Beat IR35 - avoid being unnecessarily trapped

[Page 3]

3. Satisfy as many as possible of the "self employment" tests:

[Continued]

Profitability from sound performance:

An employed person will be paid a fixed salary and sound performance does not really affect that individual's remuneration. A self employed individual will often have part of their fee retained until the task they have been retained to undertake has been completed successfully. This opportunity to profit from sound management and sound performance is an indicator of self employment.

Financial risk:

An individual who bears financial risk in providing his services is likely to be self employed. If you suffer the risk of bad debts (i.e. unpaid invoices from your agency) then this is financial risk. If you purchase your own assets to enable you to provide your service, then this is financial risk. If you undertake to complete a task for a fixed fee and it takes longer than you anticipate, then this is financial risk.

Contract term:

Employees generally remain with an employer for a longer period of time than a self employed person provides service to a client on an ongoing basis. Therefore, shorter contracts with a change of client will support your assertion that you are self employed. However, longer contracts with the same client will not necessarily be damaging. It will depend on the other terms in your contract.

Absorption into the organisation:

If an individual seems "part of" the organisation to which he provides services, he is more likely to be categorised as employed. Avoid being entitled to attend the client's employee Christmas party or staff canteen as these suggest you have been absorbed into the client's organisation. If you are retained to supervise employees of your client, this may also suggest you have been absorbed into the client's organisation.

Right to employee benefits:

Employees are entitled to holiday pay, sick pay, maternity pay and a number of other similar things. The absence of the right to these in your contract will not on its own put you outside the grasp of IR35, but you will be right in the IR35 firing line if your contract DOES entitle you to any of these or anything resembling them.

Remuneration:

Employees are usually paid a regular salary. While pay by the hour is not quite a fixed salary, the mention of timesheets will tend to suggest employment. Therefore, where possible, it is best to refer to remuneration in terms of outputs (deliverables) rather than inputs (hours or days).

Provision of equipment:

Employees are provided with all the equipment they need to perform the duties of their employment. A self employed person obviously must provide their own. Where are you required to work at home and to use your own equipment, this will add weight to your assertion that you are self employed.

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Full index of pages:

Home Page IR35 Background - page 1 IR35 Background - page 2 IR35 Background - page 3

IR35 Rules - page 1 IR35 Rules - page 2 Beat IR35 - page 1 Beat IR35 - page 2

Beat IR35 - page 3 Beat IR35 - page 4 Ltd Company - page 1 Ltd Company - page 2

Ltd Company - page 3 Ltd Company - page 4 Umbrella Companies - page 1

Umbrella Companies - page 2 Composite Companies - page 1 Composite Companies - page 2

Composite Co - page 3 Composite Co - page 4 MSC - page 1 MSC - page 2 IR35 Insurance

IR35 Investigations - page 1 IR35 Investigations - page 2 Contracts - page 1

Contracts - page 2 Contracts - page 3 Resources 1 Resources 2 Resources 2 Sitemap