IR35 contract - essential features

Contracts: Next >>

[Page 1]

Introduction:

You should remember that in the past the Revenue paid very close attention to the contractor's contract during each IR35 enquiry. They have now started to pay attention to other aspects as well (see our "IR35 Enquiries" section and our "Beat IR35" section) but the contract remains a key element of focus.

You should remember, whenever you sign a contract, that the document you are signing could eventually be used to determine your IR35 status. The costs of paying for a professional review of your contract before signing are well worth it. And remember, it will be extremely difficult for you to have a contract amended once it has already been signed. It pays to get it right first time out.

Essential features of your contract:

If your contract is to establish that your status is outside the scope of IR35, then it absolutely must have the following attributes:

(1) Exclusion of your personal name:

Your customer is not contracting with you. You are an employee of your own company not theirs. Your customer is contracting with your company. Your own name should therefore not appear anywhere in the contract. Only the name of your company should appear.

If your own name does appear, it could be construed that you are contracting to do the work yourself i.e. to provide a personal service. As we mentioned in our "IR35 Background" section, personal service indicates employment rather than self employment and this would put you right in the firing line for IR35.

(2) Right of substitution:

Your contract needs to have a substitution clause in it enabling to you provide an alternate to complete the work detailed in the contract on your behalf should the circumstances require. It is usually acceptable for your client to have the right to approve the alternate, but you must ensure the clause allowing you to provide a substitute is present in the contract.

(3) Services:

Your contract must have a clause containing the details of the services your company is contracting to provide to your customer. This clause needs to be as detailed as possible. If you have read our "IR35 Background" section, you will remember that you need to rebut firmly any suggestion that you have "mutuality of obligations". If your "Service Clause" is detailed and demonstrates that you have been retained to carry out a specific and separately identifiable task then it cannot be said that you have "mutuality of obligations".

Next >>

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