We safeguard the "independent" status of contractors (consultants) who manage discrete projects as distinct from “business as usual” work. Using our robust, IR35 friendly Contract, we contract with the end user and the consultant, reducing their risk of a potential "employment relationship" being created by contracting directly.
We also offer contractors a shorter payment cycle, ensuring BACS transfers are made within 14 days of receipt of a valid PSC invoice and an authorised project time record. Usually, our service to contractors is free as we recover our nominal administration charge from the client.
Contractors, in business on their own account, are Director-shareholders of a Limited Liability Company, often referred
to as a Personal Services Company (PSC). Ideal for B2B consultancy, the PSC offers the flexibility sought by both the client and the contractor.
Clients utilise expert consultants to deliver specified projects within set timeframes and budgets. The agreed project
terms including the important "intention of the parties" are clearly defined in a Contract for Services.
Contractors offer proven project skills and flexible working patterns, allowing them to consult on-site or remotely.
Clients need only monitor the work at arm’s length and can focus on managing permanent staff doing day to day work.
Using short-term specialists saves the client hiring full-time project managers and paying expensive recruitment fees.
The PSC delivers the project for an agreed price, allowing the client to budget accurately and the contractor to manage
company overheads, revenue and post-tax profits efficiently.
IR35 - Intermediaries legislation
IR35 is tax law which centres on the relationship between the end user and the consultant's PSC. HMRC can claim the relationship is not truly B2B and is actually one of "disguised employment". HMRC apply status tests and if a PSC is deemed to be inside (caught by) IR35 then employment taxes are payable by the contractor on all fees earned.
In determining IR35 status, HMRC rely on the “actuality” of working practices, not just Contract terms and will seek confirmation of the "true" day to day work arrangements (actuality of events) from the contractor and end user client.
IR35 Compliance - to remain outside of IR35, the following terms and work practices must be considered:
Is the Contract for Services IR35 "friendly" and compliant - judged an "IR35 Pass" if assessed.
Is the Contract Business to Business specific (as per above).
Provision of services & substitution - not specific to a "named" consultant and an unfettered right of substitution.
Supervision, direction and control (SDC) - maximum contractor autonomy over project work practices and delivery.
Mutuality of Obligations - no reciprocal obligations after current project, both parties free to end arrangements.
Intention of Parties - clear declaration of intent not to form an "employer-employee" relationship.
Liabilities - clearly defined, contractor liable for best practice, quality of work guarantees and making good errors.
Insurance - contractors need to maintain adequate insurance including Professional Indemnity cover.
Notice periods - minimal notice is usual for contractors; termination without notice or at will is ideal for IR35.
Part 'n' Parcel - agreement not to integrate or treat as an employee, no business cards, no use of staff benefits etc.
Risks - contractor "in business on own account" so P&L risk, warranted work, no promises of further projects etc.
Payment - to PSC only, negotiated/agreed fixed rates ideally paid periodically or on milestones or deliverables.
Equipment - contractors own for projects, PSC pays for training. Client can supply specialised kit or software.
Exclusivity - contractor has a right to consult for more than one client concurrently.
Schedule - supports Contract, clearly defines project, start/end dates, deliverables, agreed notice periods.
Trading style - PSC is a "going concern" i.e. advertising, websites, letterheads, logos, RFP's, quotes, VAT , Co. accounts.
On-site behaviour – not acting as employee inc. "social" invites, positions of responsibility, digital signatures.
Confirmation of Arrangements Letter - parties confirm true work practices in Contractor's letter to end user.
Contracting and IR35 is complex but workable; call us for referral to expert opinion from our legal advisors. We
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