Do my contract clauses keep me outside IR35?
A reader asks:
I (the Worker) am working through my Limited Co. (the Contractor) have signed a Contract with an Agency (the Company) to work for a Client. I have been following closely the "Inside/Outside IR35" topic for some time and I wonder is there, apart from your FO35 Contract Samples, any other cast iron contracts out there which ensure categorically that one is outside IR35. I was always of the impression that I was outside IR35 but the more I look into the situation the more confusing it gets. I appreciate that there are other possible considerations apart from a signed contract but this must be the basis from which to work.
Following are a few excerpts from my contract which was signed by "the Contractor" and "the Company":
1. The Contractor is, and shall at all times remain, an independent contractor in connection with the Services, carrying on business on its own account.......
2. This Agreement does not, nor is it intended to, constitute a contract of employment between the Company and any of the Contractor's directors or employees including any Worker and neither have the parties established nor do they intend to establish in any other manner whatsoever an employer/employee or master/servant relationship between the Company and such individuals......
3. At no time will the Contractor or any of its directors or employees including any Worker hold itself or themselves out as being employees of the Company or of the Client......
4. Notwithstanding any other provision of this agreement, this agreement may be terminated by either party giving four and a half working days notice to that effect to the other..............
5. The Company shall not be under any duty pursuant to this agreement to take any measures to protect the health, safety and/or welfare of the worker nor to provide safe or other equipment, tools or premises nor to provide a safe system of working.......
6. The Contractor shall at all times during the term of this agreement be the employer of the Worker involved in the provision of Services and warrants that it is entitled lawfully to employ and hire out or otherwise make available the time and services of its directors or employees as Worker to any other person, firm, company or organisation.......
I would appreciate your expert answer to the question "Am I definitely/possibly/probably/maybe/or not outside IR35?
Kevin Miller replies
John Sorry to be difficult but there is little in these details that helps me decide one way or the other. Several of the clauses you cite are really statements of intention - which from a case law point of view only become pertinent when all other issues are finely balanced. Only then does the intent of the parties become conclusive.
The key issues to consider include:
1] Personal service - the right of substitution (ROS) and the extent to which it is fettered
2] Control by the client over issues of what and how you do while on the contract - if they can control those factors you may well be caught in the absence of a good ROS. Control over when and where the work is done tends to be less determinative as there are often good reasons why a self employed person has to work on site and at certain times.
3] Financial risk - if you can show significant risk (fixed price, making good defective work at your own expense, having to invest in additional equipment to carry out the work etc) then that will be a strong pointer towards self employment.
Regards