What you can do to ensure compliance and remain outside IR35

What you can do to ensure compliance and remain outside IR35 

There are a few simple steps you can take that will dramatically reduce the risk of IR35 being applied to your engagement. The key is to make it clear to all parties that you are not an employee and should not be treated like one. If you have the following in place, it will make it much easier to explain to a client, agency, or indeed HMRC, that IR35 should not apply.

  • Get a good contract in place making it clear this is a contract for services, not ‘of service’. IPSE has template contracts that have been drafted by Travers Smith specifically to ensure the engagement is deemed ‘outside IR35’.
  • Statement of work. A SOW is often used to define the project you will be working on. The idea is the contractor is released once the project or task has been completed. The contract is designed to provide commitment on the outcome or quality contractor will provide. The existence of a SOW can help to dispel the notion that mutuality of obligation exists – a key factor when determining IR35 status.
  • Fixed price projects – where possible it would be helpful (from an IR35 point of view) to agree milestones within the project and payment instalments on the completion of each milestone. Remember, employees get paid on a monthly or weekly basis – you don’t want to look like an employee in disguise.
  • Get your contract professionally reviewed for IR35. Before you sign a contract, get it reviewed for IR35 by a professional. The review will tell you which clauses to push back on, to ensure you stay the right side of IR35. IPSE provides a contract review service.
  • Get your working practices reviewed. It’s important to have a good ‘IR35 friendly’ contract in place. But HMRC will want to know the working practices match the contract. IPSE offers a working practices review service.

It’s all about putting clear daylight between you and your client’s employees. The clearer it is that you are not a ‘disguised employee’, the better it will be for your IR35 status.