‘Right to Control’, i.e. What work is done, Where work is done, When work is done and how work is done, is an important aspect of IR35 Contracts. If the Client has significant influence over all four you will likely be considered ‘Inside IR35’, therefore you won’t be able to take tax efficient Dividends.
If you are weighing up whether or not you are Inside IR35 or Outside IR35 and you would like to speak to a professional advisor contact Commonwealth Contractors now!
To discuss your situation call now on 0330 390 9021 or Submit your Details and we will get right back to you!
Right to Control
If you genuinely wish to be considered self employed and therefore Outside IR35 you strongly need to consider the degree of control the client has over your working arrangements. If the client has too much control you could be considered a ‘disguised employee’ and therefore inside IR35.
It is important to address the issue of control when agreeing contract terms and conditions as these dictate day to day working arrangements. The most important thing to ensure is that the terms and conditions do not imply a relationship of ‘master’ and ‘servant’ as this would certainly make you a disguised employee. Also consider control along with other clauses such as the right of substitution and Mutuality of Obligation.
Right to Control has four aspects;
- What work is done
- Where work is done
- When work is done
- How work is done
If the client has significant direct influence over all four the relationship is likely to be considered one of employment rather than self employment.
It is normally unrealistic to think that you are going to have control over all four aspects as at the end of the day the client is the customer and they ultimately decide what service they require and how they would like it performed. However, if one or more of these aspects is missing, the issue of control is unlikely to be a conclusive factor.
What work is done
If the client has control over what work is to be done then it is quite a strong pointer towards employment.
For example if you go into business and provide helpdesk services it is more than likely the client will have control over what work is to be done as you are simply responding to whatever work needs to be completed at a particular time. If the client tells you to look at the server or fix a workstation on a particular day, you do it.
To maintain control over what work is to be completed it is a good idea to define specific deliverables which once completed can be signed off by the client. This way you are not responding to work as and when but delivering a service defined by specific project milestones.
With support services, even though a contractor may be responding to client requests, there is a big difference if e.g. the request comes from a client employee who is user of an IT system turning to the contractor as an expert to help them, rather than from a client employee who is a manager and is directing the contractor as a subordinate.
Where work is done
If you are genuinely self employed there is a good chance that at least some project work can be done remotely.
If this is the case it is a good idea to ensure that the terms and conditions reflect this fact. This helps to show that you are not obliged just to turn up at the client’s offices each day to work on what is assigned.
When work is done
A self employed person is more likely to have freedom over when work is to be completed. It is therefore a good idea to ensure the terms of the contract allow for flexible work patterns.
How work is done
Control over how work is done may be a strong pointer towards employment.
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To find out more about Commonwealth Contractors call now on 0330 390 9021 or Submit your Details and we will get right back to you!