Specialist roles outside IR35

[Tonymustwearbriefs]

Hi and happy new year all,

Just wanted to check my understanding.

I am a very niche contractor, there are maybe 100 guys in the UK with my skills. This automatically places me outside of IR35, right?

I am considering a long gig in UK (maybe up to 2 years work).

Thanks and may the contracting fairy wave her wand in your direction this year,

TMWB

[TheFaQQer]

This automatically places me outside of IR35, right?

No.

To be outside IR35 you must be able to demonstrate that for the contract that is under investigation, there was either a lack of mutuality of obligation, or a lack of supervision, direction and control, or an unfettered right of substitution.

HMRC must prove that there was a mutuality of obligation, there was supervision, direction and control, and there was not a valid right of substitution.

You need to prove one, HMRC need to prove all three.

[NotAllThere]

To be outside inside IR35, HMRC must be able to demonstrate that, were it not for the intermediaries (agency, your company), the contract would be one of employ ent.

The nicheness of the skill is irrelevant.

I personally employ the only person capable of factorising prime produts products in polynomial time, in the world. Nonetheless, they're still my employee.

[mudskipper]

To be inside IR35, HMRC must be able to demonstrate that, were it not for the intermediaries (agency, your company), the contract would be one of employ ent.

The nicheness of the skill is irrelevant.

I personally employ the only person capable of factorising prime produts in polynomial time, in the world. Nonetheless, they're still my employee.

FTFY

[Tonymustwearbriefs]

No.

To be outside IR35 you must be able to demonstrate that for the contract that is under investigation, there was either a lack of mutuality of obligation, or a lack of supervision, direction and control, or an unfettered right of substitution.

HMRC must prove that there was a mutuality of obligation, there was supervision, direction and control, and there was not a valid right of substitution.

You need to prove one, HMRC need to prove all three.

Thanks.

How do you play it? Do you go into the gig and make sure there is a substitution clause in the contract? Or do you go further and get a named individual on the contract as a sub?

I should think the other two are harder to influence.

[Tonymustwearbriefs]

Thanks a lot for the helpful comments.

[jamesbrown]

Thanks.

How do you play it? Do you go into the gig and make sure there is a substitution clause in the contract? Or do you go further and get a named individual on the contract as a sub?

I should think the other two are harder to influence.

You want a substitution clause that is not unreasonably fettered and that reflects reality. In other words, there's no point having a substitution clause if there isn't, in practice, a right to substitution or there is a right, but it's unreasonably fettered (i.e. you'd need to jump through hoops). You'll need to get your contract reviewed by a specialist, because there's no single way to phrase the clause. Again, it must reflect reality.

Ordinarily, D&C is one of the strongest pointers and easiest things to evidence (control over "what", "where", "when" and "how" the work is done). However, the case law on D&C is clear that the "how" element of control can be less important for a specialist unless the client company has the ability to control how the work is done (e.g. because they have employees with adequate skills). Still, if you're not a BAU/BoS contractor, that points away from your being part and parcel of the ClientCo, which is good. Anyway, there are several attributes of D&C that could be evidenced (see above).

[Tonymustwearbriefs]

You want a substitution clause that is not unreasonably fettered and that reflects reality. In other words, there's no point having a substitution clause if there isn't, in practice, a right to substitution or there is a right, but it's unreasonably fettered (i.e. you'd need to jump through hoops). You'll need to get your contract reviewed by a specialist, because there's no single way to phrase the clause. Again, it must reflect reality.

Ordinarily, D&C is one of the strongest pointers and easiest things to evidence (control over "what", "where", "when" and "how" the work is done). However, the case law on D&C is clear that the "how" element of control can be less important for a specialist unless the client company has the ability to control how the work is done (e.g. because they have employees with adequate skills). Still, if you're not a BAU/BoS contractor, that points away from your being part and parcel of the ClientCo, which is good. Anyway, there are several attributes of D&C that could be evidenced (see above).

I see , and the right to substitution is obviously something I'd have to get the end client to agree to. I could see that in my current role (not UK), they would unlikely allow me to send someone else in my place- in fact I've been hired because of my reputation/experience specifically. That just would never be allowed for an independent contractor.

So I guess I need to set up the gig so that my job title and management structure is within the D&C remit. So I need to appear to be without a manager, setting my own tasks etc. Which is how I'm working anyway-so that would be my angle.

[jamesbrown]

I see , and the right to substitution is obviously something I'd have to get the end client to agree to. I could see that in my current role (not UK), they would unlikely allow me to send someone else in my place- in fact I've been hired because of my reputation/experience specifically. That just would never be allowed for an independent contractor.

So I guess I need to set up the gig so that my job title and management structure is within the D&C remit. So I need to appear to be without a manager, setting my own tasks etc. Which is how I'm working anyway-so that would be my angle.

Yes, there’s little point in having a contractual right to substitute unless the client would allow this in practice, but there’s no harm in pursuing this; the client may appreciate the option of your using a suitably qualified substitute (perhaps someone already known to them?).

Absent that, yes, you should focus on strong wording, backed by reality, with regard to lack of D&C and absence of MoO. However, it’s very imporant that you not rely solely on advice here and instead seek a review of your contract and proposed working practices from a specialist, such as Abbey Tax, Qdos, Bauer & Cottrell or similar.

[northernladuk]

Yes, there’s little point in having a contractual right to substitute unless the client would allow this in practice, but there’s no harm in pursuing this; the client may appreciate the option of your using a suitably qualified substitute (perhaps someone already known to them?).

Absent that, yes, you should focus on strong wording, backed by reality, with regard to lack of D&C and absence of MoO. However, it’s very imporant that you not rely solely on advice here and instead seek a review of your contract and proposed working practices from a specialist, such as Abbey Tax, Qdos, Bauer & Cottrell or similar.

+1 to this, particularly the last paragraph. IR35 isn't a tick box exercise where we tell you something and you think you are now safe. It's a whole approach to the way you work. All the above are your key defence but it's still important to understand what you are doing and why and act like you are a business. It may sound petty but you should have a contractor pass, not sign up for the permie benefits on site yadda yadda. It all adds up and you want to be avoiding an investigation, not just having defence should the worst happen.

Tons and tons of resources in the links to the right, and if you search the threads using the google search method.