Reply to: Absence of contract and IR35

[northernladuk]

The comparison with a plumber is a stupid one IMO.

Totally this.

Does your plumber charge 10's of K per month in a B2B arrangement? No does he balls, so no comparison.

If you were engaging a builder to do 40K plus of work on your house you'd be insisting on a raft of paperwork and agreements. Still a daft comparison but makes the point about value and expectations.

But hey, if you think you can compare yourself to a plumber then fill your boots.

[jamesbrown]

IR35 and mode of documenting contractual terms are pretty much orthogonal.

The whole point of IR35 is to build a hypothetical contract.

I think we've learned by now that the stuff written in an actual contract is viewed as window dressing when building the hypothetical contract.

A PO and SoW is absolutely fine for any length of time and any type of work from an IR35 POV. However, from a commercial POV, it starts to become more risky when you have minimal T&Cs.

[Lance]

I don't really get it. I have been using the same plummer for the past 5 years - does that mean he is my employee? If I get adhoc work from a client for years (regardless of the amount of work) and I have other clients then I fail to see how this can be construed as an employee like relationship.

do you use your plumber a few days every month?
Or just ad-hoc as you spring leaks?
Does your plumber provide materials or do you?
Does your plumber ask you how you want the leak fixing or does he just get on with it?

The comparison with a plumber is a stupid one IMO.

But equally, if you're a real business with multiple customers then the PO/Ts&Cs route is just fine and HMRC aren't going to give it a second look.

If, however, you bill several hundred £k, over a few years, to teh same client, and next to f*** all for other clients. And you're doing it without a firm contract then HMRC may well look at you and see you as easy meat.
There's no hard and fast rule. Neither the plumber extreme, nor the clearly disguised employee other extreme are good comparisons....

Ask yourself. With all the knowledge you have of IR35 and what you know of failures and successes, and the intention of the legislation, do you feel lucky? Well do you punk?

[WTFH]

I don't really get it. I have been using the same plummer for the past 5 years - does that mean he is my employee? If I get adhoc work from a client for years (regardless of the amount of work) and I have other clients then I fail to see how this can be construed as an employee like relationship.

Do you pay the plumber cash, or does he invoice you?

No contract means no insurance, no cover.

[cannon999]

Everyone that has talked about other ways to get around this without a contract such as PO's etc is absolutely right but IMO there is a word of caution with my IR35 head on.

It's a similar situation to when we get asked about taking extra work on at a client and raising a new SOW. If it's done too many times, particularly without an overarching contract like in this case, there is a chance over a long period of time it could look like a paperwork game and HMRC will decide that the reality looks more like D&C than true task driven deliverables. Having an overarching contract explaining the intention of the engagement will certainly help along with separate documentation requesting each piece of work and quote for it.

Having 5, 10 or more PO's or SOW's that just describe what is to be done won't impress HMRC if they've a long period of this to look at.

Just my tuppence worth with an IR35 pedant hat on.

I don't really get it. I have been using the same plummer for the past 5 years - does that mean he is my employee? If I get adhoc work from a client for years (regardless of the amount of work) and I have other clients then I fail to see how this can be construed as an employee like relationship.

[northernladuk]

Everyone that has talked about other ways to get around this without a contract such as PO's etc is absolutely right but IMO there is a word of caution with my IR35 head on.

It's a similar situation to when we get asked about taking extra work on at a client and raising a new SOW. If it's done too many times, particularly without an overarching contract like in this case, there is a chance over a long period of time it could look like a paperwork game and HMRC will decide that the reality looks more like D&C than true task driven deliverables. Having an overarching contract explaining the intention of the engagement will certainly help along with separate documentation requesting each piece of work and quote for it.

Having 5, 10 or more PO's or SOW's that just describe what is to be done won't impress HMRC if they've a long period of this to look at.

Just my tuppence worth with an IR35 pedant hat on.

[northernladuk]

Is there any evidence that no paperwork is bad news when it comes to IR35 ? I agree it's asking for trouble on other fronts but it's about as un-employee like as it gets. I can see why its good to have paperwork to throw at them when they come a knockin but has anyone been to a tribunal with no paperwork ?

Any evidence as in case law or examples of court cases? No but that is more likely down to the fact no one is generally daft enough to get to that stage. Remember QDOS's insurances says they won't defend a case if it's not winnable. How do we know these never got to court because they were in such a poor position with no contract? I don't think the question of 'has it ever happened' is useful at all.

If you've no paperwork how did you get your contract reviewed and following that how did you get any insurance? Even with the best will in the world many contracts fall over with minor points like unfettered substitution. Without it being clear it's unfettered it fails the test. If it's not there at all the who the hell knows what the position is? If you've no paperwork, it goes to court and the client slips up with is wording and says 'yeah happy to decide it we accept a sub' then you are absolutely screwed. I doubt anyone has been to tribunal with no paperwork because no one will defend them.

