The reason that we ask this question when reviewing an engagement is to understand the nature of the engagement, specifically around the issue of ‘Control’, which is one of the three key points that is used to determine whether a contractor is working inside IR35 or outside IR35 along with ‘Substitution’ and ‘Mutuality of Obligation’.
It is true that any project is essentially a collection of tasks building up to certain agreed deliverables and milestones and the completion of the project itself.
However, a project-based role would be one where key deliverables were required and the contractor would be determining the tasks required to meet those deliverables and complete the project; i.e. the contractor is in control over how the work is done (or responsible for the method of the performance of the services, as you might read in a contract).
Where the role is task-based, then the client is essentially directing the contractor from task to task and potentially has sufficient right of control to prioritise which task is undertaken when.
An example could be a project to build an online process for automating the review of contractor working practices. Clearly to achieve this, will require specific tasks to be completed:
- technical input for the question set;
- testing of the outputs;
- ensuring that the user journey is clear and that there is sufficient information to help prompt the customer;
- liaising with the software providers to make changes;
- testing and determining the pricing of the assessment tool;
- how the tool will be marketed.
No-one person will do all of this work in isolation, but if the contractor has been given this to oversee, then this is project-based.
If, on the other hand, a contractor is sitting on a help desk, then the work would be deemed as task-based.
The reality for many engagements is that they sit somewhere in between the two.
In summary you will more likely be deemed as working inside IR35 if you are contracted for task-based engagements, as ‘Control’ comes into play.
For further guidance on the intricacies that IR35 poses for contractors, please refer to our IR35 Hub. If you would like specific IR35 taxation advice, the experts at Markel Tax can help. Find out more on the website.
Details for this article were provided by Paul Mason, Head of Tax Partnerships at Markel Tax