The rules around IR35 are set to change from April 2020, with private sector firms set to adopt responsibility for determining status. There is, understandably, unease from contractors too, with many questioning the IR35 status of a contract, before they will even consider it. In many cases, contractors and employers are more defensive than the actual case law and this can often result in contractors choosing to exit contracts after a maximum of around 24 months.
What are the alternatives?
As a contractor, you will be understandably concerned about the implications of working inside IR35 and this may make you feel uneasy about working on a long contract, even if it is a lucrative one. On the same note, clients can be a bit apprehensive about engaging contractors for long periods of time, as they don’t want the possibility of a tax investigation and hefty fines along the way. It would seem a shame to cut the contract for this reason alone; if both parties are happy with the relationship and the way things are going. There is no need for contractors to leave contracts they are enjoying, just because of IR35, there are some ways to ensure you keep the balance of a contractor and client relationship.
Consider a Substitute
One of the most effective ways to meet the outside IR35 standards is to ensure you have something in your contract which states that you can be substituted. As you are ultimately a ‘service’, you should be able to arrange for someone to fill your shoes, if you are unable to fulfil an aspect of the project. If you can’t be substituted, it could be seen that the company is employing you and this would cause IR35 to be questioned.
It is also important to collate evidence relating to the journey along the way. For example, emails you have sent to the manager discussing time off. If you are asking for time off, then you could be seen as an employee. However, if you are informing, you are making it clear that you are a contractor. As a contractor, you would set your own boundaries in terms of work settings and this would often mean that you will work from home quite often. If there is no evidence to suggest that you ever work from home, you might be heading down the route of being an employee. It is important to maintain any evidence to show that you control where you work, for example, invoices stating your work location. If you are attending team meetings which are not relevant to your work or company events, this could also be seen as something an employee would do, not a contractor. It is important to ensure there are clear boundaries.
At Mindful Contract, we provide advice to clients on managing the IR35 risk in a pragmatic way whilst being mindful of your organisations preferences and way of doing things. We also offer a full managed professional service on an outside IR35 basis.