stating that there is no more work available that is specified in your contract, and you aren't willing to consider any work outside that scope, so you're terminating the contract early. Just make sure they're lined up to accept that so they think you're being an arse.

That (IMO) proves you have no Mutuality of Obligation, and therefore IR35 cannot apply to you.

[ProjectManager]

Thanks a lot all!

There is a bit of work now, I can bill good 2-3 days this week and perhaps 1-1.5 days next week, but I don't see any harm(negative impact to business/projects) in me leaving end of this week for example, there is nothing critical or that important happening next week.

My question is more around HOW to word it, perhaps an e-mail from customer's Mgt asking me to put tools down for example, or something of this sort?

I am a bit concerned that if I leave, regardless of wording I'd need notice period, I do not want to put some big fat lies in writing to bypass the notice period, I think it makes much more sense if my client asks me to leave due to lack of work.

If it's risky and sounds fishy I will just carry on to the end of the contract but if there is a reasonable chance to cover my back from legal perspective and improve my IR35 stance I am willing to bite the bullet.

Hope I am making sense.

Thanks,
PM

[northernladuk]

Well you need to think about going now really. Sitting around getting paid for doing nothing for a couple of weeks is going to out weigh being canned for a few days when it comes down to an investigation.

When you say work has dried up? Were you doing whatever work they allocated you and now there isn't much?

[SueEllen]

Hi NLUK,

There is no work, I am probably under 10-15% utilised at the moment, it has dried up in the past month or so and now is very quiet, dead quiet.

I am not 100% sure they will do as asked BTW, I am just trying to see if what I am thinking makes any sense and if it does then see what's the best way to do the above.

Thanks,
PM

Then ask the client if you can leave immediately or in a few days.

Will it help if there is an IR35 investigation - who knows as it depends on the rest of your contract and your working practices.

[ProjectManager]

What is the reality of the situation? Is there really no work for you to do or are you tick boxing trying to get an IR35 out?

If the client get's called to court which version will they tell?

EDIT : Ah you've edited your post to clarify.

Hi NLUK,

There is no work, I am probably under 10-15% utilised at the moment, it has dried up in the past month or so and now is very quiet, dead quiet.

I am not 100% sure they will do as asked BTW, I am just trying to see if what I am thinking makes any sense and if it does then see what's the best way to do the above.

Thanks,
PM