‘IR35 Friendly’ Contracts – Not So Friendly!!
On 27th July 2011 the judgement was handed down from the Supreme Court in the case of Autoclenz Ltd v. Belcher and Others and it has confirmed that a contract that is written to be inside IR35 but is not a reflection of the work the contractor will actually be doing is not worth the paper it’s written on.
The written contract used by Autoclenz stated quite clearly that:
- the contractors were considered self-employed and were responsible for their own tax and NI contributions
- The intention of both parties was that the contractors were not, and would not become, employees of the company
- The contractors could provide a substitute if they were unable to work personally – “….you are entitled to engage one or more individuals”.
- The contractors would have to provide all or some of their own equipment
- There was no obligation on either side – “you will not be obliged to provide your services on any particular occasion not, in entering into any such agreement, does Autoclenz undertake any obligation to engage your services on any particular occasion”
The contract, taken in isolation, would most likely be considered, by any reviewer, to be outside IR35 but the Supreme Court Judge decided, based on working practises, that the contract was inside IR35 and the contractors would be considered as employees of Autoclenz.
The good news is that, as an employee of ContractorUmbrella, you do not need to consider IR35 or expose yourself to any future risks regarding your employment status. Working through an umbrella company you are outside the scope of IR35 as you are employed by your umbrella company and paid through PAYE. Visit our website www.contractorumbrella.com.
If you would like to discuss any aspects of using an Umbrella Company you can contact one of our expert advisors on 01206 713 680 or email us at info@contractorumbrella.com.
