Suitable Contracts

An arrangement will only amount to genuine “self-employment” in law if all of the arrangements, facts and circumstances amount to self-employment.

Where there is no PSC, and the individual and their client deal directly with each other, they must consider how the contract is implemented, the conduct of client, individual, and anyone the individual engages to do any of the work for them, and all related arrangements between them.

If a PSC is involved, the PSC and you - whether you are the individual or the business client - must consider how the contract is implemented, and all arrangements between all three parties (PSC, client and individual). To reduce the risk that IR35 will apply, there should be a suitable contract and arrangements between the PSC and the client which has the features of a contract for services, and not those of a contract of employment. There should also be a suitable contract between the PSC and the individual with features as much like a conventional employment contract as possible. The Guidance Note explains these features.

Whether you are the individual or the client, you need to determine the details of the arrangements and document them for IR35 purposes, to try to ensure that claimed self-employed status is genuine rather than merely a tax-driven device or an attempt to avoid employment protection rights. A detailed contract ensuring the independence of the individual is a key starting point.

There are numerous templates in the Business and Employment folders which might help with these issues. You can see them here.

Employment, self-employment, and the IR35 rules are complex subjects, and we strongly recommended that you take tax and legal advice before relying on or using any of the template documents or other material on the website, or implementing any arrangements.