IR 35 and Contracts/SOW

[Lance]

What was the point about the SOW being a sham for IR35 for? It seems totally redundant given that if I was trying to get out of IR35 I probably would want to be paid as well, since otherwise, there's nothing to get out of. It was also very rude.

The question was very simple and yet I didn't get an answer, so why did you bother replying?

To reiterate for people who might care. I have a good relationship with them and they are slow with their paperwork. They won't not pay me, as they just paid my last invoice without question, as they always have because we do good work for them (sometimes I hire freelancers to help).

Does not having a SOW or contract make me inside of IR35?

spare me the bawling of the perpetually offended....

You got your answer. Sort the SOW as it determines what you need to do to get paid.
The other answer was that a SOW as a sham will not help you with IR35. Not having a SOW does not make you outside IR35.
The fact you like other answers that are same as mine, suggest you don't understand what is being said.

[BlasterBates]

You're assuming that I could quickly get another contract, which is a presumption on your part with no basis. In the meantime, I have been paid and have a good relationship with them.

There is no debate that it's not ideal to be doing business without a contract in place, but to say it's stupid is presumptive - I even stated that I didn't want to disclose personal circumstances. Just to be clear, I am working to get other work, but can only take on so much.

I'm not working at risk for an indefinite period - I'm working on a monthly basis for them and am going to be chasing them again soon - I did last week. There is a good relationship and I'm being paid.

Your unifactorial analysis of my situation is presumptive.

Some contractors have a written contract and don't get paid either. As you've stated, they are paying you regularly. In my experience it's actually fairly normal for renewals that the paperwork comes after the start date, though usually it arrives after a week or so. The verbal contract is legally binding. I once had a 6 month contract based on a verbal agreement. Nethertheless if you did get into a dispute you would be in a weak position, so definitely not desirable. Given the current market probably best to carry on and keep on the pressure to get the paperwork signed.

[northernladuk]

Does not having a SOW or contract make me inside of IR35?

A very flippant reply from me would be, if it's been possible to continue to work this long without an agreed SOW then it's pretty clear that a SOW is not needed, so it does appear to be a bit of a sham. The SOW should define and drive the work. It doesn't exist to document the work you'd be doing anyway.

In general no, not having a SOW doesn't not always make you inside BUT if you are being directed and told what to do by the client without one then there is an argument you are already inside through D&C and possibly MoO and the SOW, when it appears, makes no difference what so ever. So yes, it could be the case for you the lack of the SOW is making you inside. The fact you don't even have a contract doesn't help your situation either.

Working without a contract, however, is a big no no and you need to sort it. You are very lucky having a good relationship with the client but all that is doing is reducing the risk it won't go pear shaped, not removing it. At least try get a contract with the basic clauses inso you are commercially safe before worrying about IR35.

[jamesbrown]

I do agree I'm being treated poorly and I'm trying to address that. I'd like to not be homeless in the meantime.

When you say my company is liable, what do you mean? Can you be specific?

I mean that your company (read: you) remains responsible for determining whether your contract is inside or outside IR35 and for acting accordingly. Your company remains liable for underpaid tax in the event that you declare it to be outside and it is subsequently found to be inside. The liability will extend to the deemed payment that should've been made, plus any penalties and interest, as applicable (probably offset against Corporation Tax paid although there are no absolute guarantees of that). The same applies from April 6 when the supply chain is fully overseas, so really no change in IR35 at all. The location of the client is irrelevant; it has been, and will remain, your responsibility to determine whether your contract is inside IR35 and, when inside, to operate a deemed payment.

All that said, if you're working for an overseas client and routinely subbing work (that you would otherwise do in person) to other freelancers, it's quite unlikely that the contract is inside - but you should have it reviewed nonetheless.

[MJL]

There isn't a good relationship because you don't have a contract. You're being treated poorly because you're willing to accept it.

Anyway, good luck to you. Get your non-contract and working practices reviewed at your earliest convenience because your company remains responsible and liable both now and after April 6 (unless there is a company, such as an agency, above yours in the supply chain with a UK connection). Also, do some reading on IR35. Resources over there -->

I do agree I'm being treated poorly and I'm trying to address that. I'd like to not be homeless in the meantime.

When you say my company is liable, what do you mean? Can you be specific?

[jamesbrown]

You're assuming that I could quickly get another contract, which is a presumption on your part with no basis. In the meantime, I have been paid and have a good relationship with them.

There is no debate that it's not ideal to be doing business without a contract in place, but to say it's stupid is presumptive - I even stated that I didn't want to disclose personal circumstances. Just to be clear, I am working to get other work, but can only take on so much.

I'm not working at risk for an indefinite period - I'm working on a monthly basis for them and am going to be chasing them again soon - I did last week. There is a good relationship and I'm being paid.

Your unifactorial analysis of my situation is presumptive.

There isn't a good relationship because you don't have a contract. You're being treated poorly because you're willing to accept it.

Anyway, good luck to you. Get your non-contract and working practices reviewed at your earliest convenience because your company remains responsible and liable both now and after April 6 (unless there is a company, such as an agency, above yours in the supply chain with a UK connection). Also, do some reading on IR35. Resources over there -->

[MJL]

No presumption necessary, it's there in your OP in black and white; you're working at risk for an indefinite period. As I say, IR35 is the least of your worries. The time spent working for potentially no money could've been spent seeking alternative work. What if this mythical contract is still sitting with her boss in September? I fear you're in too deep now and won't be able to cut your losses.

