PCG Draft Contract

**DaveB** · 13 June 2006, 20:58

Originally posted by bluwe

Hi there,

I'm after a bit of advice. I'm just about to start contracting at the company I have worked at for the last 18 months as a permanent employee. We've agreed a timescale and an hourly rate, but because of the nature of the work I do (3rd Line Network Support) I am struggling to fill in the blank sections (Service Definition, Deliverbales, Acceptance Criteria, etc) on the Schedule because I won't be working on a specific project, just providing support as and when required and installation expertise on a number of different projects. Effectively I'm unsure as to how to word these sections to ensure "IR35 Friendliness" whilst accurately reflecting my role.

Can anyone help? I'm really stuck!

Cheers,

James

Thats because you are doing precisely what IR35 was designed to prevent. Moving from Permie employee status to contracter status while retaining all the same working practices and to all intents and purposes behaving like a permanent employee.

Should you be investigated you are going to find it very hard indeed to prove you are not caught by IR35.

I have to ask who gave you the advice that this was a good thing to do? It's not only you that runs the risk of investigation, but the company you will be working for as well as if you are deemed to be an effective employee they may welll become liable for back dated employers NI etc as well.

**bluwe** · 13 June 2006, 21:08

Thanks for the reply. Nobody advised me to do this, but truth be told the rate on offer was the deciding factor. I was aware of the "Friday Monday" thing but I assumed you could protect yourself with a correctly worded contract containing a MOO clause, etc...

With regards the the potential for my employer to be investigated, it is common practice at the company I work for to re-employ people as contractors so they must be aware of potential implications.

**DaveB** · 13 June 2006, 21:20

Originally posted by bluwe

Thanks for the reply. Nobody advised me to do this, but truth be told the rate on offer was the deciding factor. I was aware of the "Friday Monday" thing but I assumed you could protect yourself with a correctly worded contract containing a MOO clause, etc...

It's not the contract thats important it's the actual working practices in place. You can have the best contract in the world for IR35 but if it's not an accurate reflection of whats really happening then you will still get shafted by the IR.

Of the few cases the IR have won on IR35 at least one of them has been down to exactly the situation you are describing.

As I see it you have two options.

1. Go ahead as planned and hope you dont get investigated. It's unlikely but not beyond the realms of possibility. Work out what it would cost you if you are caught by IR35 and stick that money in the bank just in case. If you're only planning to stay on this job for 3 or 6 months the odds are probably in your favour.

2. Count yourself as IR35 caught from day one and pay the Tax and NI. Look at it as the price of getting a foot in the door as a contractor. When you take your next contract you can make sure you get it done right.

**bluwe** · 13 June 2006, 21:42

Thanks for that, Dave. I didn't realise the working practices would also be investigated. I'll have a think about how to proceed, bit of a catch 22!

Cheers,

James

**DaveB** · 13 June 2006, 21:54

Originally posted by bluwe

With regards the the potential for my employer to be investigated, it is common practice at the company I work for to re-employ people as contractors so they must be aware of potential implications.

Given what you just said I would be very, very, carefull. All it will take is one investigation into one contractor there and the potential is for the whole lot to come down. They investigate a contractor, that leads to the company, that leads to everyone else working there in the same way. If I were you I'd take option two, minimise you're liabilities, and look to get out as soon as possible, then become a proper contractor if thats what you really want to do.

Having said that check back tommorow and see if anyone else has any different opinions. Most people here have buggered off for the day.

**bluwe** · 13 June 2006, 22:19

I hear what you're saying. At the moment I'm using contracting as a means to an end, but I do want to be in it for the long term, so whilst option 2 is a ba**ard it definitely sounds the safest option in the long term.

**malvolio** · 13 June 2006, 23:05

No, what you are doing is tax evasion, not avoidance. There is no business reason for doing what you are doing other than it saves you tax - I doubt, for example, your employer is paying any more gross for your services than before.

So sorry, mate, but you are why we real contractors have to manage IR35 in the first place. If you need more cash, either get a pay rise or go freelance properly, which means by yourself in the open market.

**bluwe** · 14 June 2006, 05:50

"I doubt, for example, your employer is paying any more gross for your services than before."

How do you work that out?

"So sorry, mate, but you are why we real contractors have to manage IR35 in the first place."

I haven't given my client a contract or taken any action yet so don't tar me with that brush.

**ratewhore** · 14 June 2006, 07:44

Personally I wouldn't bother with the PCG contract. I use a small set of t's and c's for my direct clients and a 30 day payment term on my invoices.

Seems to work...

PCG Draft Contract