Contractors’ Questions: What if my client’s contract spec is similar to its ‘job description’?

Contractor’s Question: Ahead of our pending IR35 status determinations, us contractors here at leading automotive-make have noticed some rather unhelpful small print in some of our contract spec/briefs and task descriptions.

In particular, some of the wording for a ‘Contract Head’ is identical to that for a ‘Permanent Head.’ The former should obviously be more project deliverable-focused.

Secondly, us contractors are being asked to contribute towards the company's ‘Continuous Improvement’ process, with a view to submitting one idea a month -- as spelt out under the company's KPI targets, and as also expected of permanent employees. Additionally problematic for our independent status (not that the engager seems to realise), is that as part of this we must review existing corporate procedures and suggest updates. We know this is wrong for our genuinely self-employed status, but can’t convince the engager. Should we just go along with it all?

Expert’s Answer: It’s not been said by advisers enough, but one positive aspect of private sector IR35 reform is that it has had the effect of highlighting a very real problem, and something which has been endemic throughout the freelance and contract labour sector, much to most of the sector’s annoyance. I am talking about the incidence of hirers using contractors to save on employment costs, but then expecting contractors to act like employees in many respects.

The new off payroll working rules (scheduled to be introduced from April 6th) have largely been introduced to inform hirers that they don’t actually get to have two bites of the cherry, not least because if an IR35 enquiry was raised (back in the good old days), it wasn’t the hirer who copped the bill.

Other commentators have pointed out the injustices of end-clients not following through on business-to-business agreements, not least because end-client evidence can be so important if a tax inspector does call. And you probably already know this next bit I’m going to state, but for the avoidance of doubt: Contractors genuinely in business on their own account simply must not accept ‘job descriptions’ of any kind. Instead, ensure that work which is required is spelt out under your contract or/and is covered under a Statement of Works, foregoing any need for a job description. (For the uninitiated, a SoW is an outcome-based document and increasingly I am of the belief that no ‘Contract for Services’ should be seen in public without one!)

As for contractor involvement in any company KPI programme, this should be limited to an advisory capacity, allowing any requirements of the company employees to meet their KPIs, to be carried out by contractors, albeit under a contact variation.

Hopefully, your engager won’t join the list of companies making hasty policy decisions on contractor status, and this will allow contractors to collectively source an accurate contract for services which can be presented to the company management, along with creating a process which contractors agree to, that supports company employees in any KPI programme which would need a contractor’s assistance.

I get the feeling that your message is not being assimilated by company management, so I recommend that you do what HMRC does, and create some examples of how a freelance contractor would provide services to the client under a contact for service, how easy contract variations could be managed, and how contractors could assist employees in their KPI programme. Good luck!

The expert was former tax inspector Carolyn Walsh, managing director of Andraste Accounting and CWC Solutions.

Tuesday 18th Feb 2020
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Written by Carolyn Walsh

With over twenty years’ experience in the sector, Carolyn assists freelancers, contractors, agency and umbrella company workers, interpreting tax legislation and guidance with a no-nonsense approach.
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