IT Consultancy Agreement (Company)
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
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
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
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
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
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
9. Fees and Payment
14. Force Majeure
15. Term and Termination
16. Effects of Termination
17. Data Protection
18. Data Processing
19. No Waiver
20. Further Assurance
22. Assignment and Sub-Contracting
24. Relationship of the Parties
25. Third Party Rights
27. Entire Agreement
30. Dispute Resolution
31. Law and Jurisdiction
and the following schedules:
1. The Main Contract
2. The Sub-Contracted Services
5. Sub-Contractor’s Fees
7. [Data Processing]
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