Bite Size IR35: Are You in Control?

When determining a contractor’s IR35 status, a number of different factors are taken into consideration. One of the dominating influences is their level of control.

As a director of a limited company, you are responsible for many things including its success, accounts, administration, taxes and so on. You are in control of the company. When you enter a contract with a client, your client is hiring your services but you are still the director of your company and so still in control of what it does and how it does it.

It is easy for particularly new contractors who have only known permanent employment relationships thus far to allow their end clients to dictate their work. It is also very easy for end clients, particularly those who do not deal often with limited company contractors, to treat you as an employee and expect the same from you as they do from their employees. This is an incredibly detrimental habit to get into and should be broken as soon as possible.

An employee would be told how to do their work, when to do it and where, so when we assess level of control, we look at when, where and how:

  1. When.
    As a contractor, you will have been contracted out to undertake a particular task or project likely within a specified timeframe. Your deadline or the end of your contract term is the only specification which should be made to when you must work. You should not be required to work at specified hours e.g. 9am to 5pm Monday to Friday, like an employee would. It is acceptable that if you need to complete work at your client’s office and they are only open at certain times or if you need to liaise with staff, that you must complete your work within these hours, but the hours each day should not be set e.g. if your client is open 9am to 5pm, you should be able to work from 11am-4pm for example.
  2. Where.
    The relevance of this point is very much dependent on your trade. An oil and gas safety inspector for example, is unlikely to be able to work anywhere else but on location. A contractor of this type who has to work on site is unlikely to be seen as being under control by their end client as it is merely a necessity to the work involved. IT contractors on the other hand can probably work from anywhere depending on the task at hand. Where this is the case, you should not be required to work from the client’s site at all times, although you may need or even find it easier to complete your tasks on site, it should not be a requirement as it would be for an employee. The only caveat to this is security, as where there are security measures, you may be required to operate at your client’s site at all times.
  3. How.
    Whereas the other two points of control may be rendered irrelevant by your particular situation, the ‘how’ is very important. As a contractor, you have been brought in to a business to undertake a task, probably because the business does not have the expertise or resources to complete it in house. As the expert, you know best and therefore should have full control over how you do your work. Consider the common analogy of a plumber or electrician who has come to fix something in your home; you wouldn’t stand there telling them what to do as you hired them for their knowledge and capability. You may not find any indicators of this point in your written contract, but more in your working practices so ensure that your client agrees with the fact you are in full control of how you complete your services.

To summarise, your clients should not have control over how, when or where you complete the contract. Only the situational nature of your work should make any dictations in these aspects.


By:Jane Hailstone

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