Seven So-Called Myths That Do Not Affect IR35 Status

A majority of contractor contracts will include a ‘Contractors must be cautious on how the IR35 legislation impacts their contracting. The problem with this keen interest is that misinformation can make contractors feel alarmed and make them pessimistic.

Here are some of this misinformation regarding a contractor’s IR35 position.

1. Length of time at one location

IR35 status is not affected by the length of time spent at a single location. HRMC may try to utilize an extended stay at a single location of a contractor to help build a case for ‘part and parcel.’ IR35 must not be confused with the 24-month rule for expenses.

2. Right of substitution has never been put into practice.

It does not mean that just because the right of substitution is not practiced makes it invalid. The significant factor is that the contractor can send a substitute in their place, regardless of whether they do it or not.

3. No contractor to send to practice the right of substitution.

Contractors do not need to send an employee as a substitute. Another contract who also in the business of subcontracting can be legal personnel in their place. It is valid as long as the business of the contractor is paying the substitute and is still ultimately responsible to the customer for fulfilling the contract.

4. Customers assert that their equipment must be used.

Many customers have strict rules regarding security, health, and safety. Employees are not allowed to utilize their own equipment at work. These same rules also apply to contractors. There are cases when providing equipment is not practical such as oil and gas contractors working offshore. It has been confirmed that a contractor will not be inside IR35 if he does not supply his own equipment for security and practical reasons.

5. Statement of intent in contracts

statement of intent’ clause that supports the contract should not mean that there is a contract of employment between the contractor and client. Some contractors unknowingly assume that the existence of such a clause puts them outside IR35.

6. Work is office-based.

Contractors assume that they are placed inside of the legislation if their contract does not permit them to work from home. An example would be a contractor being required to work on site if they can only deliver the service as contracted through the computer networks and project team of the client.

7. Confidentiality agreements in the name of the contractor

Client confidentiality agreements that specifically indicate the name of the contractor do not affect a contractor’s IR35 status as long as the agreements are not in conflict with the agreement between the contractor’s limited company and the client.

Conclusion

Contractors really need to be cautious when it comes to knowing the in-depth policies of IR35. If you are in need of special services, our company can provide you with expert help regarding IR35 for contractors.