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Retain your control as a contractor to keep IR35 at bay

Supervision, direction and control IR35

Control is one of the three key points that is used to determine whether a contractor is working inside IR35 or outside IR35.

The three main pointers are:

Supervision, direction and control

– The degree of control your client has over what, how, when and where you complete your working day?

Substitution

– Are you required to carry the work out yourself?

Mutuality of Obligation (MOO)

– Is your client obliged to provide you work, and are you obliged to complete it?
Regardless of whether you work as a contractor in the public sector or the private sector, you will need to be able to demonstrate that these points and working practices are compliant to IR35 legislation if you are subject to a HMRC IR35 investigation.

An additional point that is also heavily weighted in the CEST tool is how you are paid. If you are paid weekly or monthly for your contract, then that is likely to be viewed as working inside IR35.

 

In this article we look at supervision, direction and control

If you are an end-client and you exercise control over how a contractor performs the work they are contracted to complete for you, then you are at risk of placing that contractor inside IR35.

Supervision means that you are closely supervising a contractor’s work, which can include stringent checks by an employee of the end-client before the contractor can move on to another task.

Direction – Someone providing direction to a contractor will often coordinate how things are done and how the project progresses.

It can be argued that both supervision and direction are necessary in some sector, especially those heavily regulated such as financial institutions, to ensure compliance is adhered to.

Control can, for example include insisting on a contractor conforming to methods laid-out by the hiring party, such as: “We don’t do it like that, we insist on you working to our methods.”

Control can also mean an employee having the power to move a contractor from one task to another as priorities change. In short, the autonomy of the freelancer/contractor is removed.

In short, the freelance contractor should retain control over how and when they work, not the end-client. If you find yourself in the situation where you do not have control over how and when you work, then you could find yourself working inside IR35.

A contract review can identify such an issue as well as identifying other indicators for working inside IR35. This could then provide you with an opportunity to discuss changes to your contract and/or working practices with your end-client to ensure you are compliant and working outside IR35.

 

For information about Tax Enquiry & Legal Expenses Insurance and Contract Reviews, please contact our award-winning team on 0333 321 1403

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Related Articles:

Retain your control as a contractor to keep IR35 at bay

Mutuality of Obligation (MOO)

The Right of Substitution

Why do I need an IR35 Contract Review?

Can I insure against IR35?

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