Contractors’ Questions: Any IR35 risk to client extending my services’ scope?
Contractor’s Question: To help avoid IR35, this ContractorUK article says not to accept work that merely crops up, but my client wants to widen the scope of services I supply. Those services require the skills the client engaged me for a long time ago and still lacks internally.
A new rate for this extra work (a ‘trial’ rate first as I’m unsure how long the work will take) will be set, as will new wording in a supplement to my contract. Would these factors help position me away from IR35; I will still be in control of when, where and how I do the work.
Expert’s Answer: The ContractorUK article you have linked to highlights the increased IR35 risk of a contractor who is regularly provided with work on an ongoing basis rather than on a project-by-project basis. However, there is a distinction between a contractor who is asked to provide an additional service outside of the original assignment (and which is separately costed or scoped), and someone who is taken on for a period of time and simply given a series of jobs to undertake during that time. The latter contractor is likely to have an increased IR35 risk.
The distinction should also be made between someone who is asked by the client to undertake an additional or altered piece of work, but who could refuse to undertake that work, and a worker who can be moved from task to task at the behest of the client. Again, the worker who can be moved from task to task by the client will have an increased risk of IR35.
As far as your circumstances are concerned, you are right to document the additional work required and preferably should ensure that there is a separate assignment schedule for the extra work which, if possible, should be separately costed. The fact that you are responsible for how the work is carried out and are not working under the obvious control or supervision of the client will still be significant factors in determining IR35.
Lastly, you mention that you have been working for the same client for a long time (although we don’t know how long) and, while HMRC and the courts may take this into account when considering IR35, duration is not a determining factor by itself.
The expert was former Revenue inspector John Hill, founder of John Hill & Associates, a specialist in IR35 and Employment Tax Services.