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Freelancers and IR35 Compliance

August 2011

Many professions are popular with freelancers. Freelancing is often popular from both sides of the equation. There are a number of freelancer-rich professions which do not necessarily make as much sense in an employment setting. Many businesses, for example, only need their website redeveloping every few years and only need bespoke software every now and then. Keeping a suitably qualified specialist on the payroll simply does not make sense. Similarly, from the professional’s perspective, being freelance allows them to serve a broad range of clients and maximise their own profitability.

Nevertheless, whilst freelancers may only be employed for specific projects, those projects can sometimes be lengthy and can sometimes be followed by similar projects for the same client. Ensuring that the freelancer remains self-employed, particularly in the view of HMRC is important. Of particular relevance are the somewhat notorious IR35 rules.

The key factor when it comes to complying with IR35 is independence. The freelancer should retain control of their work, free to work where they choose, free to provide substitutes and free to work for other clients (all within reason given the requirements of a particular job or client).

Compliance with IR35 can be complex, and seeking the advice of suitably-qualified professionals including accountants is always wise; however a contract containing the appropriate ingredients is a key step.

New Freelancer Contracts

Simply-Docs has now published a set of new freelancer agreement templates designed for several professions in the creative and IT sectors. Each of these documents aims to be an IR35-compliant contract and contains the essential ingredients in retaining the freelancer’s control and independence.

Updated Contractor Agreements

Two of our popular contractor agreements have also received updates in order to make them more IR35 friendly with greater emphasis on independence and a new express provision clearly stating that the contractor is not to be treated as an employee.

The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.

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