You're assuming that I could quickly get another contract, which is a presumption on your part with no basis. In the meantime, I have been paid and have a good relationship with them.

There is no debate that it's not ideal to be doing business without a contract in place, but to say it's stupid is presumptive - I even stated that I didn't want to disclose personal circumstances. Just to be clear, I am working to get other work, but can only take on so much.

I'm not working at risk for an indefinite period - I'm working on a monthly basis for them and am going to be chasing them again soon - I did last week. There is a good relationship and I'm being paid.

Your unifactorial analysis of my situation is presumptive.

[jamesbrown]

Thanks very much for the considered reply. I would ask you to consider that in my shoes, it may have been more stupid not to be doing this work than not, since otherwise, due to personal circumstances I'd rather not go into, I'd not have any work right now and wouldn't have been paid since December's invoice. It's certainly not ideal, but to say it's stupid, it's a bit presumptive.

No presumption necessary, it's there in your OP in black and white; you're working at risk for an indefinite period. As I say, IR35 is the least of your worries. The time spent working for potentially no money could've been spent seeking alternative work. What if this mythical contract is still sitting with her boss in September? I fear you're in too deep now and won't be able to cut your losses.

[MJL]

IR35 has never been that simple. Having a clear statement of work will generally help, but it really depends on your working practices in the round. This is why there are professionals available that review contracts and working practices.

Anyway, forget about IR35 until you've mitigated the commercial risk. Regardless of how much you trust the client, it is a very stupid move to work without a contract and you'd be well advised never to do that again (assuming you want a viable business in the long term).

Thanks very much for the considered reply. I would ask you to consider that in my shoes, it may have been more stupid not to be doing this work than not, since otherwise, due to personal circumstances I'd rather not go into, I'd not have any work right now and wouldn't have been paid since December's invoice. It's certainly not ideal, but to say it's stupid, it's a bit presumptive.

[MJL]

If the supply chain is fully overseas, then it's BAU after 6 April - YourCo is still responsible and liable for administering IR35.

The other stuff is orthogonal to IR35. Working without a contract is a very bad idea, commercially speaking. You are working at risk. The IR35 risk is trivial in comparison, since "at risk" here means 100% of the money you are owed.

Thank you very much for your considered reply.

[jamesbrown]

Does not having a SOW or contract make me inside of IR35?

IR35 has never been that simple. Having a clear statement of work will generally help, but it really depends on your working practices in the round. This is why there are professionals available that review contracts and working practices.

Anyway, forget about IR35 until you've mitigated the commercial risk. Regardless of how much you trust the client, it is a very stupid move to work without a contract and you'd be well advised never to do that again (assuming you want a viable business in the long term).

[jamesbrown]

If the supply chain is fully overseas, then it's BAU after 6 April - YourCo is still responsible and liable for administering IR35.

The other stuff is orthogonal to IR35. Working without a contract is a very bad idea, commercially speaking. You are working at risk. The IR35 risk is trivial in comparison, since "at risk" here means 100% of the money you are owed.

[MJL]

you should push them hard on the basis that might be working for free. delivery against a sow is your proof of work.
Unless the sow is just a sham to get you around ir35.

What was the point about the SOW being a sham for IR35 for? It seems totally redundant given that if I was trying to get out of IR35 I probably would want to be paid as well, since otherwise, there's nothing to get out of. It was also very rude.

The question was very simple and yet I didn't get an answer, so why did you bother replying?

To reiterate for people who might care. I have a good relationship with them and they are slow with their paperwork. They won't not pay me, as they just paid my last invoice without question, as they always have because we do good work for them (sometimes I hire freelancers to help).

Does not having a SOW or contract make me inside of IR35?

[Lance]

I’d appreciate if you could answer a quick question relating to IR 35, as I’m a somewhat awkward position with a client I do approximately 2 days a week for who are based on Switzerland.

We are working on various things with the idea that I’ll be working on different projects throughout the year. This is a continuation and extension of project work that was done last year.

My contact there, who I work with, send me a draft contract and SOW at Christmas, which was already late. At the end of January she apologised profusely for not sending it back up the chain and completing some parts of it. I said, as long as it’s there in a few weeks it should be fine. She said a few days.

March came and I asked her what was up and she said it was still sitting with her boss.

Obviously it’s not ideal to be working outside of contract, despite the high level of trust we have for each other and the question is.

Is there a major issue if I don’t have a signed SOW showing it’s a project based relationship before IR 35 comes in in April? How hard should I push them based on that factor.

you should push them hard on the basis that might be working for free. delivery against a sow is your proof of work.
Unless the sow is just a sham to get you around ir35.

[MJL]

I’d appreciate if you could answer a quick question relating to IR 35, as I’m a somewhat awkward position with a client I do approximately 2 days a week for who are based on Switzerland.

We are working on various things with the idea that I’ll be working on different projects throughout the year. This is a continuation and extension of project work that was done last year.

My contact there, who I work with, send me a draft contract and SOW at Christmas, which was already late. At the end of January she apologised profusely for not sending it back up the chain and completing some parts of it. I said, as long as it’s there in a few weeks it should be fine. She said a few days.

March came and I asked her what was up and she said it was still sitting with her boss.

Obviously it’s not ideal to be working outside of contract, despite the high level of trust we have for each other and the question is.

Is there a major issue if I don’t have a signed SOW showing it’s a project based relationship before IR 35 comes in in April? How hard should I push them based on that factor.