Contract reviews

Azeey · 19-05-2009, 10:08 AM

Bloke from Qdos.

I've never bothered with contract reviews, I just read them myself. What's in them for me?

I see a couple of potential problems with them:

1) I lie about my work practices
2) Legislation changes during the contract (unlikely, but if it's a longish contract who knows under this government)
3) You state that you will decide if the contract and working practices fall outside of IR35. If no, you offer tax liability insurance (handy that). If yes... then what?

I mean, what happens if Hector investigates and decides no, Qdos was wrong, they are looking at deemed employment and want some money back. What happens then? Do I chase you?

Seb Maley · 19-05-2009, 05:43 PM

Bloke on forum

I sense a hint of suspicion here. Firstly, we need to separate the reviews and insurance completely - they are unconnected.

It is clear that having a compliant written contract will improve your IR35 position. Whilst a lot of emphasis is placed on the actual working practices in an enquiry, the contract is the first port of call so a decent one definitely helps. It is therefore a good idea to have a review from someone who regularly deals with IR35 enquiries at the dirty end. The review will tell you exactly what to change including suggested wording alterations.

Also, when you state on your P35 that you are operating outside IR35, HMRC expect you to take some due diligence in making that decision. A contract report will be proof of this.

The working practices are crucial, so we always advise that these are taken into consideration in any review. You could obviously lie about these to us (which would be a bit odd), but HMRC won't just be asking you about them - they will approach your end client. The client will hopefully give an accurate representation of the situation to HMRC, so it makes sense to submit accurate details in the review. Many elements of IR35 are annoyingly ambiguous, but we try to make the questionnaire as straight forward as possible.

Unfortunately nobody can guarantee the successful outcome of any enquiry. We are providing you with our expert opinion, but if we think you are outside IR35 and you are subsequently found to be caught then we can't be liable (unless you have the insurance, which I'll touch on in a minute). If we consider the contract and working practices a fail we'll give you all the information you need to improve it.

The potential for legislation changing is a good point. If something unforeseen and major happens there isn't a great deal we can do other than publically advising our clients of the changes. We'd happily re-review contracts on this basis without charge.

The insurance is purchased on a standalone basis, not flogged off the back of successful reviews. It is risk assessed, but this is a simple working practice questionnaire. We're confident that if the way you work in reality is compliant, we'll have enough to defend you successfully. If not the policy will pay out. It's offered on the back of our expertise in IR35 and has provided hundreds of contractors with peace of mind over the years.

I think some people distrust it because it is an insurance policy, and insurance companies are generally viewed with much suspicion and disrespect. We're not really a traditional insurance company though. Our history has been in consultancy, for which we are well respected, and providing insurance was a natural progression. We're certainly not in the business of wriggling out of claims.

I've just seen how much I've written, so I'll stop now before you fall asleep.

Azeey · 20-05-2009, 10:55 AM

Quote: