IR35 contracts - necessary attributes

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Other positive attributes a contract should have:

(1) Right to concurrent contracts:

If your contract gives you the right to work on other contracts at the same time, this will add weight to your argument that you are not an employee. It would be very unusual to find such a clause in a normal employment contract.

(2) Insurance obligations:

If your contract obligates you to purchase professional indemnity insurance or pubic liability insurance, this will tend to suggest that you are not an employee. Again, it would be very unusual to find a clause of this nature in a normal employment contract.

(3) Express exclusion of mutuality of obligations:

As we mentioned in our "IR35 Background" section, "mutuality of obligations" is something strongly associated with employment. If your contract contains a clause expressly excluding "mutuality of obligations" then this will help you to argue more strongly that you are not an employee.

(4) Drafted in terms of deliverables:

It will be beneficial if your contract is drafted around your deliverables and on the basis of the specific task or project you have been recruited to work on. If it contains an obligation for you to correct unsatisfactory work at your own cost this will add weight to your assertion that are self employed. Conversely, the mere mention of timesheets will damage you argument that you are self employed as it suggests payment on the basis of an hourly or daily rate.

(5) Profitability from sound performance:

If your contract contains a clause allowing you to profit from sound performance, this will help your argument that you are self employed. An employee is paid a salary regardless of whether or not he delivers his project on time. However a self employed person would naturally expect part of his fee to be retained by his customer until after satisfactory completion of the project.

(6) Express exclusion of employment rights:

If your contract contains a clause which expressly states there is no intent to create any employment rights or that no employment rights have been created, this will again add weight to your assertion that you self employed.

None of these factors on their own will place your status outside IR35. Indeed your contract on its own (no matter how well drafted) might not place your status outside IR35. But if you can have as many of the above as possible in your contract, then its general feel will paint a picture that is NOT employment. You can be satisfied that you have planned and prepared for IR35 and have prepared good foundations to build on.

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