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Working Outside IR35: The Question of Control

IR35

The degree of control the end client has over the services you supply is one of the major factors that determine whether you’re considered to be inside IR35 and employed for tax purposes, or outside IR35 and in business on your own account. Employees are typically under the direct supervision of their employers, and the truly self-employed would expect to have more influence over how they complete the work they’ve been hired to do.

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The question of control is complex and it has several moving parts, so in this article we’ll break it down and explain each one.

Any determination of your IR35 status must examine the extent to which the client has the right to control what you do, and where, when and how you do it.

Control over what work you do

If you’re reporting to a manager or supervisor who can assign new tasks to you, or move you from one task to another as priorities change, without consulting you or renegotiating your contract, this is indicative of an employment relationship.

Another indication would be how much control you have over the work – for example if you discover an additional task that isn’t covered by the original contract, can you go ahead on your own, or would you need to check with the client first?

It’s important to note that if the client has the right to assign new tasks, you are clearly under their control, whether they actually exercise this right or not. For this reason, the standard phrase “and any other duties as required…” belongs in employment contracts, and not in your contract for services.

Control over where you work

It’s common for a contract to require you to work at a specific place and this is largely acknowledged to be neutral for IR35 purposes. For example, a heating engineer would have to work at their client’s home, but this does not indicate that the client controls or employs them.

However, it can be a factor where you work mostly from home. Unless the client has implemented strict guidelines and rigid reporting requirements, a home worker has no set hours, and work is not being checked on an ongoing basis, so it would be difficult to argue that you’re under the client’s control.

Control over when you work

An employee would be expected to work set hours as set out in their contract or arranged by the client, and a contractor would be expected to arrange their hours according to the need to suit the task and their own needs. It is acceptable in some circumstances for the hours of work to be restricted – for example by the client’s office hours or the availability of their systems. For example, there’s a difference between the client saying “our systems are available between 9am and 5PM Monday to Friday” and “you must work from 9am to 5pm on weekdays”.

It’s also acceptable for the client to tell you how may hours they’re willing to pay for, but less so for them to tell you exact hours when you should be working.

Control over how you work

The thing that sets many contractors apart is that they’re hired for expertise that the client does not have in house. If this applies to you, it will be difficult for the client to control how you work because you’re the one who knows how to do it and that’s why they’ve hired you.

Providing a detailed specification, or checking that specific industry practice or standards are adhered to does not usually constitute control.

Getting a professional opinion about your IR35 status

As you can see, there are a several elements to control and control itself is only one of several factors that affect your IR35 status. This is why we advise any contractor who trades through their own limited company to get each contract reviewed by an IR35 expert, to ensure they’re working under the correct status and protect them from future investigation by HMRC.

If you have any questions or if we can help in any way, please call our expert team on 01296 468 483 or email info@orangegenie.com.

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