IT Consultancy Agreement (Company)

The data protection provisions in this document have been updated with reference to the UK GDPR.

When dealing with specialist services such as IT services, it may often be the case that a service provider (or “main contractor” in this context) wishes to sub-contract all or part of the services they are contracted to provide.

This IT Consultancy Agreement (Company) is designed for use where a company is engaged as a consultant subcontractor by a main contractor to provide IT services to that main contractor.

The company may engage any one or more individual IT specialists or IT services companies to provide IT services on its behalf to the main contractor under this template. This template is not primarily intended to be used where the consultant subcontractor uses one or more IT specialist individuals named in the contract where that or those individuals are using the consultant subcontractor as their personal service company. For such a case, it may be preferable to use IT Subcontractor (Company) agreement instead. However, it is still possible to use this template for this purpose where the subcontractor does not want to identify or confine itself to using any particular IT specialist/s.

Under this template the subcontractor company is free as an independent contractor to provide any one or more suitably qualified persons or companies (“Consultants”) to do some or all of the work. The subcontractor is free under this template to determine when, where and how work is completed (subject of course to the main contractor’s and its client’s requirements). The subcontractor is free to work for other clients or main contractors.

This IT Consultancy Agreement (Company) has been designed to be sufficiently broad to cover a range of different types of work. The specific details which will be unique to each transaction should be provided in a series of schedules, outside the main body of the sub-contract.

This form of agreement may be used alongside the IT Service Agreement . The clauses in each document are designed to mirror and/or complement each other. In particular, this IT Consultancy (Company) Agreement includes a provision to the effect that it will not come into force until the main contract does and will terminate automatically in the event that the main contract is terminated (subject, of course, to the obligation to make reasonable payment for any work already completed by the sub-contractor).

Other key provisions in this form of agreement cover elements such as fees and payment, insurance, confidentiality, data protection and liability.

This template provides that the main contractor does not have to pay taxes, national insurance contributions, pensions, benefits or similar, and that, instead, the main contractor pays fees to the sub-contractor who then pays any sums due in respect of tax, national insurance etc.

This document aims to reduce the risk that, under employment law and any other applicable law, any Consultant is regarded as an employee. Nevertheless, they might still be treated by HMRC, an employment tribunal, or any other body, as an employee, and legislation (such as IR35 or other rules) might still apply in a way which adversely impacts the Consultant’s or the subcontractor’s legal, tax or NIC position. Whether that is so will depend not just on what is contained in the sub-contract but also on all other circumstances. Those circumstances may include the way in which the sub-contract is implemented, and all arrangements between the main contractor, the subcontractor and the Consultants.

HMRC provides some guidance on its website about employment, self-employment, and IR35. Its decisions on these points are often based on a “balancing exercise” in which it gives weightings to various factors. However, neither the HMRC guidance nor case law are sufficiently precise to enable anyone to predict how in any particular case the “balancing exercise” would be carried out or what HMRC’s conclusion would be about that particular case. For that reason we recommend that before you decide to use or adapt this form of agreement, you take professional legal and tax advice in relation to your particular circumstances as to any impact on the subcontractor and the Consultants of employment law, IR35, tax, and NIC rules.

Further guidance on tax and employment status of an individual Consultant who works through a personal service or other intermediary company can be found in the Guidance Note relating to Self-employment and IR35 but we still recommend that you take professional legal and tax advice before using this form of document.

Nevertheless, a carefully worded sub-contract ensuring the independence of the sub-contractor is still a key starting point.

Optional phrases / clauses are enclosed in square brackets. These should be read carefully and selected so as to be compatible with one another. Unused options should be removed from the document.

This IT Consultancy Agreement (Company) contains the following clauses:

1. Definitions and Interpretation

2. Commencement Date

3. Engagement of the Sub-Contractor

4. Status of the Sub-Contractor

5. Sub-Contractor’s Obligations

6. Service Provider’s Obligations

7. Provision of Equipment

8. Insurance

9. Fees and Payment

10. Indemnity

11. Liability

12. Confidentiality

13. Non-Solicitation

14. Force Majeure

15. Term and Termination

16. Effects of Termination

17. Data Protection

18. Data Processing

19. No Waiver

20. Further Assurance

21. Costs

22. Assignment and Sub-Contracting

23. Time

24. Relationship of the Parties

25. Third Party Rights

26. Notices

27. Entire Agreement

28. Counterparts

29. Severance

30. Dispute Resolution

31. Law and Jurisdiction

and the following schedules:

1. The Main Contract
2. The Sub-Contracted Services
3. Equipment
4. Software
5. Sub-Contractor’s Fees
6. [Insurance]
7. [Data Processing]

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