Following on from the Autumn budget, IR35 has never been more of a hot topic. With Christmas party season fully underway we’re running down some of the less obvious areas which could cause you issues when it comes to IR35 status.
1. Permission for absences
As a contractor you should never have to ask for permission to be absent. It is obviously professional to inform your client of any days you won’t be able to undertake work on a particular assignment but you do not require their approval. Any procedures to the contrary of this, and/or receiving any payment during absence, is likely to be an indicator that the assignment is caught by IR35.
If the contract specifically states that you cannot undertake work for other clients (apart from those that would be deemed a competitor of the end client) it indicates that you aren’t in business of your own account. Genuine contractors are free to work with different clients and if they cannot it would be a strong indicator the assignment is caught by IR35.
3. No substitution
Being able to provide a suitability qualified substitute is a good indicator that the assignment is outside IR35. The contract should set out that there is the right of substitution and you need to be comfortable that you will be able to exercise that contractual right if required.
4. You are named in your contract
Following on from substitution, it is important that you aren’t personally named within the contract. The contract should be with your limited company, providing contract for services as a business to business service provider. Naming individuals is more indicative of an employment contract of services and therefore a negative indicator for IR35.
5. Veering off task
Each assignment undertaken with an end client should be project specific. If a client tells you to stop working on the current task and asks you to start on another it suggests the client controls you. Where the end client exercises control it indicates the assignment is caught by IR35. Make sure that you stick to the specific project and don’t let the client influence your working methods.
6. Just one more thing
If at the end of an assignment the client has some further work, ensure the new assignment is properly agreed and documented with a new contract. Just carrying on with some further work is an indicator that there is mutuality of obligation which is a strong indicator of employment, being caught by IR35.
7. Client branding
Using the clients branding; having client business cards, having a client email address, being included on the organisational chart all increase the risk of becoming part and parcel of the organisation. Sometimes these things are unavoidable but you should try and avoid where possible to reduce the risk of being caught by IR35.
8. Appraising and being appraised
As a contractor, you should not be undertaking staff appraisals for employees of the end client or submitting yourself for appraisal. If this occurs it is again a potential indicator for being part and parcel of the organisation and therefore being caught by IR35.
9. Client covers training costs
An employee will often have their training costs covered by their employer. This would not be the case with a contractor and their end client. Therefore, an end client paying for your training costs would be an indicator for being caught by IR35.
10. IR35 under the Mistletoe
It is not uncommon for contractors to inadvertently use staff facilities and end up becoming part and parcel of the client’s organisation. As a contractor you should not use any staff facilities like subsidised canteens, discounted gym memberships, staff car parks or even using the staff entrance. You should always use the visitor’s car park and where possible ensure you sign in as a visitor/wear a visitor’s badge. A classic example of this is attending the client’s staff Christmas party, bona fide contractors would not attend a staff party so think twice before slopping off for that sneaky glass of wine – it could cost you more than a sore head!
Get in contact with ICS today to discuss how IR35 affects you and how we can help.
Call free on 0800 195 3750 or email us at firstname.lastname@example.org