Length of Engagement
Length of engagement is how long a contractor or freelancer supplies his or her services to one company in consecutive contracts.
Indeed in the early days of IR35, experts postulated that if you were at one company for more than two years then it caught you out.
People used to think that, as regards IR35, Length of Engagement was one of the major IR35 Factors.
People also used to think that it didn’t matter about the other factors. They thought that this alone would see you over the threshold.
Length of Engagement a Minor IR35 Factor
We subsequently see that now as far from the truth. If there are other factors which show, for example, the right of substitution, the lack of control of the company over the freelancer and no mutuality of obligation then it doesn’t matter that the contract period was two, three, four or 10 years.
The contractor, the intentions and the mode of working would take the contractor outside IR35. This is because he, or she, would not be a disguised employee.
Length of Contract
So, does it matter whether it is one big long contract or a number of short ones? Would Length of Engagement be equal to the one big contract? Would HMRC see the short contracts being less of a pointer to IR35?
The answer to that is No. HMRC would look at the duration of all the contracts put together as being equal to one big long contract.
Length of Contract and IR35
Length of contract is a Factor but it is not one of the major ones that point to whether IR35 catches a contractor. The other conditions in the contract are more important. The intention and actual working practices are more important too.
Whilst HMRC would see staying at the one company a long time as a factor, the way that the contractor worked and how he, or she, fitted into the organisation, if at all, would be seen as more important when showing whether the contractor was inside or outside.
To see all the major and minor IR35 factors click on IR35 Factors
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