With dozens of contractors arriving on our site looking for ‘IR35 friendly’ contract templates each day, we asked an employment status expert to outline why IR35 compliance involves far more than drawing up a compliant contract.
Seb Maley from IR35 advisory Qdos Contractor explains more:
An ‘IR35 friendly’ contract is not enough
“A common misconception amongst rookie (and occasionally established) contractors is that having an apparently compliant set of written terms & conditions means you are definitely outside IR35. This myth is perpetuated by recruitment agencies, many of which seem happy to say anything to get a contractor signed up to a role.
“In reality, IR35 revolves around far more than the written contract alone. IR35 enquiries are in-depth affairs and HMRC will be very quick to talk to the contractor’s end user.
“If they discover that the actual facts do not match what is in the contract, they will effectively say the contract isn’t worth the paper it’s written on.
“Therefore you can have the best contract in the world, but if you are treated as an employee in reality, your prospects of success will be poor.
“If a contractor receives a new contract from an agency, or is able to use an IR35-friendly template, it is always advisable to get your actual working practices reviewed alongside the written agreement.”
How to comply with IR35
In order to comply with IR35, both the terms of the written contract and a contractor’s working practices must demonstrate that he/she is on business on their own account, and not a ‘disguised employee’.
For this reason, we always suggest that contractors send their contracts to a specialist IR35 contract review service provider, who has experience of dealing with HMRC, as well as liaising with recruitment agencies to make any necessary contract amendments.
Find in-depth advice and links to service providers in our Guide to IR35 contract review services
The following guides explain how to comply with IR35 in more detail:
- IR35 Factors – the factors which are used in determining the IR35 status of a contractor. Includes working practices and contract wording.
- Confirmation of Arrangements – a letter from the client which confirms the true nature of the working relationship between client and contractor.
- If you do want to look at some sample draft ‘IR35 friendly’ contracts, you can download a variety from the Qdos resources section.