IR 35 proof contract

[hughjayteens]

I need to setup a contract between my company and a clients company, where an employee of mine will be doing 20 hours work a week for them for the foreseeable future.

I am charging them more than I am paying her, so don't want to get nabbled by IR35 or whatever other horrid things the taxman may try and use.

Has anyone got a contract that would be suitable for this, or know where I can get one?

Cheers

C

[dontlift]

this should not be put under IR35 as it is a contract for an employee doing work for a client for a number of hours per week that you have pre-agreed etc. so long as that employee is not a shareholder you should be fine.

IR35 only applies if you as the company owner / major shareholder perform the contract in person and it is the sole source of income for your company

[eric mc]

If only it were as "simple" vas that. The income does not have to be the "sole" income of your company for your company to fall foul pf IR35.

The nature of the relationship is what is important.

[hughjayteens]

Cheers guys - is there some standard contract I can use in this situation then?

[eric mc]

The short answer is no. However, you might be able to find some examples of contracts which MIGHT be IR35 friendly.
The Inland Revenue will tell you that each case is consiered separately. Relying on a bland "standard" contract will not work - especially if the details in the contract do not reflect the actual working practices between the parties involved. The Inland Revenue also recommend that, if in doubt, you should submit an example of your contract to tyem for review. It can work out very expensive if, after a number of years, the Inland Revenue decide that the IR35 provisions should have applied all along. I know of at least one individual who was stung for £30,000 unpaid tax and National Insurance because he did not apply IR35 when he should have.

Try doing an Internet search on "IR35" and you might find some useful sites.

[bga]

You may find some more info & links re IR35 over at www.contractoruk.co.uk

[anonymous-user]

The PCG are supposedly very good for this I'm told. You may have to splash out on membership to get anything from them, but then you can get off the shelf contracts, legal advise, etc. Plus, they'll fight your corner if the IR do decide to try to screw you under IR35.

[ginettag27]

I am a member of the PCG (Professional Contractors Group) and can confirm that they do have a lot of IR35 information and can help.

Of course getting information from them does mean that you need to be a member, which will cost you 100 pounds plus VAT, ie 117.50.

www.pcg.org.uk

Well worth every penny of it imo.

Phil

[JonRB]

ginettag27 said:

Well worth every penny of it imo.

Indeed, especially as your membership includes Tax Investigation Insurance so that if you are deemed to be caught they will pay for the (often costly) espenses that an investigation incurs.

[dimmadan]

There are a few specialist law companies out there that will give you an IR35 proof contract. They are listed on the PCG web site. Lawspeed is one, there are various others.

[t1grm]

As per dontlift's post AFAIK as long as you're not doing the work and the person that is doing the work is not a shareholder of your company then IR35 does not apply.

What they will have to be careful of is the relationship between themselves and your company. Are they PAYE or are you subbing this out? If they are subbing to you and the relationship between them and the client is deemed to be one with characteristics of employment then they could be liable under IR35. However, that would come out of the revenue they get from the contract so you should be clear on that front too.

I can also second everything people have said here about the PCG. Wee worth the money. 100 squid (if you're VAT registered). You can download standard contracts that have been complied/reviewed by a law firm specialising in tax law and IR35.