Control is one of the three key factors in determining the IR35 status of your contract. The others are
- the right to send a substitute;
- and mutuality of obligation.
Control is an old concept in tax law and refers to masters and servants.
Control relates to how the work is carried out and NOT when and where. As an extra difficulty it is not whether control has been exercised that is important it is whether your client could direct and control your work.
Phrases such as, “The company’s method of working shall be its own” are helpful.
Would these clauses pass or fail the IR35 control test?
Remember you and your company DO NOT want to be controlled, to ensure you fall outside IR35.
Example 1:
The Supplier shall have reasonale autonomy in determining how the services are performed however the Supplier shall co-operate with the Client and comply with all reasonable and lawful instructions made by the client.
FAIL – all reasonable instructions means that the client controls the Supplier.
Example 2:
The Supplier shall perform the services in a professional manner, with proper skill and care. The Supplier will comply with all the Client’s reasonable requests within the scope of the services.
FAIL – again the contract refers to all reasonable requests. There is no discretion on the part of the Supplier, the company (and contractor) must comply.
Example 3:
The Supplier will ensure that the Consultant complies with the Client’s Health & Safetly and other similar regulations when carrying out work at the Client’s site.
PASS – the restrictions apply to anyone in the building and do not relate to how the work is completed.
Example 4:
Neither the Agency nor the Client shall be entitled to, or seek to, exercise any supervision, direction or control over the Supplier or Consultant in the manner of the performance of the Project.
PASS – there is no control.
Do you need help in decided whether your contract is caught by IR35?
At Clearways Accountants we provide all clients with an IR35 contract review service. Call us on 01737 244298 to become a client of Clearways Accountants and have your contract reviewed for peace of mind.