All this working without a contract is fine when things are fine. It's when it goes tits up it is essential. If you don't think it will ever get there then fill your boots. If there is a hint you are going to have commercial problems like not paid on time, notice etc or legal issues around IR35 then you must have something surely... and yes, there is plenty of evidence these things can go wrong on here.

[rootsnall]

Where is your evidence to give to HMRC so they can make a quick decision and leave you alone?
Where is your RoS and an agreement that the client also understands your RoS?
Where is the agreement showing its between the client and your Ltd and not your personally?

IR35, where is your notice, your payment schedules, notice periods, what insurances you should have in place?

You aren't a NoContractor are you? The clue is in our title. Working without paperwork is asking for trouble. Don't do it.

Is there any evidence that no paperwork is bad news when it comes to IR35 ? I agree it's asking for trouble on other fronts but it's about as un-employee like as it gets. I can see why its good to have paperwork to throw at them when they come a knockin but has anyone been to a tribunal with no paperwork ?

[WTFH]

Purchase order, payment terms and statement of work (clearly defining B2B relationship and sub-contracting). I've done relatively small pieces of work on this basis before.

yeah.. This ^^^^^

A PO is perfectly legal method. With Terms and conditions defined. The Ts&Cs can have all the relevant IR35 stuff in.
That way you don't need to get a client to agree to a whole contract. They just give you a PO and you give them a copy of your Ts and Cs.

Standard B2B.
Larger clients simply won't allow this though. Small clients will be confused when you do anything else.

+1

One of my neighbours is a director of an energy company.
He'd phone me up from time to time with simple computer problems (no, I don't work in PC support, but I've got more of a clue than he has). Sometimes he'd give me a bottle of wine as thanks, sometimes we'd have a beer while I was installing windows updates.
Then he said to me that he'd like his company to pay me for my time doing it, because it saved him having to go into the office.
It was only ever an hour or two on the odd evening or weekend. I agreed a call-off purchase order at £100 per hour based on 1 hour per month over 12 months, the description was "Out of hours remote system support". Each time I'd do work for him, I'd then raise an invoice for the number of hours. It wasn't monthly, so it wasn't a regular source of income.

[Lance]

Purchase order, payment terms and statement of work (clearly defining B2B relationship and sub-contracting). I've done relatively small pieces of work on this basis before.

yeah.. This ^^^^^

A PO is perfectly legal method. With Terms and conditions defined. The Ts&Cs can have all the relevant IR35 stuff in.
That way you don't need to get a client to agree to a whole contract. They just give you a PO and you give them a copy of your Ts and Cs.

Standard B2B.
Larger clients simply won't allow this though. Small clients will be confused when you do anything else.

[Old Greg]

IR35 is the least of your concerns if you’re working without a contract. As OG says, a purchase order alongside some rudimentary T&Cs and a SoW is fine for small jobs.

Funnily enough, the only time I've ever done a piece of work with no paperwork (and it was 0.5 days that I did on my train commute for an existing client I knew very well), they tried to stiff me and not pay. So I invoiced them anyway and then they did pay. Unnecessary stress however.

[jamesbrown]

IR35 is the least of your concerns if you’re working without a contract. As OG says, a purchase order alongside some rudimentary T&Cs and a SoW is fine for small jobs.

[Old Greg]

I am currently doing some work for a client without any written down contract and wondering whether that would have any IR35 implications going forward? It doesn't have any resemblance to an employee like arrangement, I get offered work - I can accept it or not and obviously there is no guarantee that I would actually get work (some weeks I do less work, so the pay is per hour). I subcontract certain bits out where sensible. It is a long-running arrangement (more than a year).

Wondering if I should tire myself with paperwork - is it safe to keep going? Or should I write something down.

Purchase order, payment terms and statement of work (clearly defining B2B relationship and sub-contracting). I've done relatively small pieces of work on this basis before.

[northernladuk]

Don't suppose you have a template to hand?

IR35 Contract Templates - IR35 Resources - Qdos Contractor

[LondonManc]

Don't suppose you have a template to hand?

For a fee.

Seriously, you don't need a template. I worked direct for a friend's company about six years ago. All I had was an email from them explaining payment terms, an NDA to sign on the IP that we were working on and an email confirming MoO status. Didn't even bother with RoS because there was no notice, no confirmation of anything. It was very loose. Some months I'd get 22 days some, 4. Once it got less than 10 in a month twice on the bounce, I was getting a bit bored and conveniently ended up getting a call out of the blue from an old hiring manager who had moved clients and been left in the lurch by someone. I bailed out that week, but did another month of finishing up bits and bobs across a few evenings and a couple of calls from my car at lunch times.