IR35 and the Limited Co. Contractor

The three main clauses that we look at from IR35 are a clear differentiator between a permanent employee and a contractor.  In no way would a permanent employee be able to send in a substitute, would always have MOO and will always have a degree of control by the very nature of how an employee works and their employment contract.

Substitution – Are you the only one who can complete the work?

Although very rarely practiced, you should have a right to send in a suitable qualified substitute to complete the work should you be unable to do so. The contract is between the client and your limited company, not between the client and you personally. As a result, there should technically be no requirement for you to complete the work.

Supervision Direction and Control – This is a little harder to explain and does have some grey areas due to the nature of the hierarchy of business.

Supervision – Are you being directly supervised?

You will naturally have to report into some form of superior to provide updates on the progress of the project and to eventually sign off on the project, but this does not mean you are directly supervised.

Direction – Do you decide how your work is completed?

You should also be able to decide how, where and when you complete the project.  Do you decide how the work is completed, the order in which is completed, where the work is completed, and do you have autonomy over that process?  Again, due to the very nature of business you will have to comply with certain regulations such as health and safety, security and other possible restrictions. As a result of this we usually concentrate on “how the work is completed, not necessarily the where and when”.

Control – Does someone control you or are you in control?

If you were asked to stop working on the specific task you were engaged on and then asked to work on a completely separate task away from your specified project, it implies the client controls you and the work you complete.

Mutuality of obligation

In short, if the contract or project was completed or terminated there is no obligation by either party to offer more work or complete more work.

If the HR team are looking to create an environment where you can work outside of IR35, that is great news.  Your client is clearly going down the route that they want to keep contractors in the business as otherwise they may struggle finding those highly skilled workers.  If they are getting clear internal guidelines within the company of how contractors should be treated and governed, it looks like it will be good news for you. It looks to be the case that they will look to review their contracts and working practices with Contractors to better suit the IR35 regulations.