The big concern these days for many self-employed people or contractors is how to ensure and check that you are working outside IR35. If you have a good understanding of IR35, you should be able to negotiate and have the right conversations around your contracts to ensure you don’t fall into IR35 rules.
Remember, it isn’t your responsibility to decide if your status is inside or outside of IR35 and often (especially with contracts with medium and larger companies) it may be a purchasing department or someone inexperienced that makes that decision. You therefore need to understand the rules and be able to have a conversation and push back if you feel the decision isn’t correct.
In this blog, we give you some hints and tips around working outside of IR35.
1) Work on clearly defined projects, not rolling contracts
You should take contracts for projects that have clear goals and deadlines. If you have an ongoing relationship with a company then you should treat it as a series of individual projects, rather than a rolling contract. Without a fixed deliverable or deadline, your contract may fall within IR35.
2) Working flexibility
As a contractor you need to ensure you have a high degree of flexibility in where and when you work. You shouldn’t be obliged to work only during set hours or from a company premises. For example if you’re an IT contractor, you shouldn’t have to be in the company office 5 days per week 9-5. You may well be required on site sometimes, but you should be able to be flexible wherever possible.
3) Have a proper company profile
Being paid via invoice, having a website, company stationery and trading through a limited company can all help. Market your services via your company name and not your individual name.
4) Work for multiple clients
Marketing your company to get work from multiple clients and not just working for a single client can help you with the IR35 status.
5) No internal comms access
As a contractor, you shouldn’t have a company email address or access to any internal comms channels such as internal email, intranet or any other software used only for internal company communication.
6) No employee perks
Contractors should not be offered perks that employees receive, like paid holiday, sick pay, healthcare or even Christmas parties, gym membership or any other perks normally only offered to employees.
7) Evaluate your status using free online tools
A great place to start is the government ‘check employment status (CEST) tool’ to find out if you’re classed as self-employed or employed.
8) Get your contract and working practices reviewed by an expert
Getting a third-party expert to do a review of your contract, will give you clarity, peace of mind and could save you money. Here at dns, we support thousands of contractors and offer an IR35 review service. It’s not as simple as just checking out a contract, but also looking into your working practices as these working practices can override any contract if it’s ever investigated or ends up in court.
9) Negotiate changes if necessary
It’s wise to have expert on your side to ensure the contract does reflect working practices and if it doesn’t then you need to suggest changes to the terms of the contract.
10) Get a confirmation of arrangements document
If the client agrees to the changes,then it is worthwhile to get the client to sign a written document confirming the arrangements. This can provide excellent proof and defence, should HMRC investigate at a later date.
Also See: Contractor & IR35 myths debunked
11) Tender for contracts
Tendering for contracts can help to demonstrate that you are in business on your own and taking financial risk. Keep records of the tender process, documents, presentations, and emails will help. Even if you don’t win some tenders, having proof of tendering for multiple contracts can help.
12) Keep records
It’s wise to keep records detailing the activities or paperwork that back your case for being outside IR35. HMRC can investigate up to 6 years later, so having the paperwork and the history can help in any dispute or investigation.
Whilst following these tips on their own won’t guarantee you are working outside IR35, following many of them will help to prove a case that you are outside IR35. Our advice would always be to get your contract and most importantly the working practices reviewed by a third-party expert, such as the dns IR35 team to undertake an IR35 review.
Contact us if you need any further advice on working outside of IR35 or would like an IR35 review.
Any questions? Schedule a call with one of our experts.
Whether you prefer to meet and speak over the internet, or if you prefer an in person conversation we can help you with your preference.
Stay up-to-date with the latest news affecting small businesses, get business tips and tax saving advice.