Contract with limited project work

[Dark Black]

So.. I have a mate who is also a contractor.

The current client initially engaged him for a 12 month contract on a specific project. So far so good. Thing is, it quickly became apparent that there wasn't enough work on the project for 3 months let alone 12. The initial work is drying up now but the client seems to keen to keep the engagement going, suggesting more work will become available at some point during or after April (new budgets etc). In the meantime client is offering to find other bits and pieces to do, and has stated they'd like to retain headcount be it permie or contract

To me this rings IR35 alarm bells as it seem a very permie thing. My gut feeling would be to end the contract at the natural end of the current project work with the offer to go back as and when more work is available (assuming my mate is not otherwise engaged at that point). Ideally that means securing another contract in the meantime.

I can't think of a "safe" alternative that would result in (my mate) staying on-board with the current client (although he'd like to as it's both a decent rate and local), I wondered if anybody here has any suggestions? The client does seem to be very amenable to working with contractors to find ways to retain them without causing IR35 issues.. Thoughts?

[LondonManc]

So.. I have a mate who is also a contractor.

The current client initially engaged him for a 12 month contract on a specific project. So far so good. Thing is, it quickly became apparent that there wasn't enough work on the project for 3 months let alone 12. The initial work is drying up now but the client seems to keen to keep the engagement going, suggesting more work will become available at some point during or after April (new budgets etc). In the meantime client is offering to find other bits and pieces to do, and has stated they'd like to retain headcount be it permie or contract

To me this rings IR35 alarm bells as it seem a very permie thing. My gut feeling would be to end the contract at the natural end of the current project work with the offer to go back as and when more work is available (assuming my mate is not otherwise engaged at that point). Ideally that means securing another contract in the meantime.

I can't think of a "safe" alternative that would result in (my mate) staying on-board with the current client (although he'd like to as it's both a decent rate and local), I wondered if anybody here has any suggestions? The client does seem to be very amenable to working with contractors to find ways to retain them without causing IR35 issues.. Thoughts?

Recommend that your "friend" (it's always a kin friend - are you PC's sockie by any chance?) has their contract redone in April to reflect the new project. This friend could easily drag the documentation of the current project out for a month if need be.

[northernladuk]

Finish the work in a reasonable amount of time and negotiate a new exit date with your client. Get them to terminate early and ask them to call you when you have more work and in the mean time go find something else to do. Dragging work out is soul destroying and being given other stuff to do is indeed IR35 fodder. The engagement is for you to deliver a piece of work. To engage you as a person is disguised employment.

You = your mate of course...

[mudskipper]

But the chances of investigation are still very, very low, and of losing an investigation if properly represented even lower. It really depends on your attitude to risk. I'd feel inclined to pay for the cover, be mindful of working practices and keep invoicing.

[TheCyclingProgrammer]

If the contract was properly worded to limit the scope of the contract to that specific project, then if the project finishes, then IMO the contract has come to a natural end, regardless of any end date. The client is not obliged to offer new work but even if they do, you aren't obliged to accept it - doing so would IMO be a strong pointer to being inside IR35.

If the client has more projects they would like you to work on, then its a simple case of drawing up a new contract schedule confirming the new project, its scope and a commencement date. If nothing comes up immediately, there's no reason why you couldn't come back to them later, but just sticking around doing dribs and drabs because the client feels like they can use you for whatever they like until the contract expires is not a good position to be in.

[gixxer]

There is always some work for Golden plating ltd if client wants

[psychocandy]

But the chances of investigation are still very, very low, and of losing an investigation if properly represented even lower. It really depends on your attitude to risk. I'd feel inclined to pay for the cover, be mindful of working practices and keep invoicing.

I agree. Not ideal but it happens A LOT. Especially if you work in support.

But as muddie says, the chances of getting stung are very low. So it would be stupid to can a perfectly good contract on the basis that there is a little bit of a risk surely?

Surely £x per day with a bit of a risk is way better than sitting at home on £0 per day but risk free?

Of course, IPSE/Qdos cover is a no brainer IMHO anyway. And working practices etc - just be aware.

[northernladuk]

I agree. Not ideal but it happens A LOT. Especially if you work in support.

But as muddie says, the chances of getting stung are very low. So it would be stupid to can a perfectly good contract on the basis that there is a little bit of a risk surely?

Surely £x per day with a bit of a risk is way better than sitting at home on £0 per day but risk free?

Of course, IPSE/Qdos cover is a no brainer IMHO anyway. And working practices etc - just be aware.

You don't manage risk as part of your job do you. What is stupid is to not understand the amount of risk, the fall out if it hits and just assume risk is a bit of pain in the ass so ignore it and keep billing. It's also not a perfectly good contract is it? It's an IR35 nightmare that has the potential to lose you a hell of a lot of money if you get caught.

Making a decision based on your risk profile is not stupid, its a choice. I'd finish that gig and move on. I'm not worried about, and often look forward to a short stint on the bench so no need to expose myself to this level of risk... so no... It's not stupid to bin what is NOT a perfectly good contract based on 'little bit' of risk.

[VectraMan]

There's a very obvious and completely safe alternative: just be inside IR35. It's a lot better than being on JSA.

[FatLazyContractor]

WVMS.