TERMS OF YOUR CONTRACT

TERMS OF YOUR CONTRACT

IR35

IR35

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Separate Contracts for Each Project - If HMRC enquire into your IR35 status they review your contracts and these need to accurately reflect your working practices.

HMRC will check with the contractor’s end client and if they discover that the actual working practices do not match what is in the contract and that you are treated like an employee your chance of success will be reduced.

Where you are engaged on a number of different projects, your paperwork must detail all of the projects for the period of your engagement. The contract should state the start and end dates for each project and fees charged. This will help you to demonstrate that there is no mutuality of obligation between you and your client.

Without mutuality of obligation a contract (if there is a contract) cannot be a contract of service (employment). With mutuality of obligation a contract may or may not be a contract of service depending on a number of other factors.

A one off contract for 1/2 day and a long-term agreement to work contain the essential element of mutuality of obligation which makes it possible that the contracts are contracts of service.

If there is mutuality of obligation and control then whether the contract is one of service depends on a number of factors such as whether the worker can increase his profit by working efficiently for example. All other things being equal a number of contracts in succession with the same client are less likely to be contracts of service than one long contract for the same period.

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