We all understand that IR35 will be with us into the foreseeable future. Another thing that we know is that the number of enquiries will significantly increase, so now is the time to make sure you are adequately protected.
Very often you cannot control the contract that you are provided with or your client’s attitude who you are working with. However, the Orion Group says that there are some steps that you can take that will greatly improve your chances of succeeding if the HRMC comes calling.
Compile your evidence that demonstrates why you believe you are outside of IR35.
Contractors should all have a specialist review their contract, and that can also include reviewing your working practice. If possible, maintain a record of the review that you can produce in the event there is an enquiry in the future.
It also would be worthwhile to create a simple document and outline the key reasons that show you are not a disguised employee but are a real business.
Exercise your right of substitution.
That might sound quite implausible on the face of it, however, HMRC always will consider personal service and substitution as the most important factor. If you can send a substitute for yourself, even for just one day, that would have a very significant bearing on the status argument that you are making.
In light of Agency Worker Regulations that were recently introduced, end-users and agencies are more eager than ever to make sure their contractors are viewed as being genuinely independent, so it isn’t unreasonable to suggest to them to send a suitable replacement for you for one day.
Take business insurance out.
Holding business insurance (in particular Professional Indemnity) always has been both an easy and key way to strengthen your IR35 position.
Make or purchase company stationery.
It might sound insignificant, but these small detail indicating you are a real business actually can help. In fact, a judge last year in an ECR Consulting case said that ECR was a business in its own right and that Elaine had produced copies of her company stationery and business cards to the Tribunal. The judge further noted that ECR operates its business from a dedicated area in her house. The company has a website and domain. It is a PCG member and advertises its services. It invests in development, has retained reserves, and over the years has conducted fixed priced work for various clients.
Therefore, having things such as a company website, letterhead, and business cards can all be helpful in an IR35 investigation, and very much worth the small outlay of funds it will cost you.
Get a ‘confirmation of arrangements’ documents put into place.
An IR35 enquiry, as we know, focuses on what the actual relationship is with the end client. The world’s best contract can be rendered worthless if there are no compliant working practices backing it up.
HMRC will look to question your client about the way things actually work and when they do this you always are on potentially dangerous ground. After all, who knows what they might say if they are asked an endless number of leading questions?
