Contractors' Questions: Any IR35 risk to 'pre-employment' survey?

Contractor's Question : I operate through a limited company and I've started my due diligence in ensuring my contract falls outside of IR35. The agent has just sent me a link and document that the client has asked him to pass on which has concerned me a little bit. The link is an online questionnaire entitled "PRE-EMPLOYMENT REFERENCING FORM". Obviously the word "employment" is worrying; I'm not being "employed" and I wouldn't want anybody to think I am. I am worried that filling in the questionnaire would affect my IR35 status, negatively, and question whether anything entitled 'pre-employment' even applies to me. Am I right to be worried?

Expert's Answer : In an ideal world pre-employment screening checks would fall to the personal service company (PSC) and again in an ideal world rather than providing a CV of an individual, the PSC would in fact provide a 'business profile' – that effectively says this is my company and this is what we can do. However the world is not ideal and any business, irrespective of size, is subject to so many rules, legislation and regulation from all directions. Consequently it seems that everyone is checking everyone else just to protect themselves, such as from money laundering. Add to this the typical agency/end client situation where the agency has probably agreed to deal with all these issues as part of the recruitment process, plus they have their own responsibilities for checking things. It is unusual to see a contract where the agency has simply passed these on to the PSC. From an IR35 perspective, no, it is not great in its significance but it is an easily arguable point. IR35 is, after all, about the terms and conditions of the relationship with the end client, so in the scheme of things the checks made before by a third party have no real impact on this.

Answer by Kate Cottrell, founding partner of Bauer & Cottrell, an IR35 advisory.

Wednesday 1st Jul 2009
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