IR35 factors and the importance of 'control'

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IR35 factors and the importance of 'control'

Posted Mar 16, 2010

Most employment status experts regard the Right of Substitution, the Mutuality of Obligation, and Control as the most significant factors in determining whether or not a contract is caught by the IR35 rules. In this article Kate Cottrell from employment status experts Bauer and Cottrell explains why Control is a key factor in IR35 status cases.

'Control' more important than ever

In my opinion, control is THE most important issue now especially as the Dragonfly case really did for MOO (Mutuality of Obligation).

When analysing contracts for IR35 status, we are looking to see a general lack of control. Control which can include the right to control (irrespective of whether or not the right is exercised), is an extremely important issue to be considered in all status cases. Control concerns what has to be done, when and where it has to done and how it has to be done.

It is often the case that the when and where are wholly constrained by the nature of the services being undertaken and if this is the case they become neutral points. However having a right to undertake the services from your own premises is most helpful as is the freedom to choose your own hours.

Control over 'what' a contractor is doing

Recent IR35 case law has shifted the emphasis and shows that there is no expectation of control over how a skilled worker performs the services but that it is more about the extent of control over what the worker is doing that is key.

At one extreme we have constant supervision, monitoring, checking and appraisal and at the other we have complete freedom subject only to the final delivery and acceptance of the services.

We then relate it to the reality, i.e. flexibility over times and days of attendance, working from own offices, specialist skills that the client's staff do not have and really helpful things in the job spec such as the contractor scoping the project and themselves setting the deliverables and milestones.

Essentially, the more of the what they control the stronger the case.

Further information

- IR35 and the Right of Substitution (RoS)

- What is the Mutuality of Obligation (MOO)?

- Key factors in IR35 compliance

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