Sole Trader Subcontractor Agreements
Main contractors, whether by default or by necessity, will sometimes need to employ the services of subcontractors.
These Sole Trader Subcontractor Agreements will give main contractors considerable flexibility in rendering their services, allowing for an overall increase in working capacity and, in many cases, in specialist knowledge or skills. Especially relevant in the construction industry, but also valuable in many other sectors, including IT services, Sole Trader Subcontractor Agreements allow contractors to take on additional self-employed workers on a short (or fixed) term basis.
These forms of agreement are designed to be used where the subcontractor is to be an individual, but there are also Company Subcontractor Agreements that are designed to be used where the subcontractor is to be a company.
A key consideration to bear in mind is the status of the individual who is to work as a subcontractor and any workers engaged by that subcontractor. Each of the forms in this subfolder aims to minimize the risk that HMRC will regard the individual subcontractor as an employee of the main contractor rather than a self-employed sole trader.
The application of any of these templates cannot actually remove that risk. Therefore professional advice should be sought. The advice will need to consider the content of the form to be used together with all of the circumstances and arrangements relating to the work, the client, the main contractor, the individual subcontractor, and any person engaged by the subcontractor.
A further key consideration is that the agreement between the main contractor and their own client must permit subcontracting.
Sole Trader Subcontractor Agreements is part of Business . Just £38.50 + VAT provides unlimited downloads from Business for 1 year.
Frequently Asked Questions
I have taken on a job and want to bring in a subcontractor. What agreement do I need? +
Use a subcontractor agreement between you, as main contractor, and the person doing part of the work. It should set out exactly what they will do, the price and payment terms, timescales, quality and responsibility for defects, insurance and how the work fits with your own obligations to your client. These Simply-Docs templates are for an individual subcontractor working as a self-employed sole trader, with a separate set available where the subcontractor is a company.
Do I need to check my own contract with the client before subcontracting? +
Yes, check it first. Your contract with your client may restrict or ban subcontracting, or require the client's consent. Subcontracting when your main contract does not allow it can put you in breach, whatever your subcontractor agreement says. Confirm you are permitted to subcontract, get any consent needed and make sure the terms you pass down to the subcontractor line up with what you have promised your client. The subcontractor templates are designed to sit under a main contract in this way.
I subcontract in construction. Do the CIS tax rules apply to paying my subcontractor? +
Usually yes. If the work is construction, the Construction Industry Scheme applies, so as contractor you must register, verify the subcontractor with HMRC and deduct tax from their payments unless they hold gross payment status. The standard deduction is 20% for a registered subcontractor and 30% for one who is not registered or cannot be verified, and you pay the deductions to HMRC as advance payments toward the subcontractor's tax and National Insurance. CIS is a tax scheme and does not by itself settle whether the person is self-employed.
Is my subcontractor self-employed, or could they count as my employee? +
A subcontractor agreement supports self-employed status but does not guarantee it. If in practice you control how, when and where the individual works, they must do the work personally and there is a continuing obligation on both sides, HMRC or a tribunal could treat them as your employee or worker. This risk is separate from CIS, which deals only with tax deductions. Keep the arrangement genuinely subcontractor-like. The guidance notes in this group set out the tests.
What if my subcontractor is a company rather than an individual? +
Use the company version instead. These templates are for an individual subcontractor working as a self-employed sole trader. Where the subcontractor is a company, you should use a Company Subcontractor Agreement, which is drafted for a business-to-business arrangement and takes account of the off-payroll working rules that can apply where a company provides an individual's services. Simply-Docs offers these in the IR35 and Other Company Agreements group.
