Negotiate contract that sounds like IR35 trap?

[dingdangwang]

Lance: "Thing is, it reads like a small client."
Surprisingly, it's not a small client! They're a company that's part of a group of 5 companies. I contracted with them a few years ago prior to IR35 hitting private sector, through a recruiter.

jamesbrown : "Looks like an employment contract in abstract/summary form..."
Agree, these are worryingly common in contracts I've been asked to sign.

eek jamesbrown : "OP doesn't have an SDS and the SDS doesn't need to be issued until the first payment from the client (isn't clear whether this arrangement involves an agency but, if so, that could be several months after the OP starts working)"
SDS was meant to be coming on Friday, but should now be coming on Monday. That's news to me that SDS can be issued after work starts, what a mess! Again, I'm a bit of a noob here, this is my first contract since April 2021 that required a SDS as those contracts were with small clients.

Engagement is ClientCo and MyPSC Ltd, no recruiters or agents or umbrella. No payment terms, though from experience, it's always the 30 days as on my invoice, maybe with a nudge.

[jamesbrown]

Yeah, thanks, IPSE

[Fred Bloggs]

Oh that would have been the case but IPSE thought it better that status decisions were made once the contractor was in place rather than when the advert was created.

Which means we have a mess that previously didn't exist in the public sector rules as the end client needed to make a definitive decision before the contractor began.

There is no situation in existance that those people cannot make worse. In my opinion. How sad.

[eek]

Thanks for the comments. Bl**dy happy that I am retired then. What a mess. I kind of naively thought that at long last, the 95% of agency workers who were always going to be caught would be. Leaving a much smaller pool of specialist outside roles for genuine contractors.

Oh that would have been the case but IPSE thought it better that status decisions were made once the contractor was in place rather than when the advert was created.

Which means we have a mess that previously didn't exist in the public sector rules as the end client needed to make a definitive decision before the contractor began.

[Fred Bloggs]

Thanks for the comments. Bl**dy happy that I am retired then. What a mess. I kind of naively thought that at long last, the 95% of agency workers who were always going to be caught would be. Leaving a much smaller pool of specialist outside roles for genuine contractors.

[jamesbrown]

In the new IR35 world, if the client and the agency are happy to carry the risk of a bad contract why is anyone here worried? The client and the agency carry the IR35 risk now, don't they? There is only a risk to the contractor if the client is exempt from the new legislation by means of being under the threshold where the new IR35 legislation applies?

In theory, yes, but the OP doesn't have an SDS and the SDS doesn't need to be issued until the first payment from the client (isn't clear whether this arrangement involves an agency but, if so, that could be several months after the OP starts working), plus there's a draft contract that is nothing like a B2B contract, which signals that they might change their minds, plus 9.2 is an attempt to claw back any taxes owed (whether it would work is questionable, but it's there for a reason).

[eek]

In the new IR35 world, if the client and the agency are happy to carry the risk of a bad contract why is anyone here worried? The client and the agency carry the IR35 risk now, don't they? There is only a risk to the contractor if the client is exempt from the new legislation by means of being under the threshold where the new IR35 legislation applies?

In the new IR35 world the end client can change their mind anytime up to the point they pay the first invoice (which with 90 day terms may be 120 days from the contractor's start date).

You then have claw back terms that are probably illegal but at the moment nobody knows.

However as I said before I don't deal with contracts myself - I get lawyers to deal with it or insist on my own.

[Fred Bloggs]

In the new IR35 world, if the client and the agency are happy to carry the risk of a bad contract why is anyone here worried? The client and the agency carry the IR35 risk now, don't they? There is only a risk to the contractor if the client is exempt from the new legislation by means of being under the threshold where the new IR35 legislation applies?

[jamesbrown]

Agree with Lance, not a proper B2B contract, so much stuff missing that would be present in a proper B2B contract. Looks like an employment contract in abstract/summary form with a substitution clause bolted on (good luck using that). But, yes, get it reviewed by a professional for commercial terms, at least, such as they are, and for IR35 too.

Assuming the supply chain above YourCo is responsible for the SDS and liable for IR35, then the client is probably labouring under the misapprehension that 9.2 will save them (hint: it won't ...but you should also bear in mind that, if they change their mind, they are probably going to withhold payments and payment terms seem to be... absent).

[Lance]

that's not a B2B contract. It's inside IR35 every day of the week. Forget which clause, it's all of them.

However. If you get an outside determination, and they're not small, it's not your problem.
Thing is, it reads like a small client. Nothing about that says anything except small business who wants the cake and the eating of it.

IANAL.

[eek]

You should be using a lawyer to negotiate the contract don't do it yourself

[dingdangwang]

Hi folks,

Long time lurker and reader here, finally with a chance to ask a question or three.

I've received the contract shown in the attachments, sorry, all very short notice on this!
(EDIT: Not sure why the attachments don't show, but you can see them at Imgur: https://imgur.com/a/aXXMswA )

The client has yet to do the Status Determination, but has said it'll be Outside IR35.

Several clauses give me concern that they are indicative of Inside IR35, and I've asked to edit them as follows...

• 1.1: Remove "to devote 5 days per week (excluding UK Bank Holidays)"
• 1.2: Remove "at all times"
• 2.2: Is this a problem like 9.2 below?
• 4.1.a: Remove "in order to monitor sick leave and take decisions as to your fitness to work"
• 9.2: Burn this whole paragraph

Are these edits sensible?
Am I right in understanding that if we proceed as Outside IR35, and HMRC later take issue that this should be Inside IR35, that the tax liability will retrospectively fall on Client?

Client sounded fine with that possibility, but I'd rather avoid a poor determination happening near me, I don't need the hassle.

It seems I have a few options:

• Insist Client remove/edit the offending paragraphs as above
• or
• Leave the contract as is, but go inside IR35. But what should I bump my rate to?
• or
• Are there other possibilities you'd suggest?

We've got a call first thing on Monday, this time with a director who'd have authority to amend the contract, so I'd like to be prepared with your wisdom!

Thanks in advance, and sorry to sound noobish.

EDIT: Not sure why the attachments don't show, but you can see them at Imgur: https://imgur.com/a/aXXMswA