What to do before April 5th

Many of you will have been speaking with Agents and Clients trying to understand which side of the line you will fall after April 5th. The lucky few who are working for enlightened Clients and "on the ball" Agents may have even got themselves sorted out.

What about the rest?

Assuming you have not taken or are about to take: the permanent route, gone overseas, downshifted, and you want to remain providing your services as an Independent Consultant, then take a moment to consider this:-

The point at which you will have to declare which sort of Contract you will be in, is next April. Do you consider yourself a disguised employee of the Client? Do they want you as an employee? In most cases the answer will be a flat NO

Therefore the Contract you signed with the Agent (and that the Agent signed with the Client) is clearly now wrong and does not reflect the reality of the situation. It is however totally unrealistic to expect Clients to understand why they need to change and then understand how they need to change within the remaining few weeks. (It is why the British Chamber of Commerce recommends that Government allow at least 4 months from the introduction of new legislation to when Companies have to start implementing.)

Drop a note to your Agent and your client pointing this out. Tell them you consider yourself a genuine business, that you are not a disguised employee of the client and that you are sure over the coming months you will be able to renegotiate Contracts that reflect the true reality of this situation.

Keep a copy of this on file and I would argue that you have bought yourself some time to sort this out. In the meantime look after the downside and adjust your outgoings to allow for the possibility of a higher tax bill

In the next article I will look at Contracts and how they fit into a commercial negotiation. If you are not subscribed to the newsletter I recommend that you do this and you will get notification when it is posted.

If you are not a member you should also join the PCG. They will have legal expenses insurance cover from April 5th, to cover a Revenue investigation, as well as a free draft contract and 1/2 an hour of legal advice, free, via a legal hotline

Cheers

Andy White

Postscript: Added 26th March 2000

I had hoped that the Revenue would take a pragmatic view of the transitional period for those who are in Contracts spanning April 5th. Unfortunately not

Here is the text of a reply received from Sarah Walker

If the contract in force genuinely does not reflect the facts of the relationship, and the worker can demonstrate that, then the reality of the relationship is what will determine the tax treatment. But the Courts have in the past been very unwilling to disregard a properly signed contract.

If the contract in force (together with other relevant factors) meets the definition of employment, a letter from the worker saying that he would like to negotiate a different contract will not make a difference, unless there is a real change in the nature of the relationship. If there is a change which affects the tax treatment, the different tax treatment would only apply from the date of the change.

So in conclusion the relationship must meet the self employment rules and a contract should be in place from April 5th if you do not want to be caught by IR35