IR35 in a contract with agency

[Clare@InTouch]

Does it actually say you are operating within IR35? You can comply with all aspects of the legislation from outside.

Agreed. Saying that you're compliant with the rules and saying you're inside of IR35 could be totally different things, depending on context. Equally there's nothing wrong with being a personal service company, it certainly doesn't go hand in hand with being inside IR35.

I'd want to see that exact wording of the clause before deciding whether it was a dealbreaker.

[joanna]

Agreed. Saying that you're compliant with the rules and saying you're inside of IR35 could be totally different things, depending on context. Equally there's nothing wrong with being a personal service company, it certainly doesn't go hand in hand with being inside IR35.

I'd want to see that exact wording of the clause before deciding whether it was a dealbreaker.

It does say in the title that it is a contract with a limited company contractor who has not opted out of the conduct regulations (within IR35).

One of the clauses say that "the Intermediary is not a ‘managed service company’ as defined in section 61B of the Income Tax (Earnings and Pensions) Act 2003 but that it is a personal service company which is compliant in all respects with the IR35 Legislation."

[Raxme]

Jo,

going back to your original post: "(a) I confirm I am within IR35 and (b) that my business is a personal service company (c) which is compliant in all respects with the IR35 Legislation"

The only issue here is (a)

(b) you can safely say yes as in fact there is no such legal entity and it is just a wording that HMRC use and cannot get you into any difficulty by itself

(c) provided you don't break the law, you or I or anyone will "comply in all respects with the IR35 legislation" - how can you do otherwise? What this does not imply is that you are either a deemed employee ("caught") or confirmed to be "not caught". Complying wth the legislation means reading it and deciding whether you are in or out, it does not mean "caught"

Whether you are in or out of IR35 should not really be anything to do with the agency or your end client. I suspect they are asking this as they don't want the hassle (and/or the end client doesn't want the hassle) of getting involved with a potential future HMRC investigation (not entirely surprising - none of us do). However, it appears that you have signed to say that you are caught.

My feeling is that what you have signed is contractually unenforceable, since you are saying you are something that is not decided between you and the agency; if it ever came to it it would be between you and HMRC, based on information provided by you and the end client. The agency has told you sign or nothign as they recognise your weak negotiating position, not because that is the truth. The position may change after you have some weeks and months under your belt and hopefully giving the client good service

I would still get your contract and working practices reviewed by one of the professional firms. Once you get some clarity over the real position, you might find you are caught in which case you've lost nothing However, if you are not caught, you'll be in the position where you have third-party expert opinion on your side, and have given that aforesaid good service and the client will not want to lose you. You could then consider whether it is worth trying to renegotiate.

You could also simply pay yourself as you see fit - which might be deemed caught and meet the IR35 formula, or it may be that you pay yourself a sensible salary & didvends structure and just not tell the agent (on the basis that the clasue is unenforceable).

Best of luck

[Raxme]

Also, er, look for another position!

[SueEllen]

Also, er, look for another position!

+1

Generally all agencies say the contract is not up for negotiation.

However once I get my contract reviewed, if the agency decides they will be uncooperative and they receive a sharp email/short phone call from my reviewing lawyer they back down.

Lots of agencies don't actually have an lawyer who draws up their contracts, they just have a "legal expert" who is a kid out of university who has been sent on a legal training course so put any rubbish in their contracts.

One trick is to always make sure you have the details of the people at the client who interview you.

So if the contract falls through by the agency being uncooperative you can ring the client up and explain while you like to work with them unfortunately due to the terms the agency are trying to enforce your lawyer has told you not to do business under those terms.

Some clients will be interested in what the agent is doing while others aren't.