Contractor Tax Protection
Tax Liability Cover (TLC35) and
IR35 insurance from Qdos Consulting
IR35 - Confirmation of Arrangements
Posted Apr 18, 2012
Alongside a IR35 compliant contract, and matching working practices, a document confirming the true working arrangement between contractor and client is an important tool in demonstrating self employment.
IR35 and the importance of working practices
Since IR35 became law in 2000, a great deal of time has been devoted to the importance of IR35 compliant contracts which demonstrate that the subject is self employed rather than merely a disguised employee.
Not only should the lower tier contract (contractor - agent) match the terms of the upper tier contract (agent - client), but the contractor's working practices must also demonstrate that he/she works in a manner of a self employed individual, rather than a traditional employee.
With this in mind, employment status specialists recommend drawing up a confirmation of arrangements letter in which a client confirms how the contractor will work and act during the course of his/her contract.
Seb Maley from Qdos Consulting explains further:
Confirmation of Arrangements
"The true facts of an engagement are absolutely key in the case of an IR35 enquiry. HMRC will give short shrift to any compliant written contract if it is apparent that the working practices do not match. Unfortunately, actually clarifying the facts when you are under enquiry can prove to be very difficult.
"HMRC will send numerous leading questions to your end client, which often results in them inadvertently causing serious problems. Add to that the fact that your contract may have long ended and the people you actually worked with are no longer there: you may end up with someone you've never met answering very specific and potentially damaging IR35-related questions.
"The confirmation of arrangements goes some way to negating HMRC's need to pursue the end client. It will clarify all of the key points and, if signed by a responsible individual at the client, will have a huge impact on your prospects of success.
Free Confirmation of Arrangements template
You can download a free confirmation template, as well as sample contracts, from the Qdos site here.
- Professional Indemnity Insurance - Essential cover from Hiscox
- Helix Management Ltd - Up to 90% retention. Same day payments
- Parasol - the UK's favourite umbrella company
- Qdos - IR35 experts - Providers of low cost contractor insurance
- Contractor Finance - up to £30,000, when you need it
- Umbrella Company - 12,000 contractors can't be wrong!
- SJD Accountancy - UK's largest Accountants to Contractors
- Together we're stronger! - Join PCG, representing contractors
- ClearSky Accounting - specialist support for contractors
- Free IR35 & Tax Review - Call ICS on 0800 195 3750
- InTouch Contractor Accounting - Clients love our personal service
- Contractor Mortgages - Based on your daily rate alone