Most Points Apply to All Contractors
Even though Lisa Fernley had a couple of points in her favour that normal contractors don‘t have, i.e. she has four other clients and she has someone who works for her, it is difficult to see how the Special Commissioner could rule against most contractors, as long as they take certain precautions. Even if they didn‘t they would still stand a pretty good chance.
The Commissioner said that there were 9 points that tilted towards Lisa being a small business, and 3 that pointed to her being a disguised employee (see our article ‘Reasons for the Verdict – What Contractors Can Do to Stay Outside IR35’).
Only Three Against
Even the three points that went against Lisa were neutralised by points in her favour, according to the Special Commissioner.
Her contract provided for a standard working week, but she didn‘t, in practice, work a regular working week, varying her weekly hours.
According to the Commissioner her financial risk was low as you was paid regularly, but this was trumped by the fact that she had problems getting paid a couple of times, as sometimes happens to a small business.
I‘m sure that in future contractors could point to other contractors who have lost out when their agencies went bust during the current downturn to show that there is a greater risk to them, as small businesses, than there is to employees.
Also, according to the Commissioner, it counted against her that the contract stated that she did the work personally. He said that the rate was fixed with Lisa Fernley personally in mind, but he didn‘t think that this was significant and was not contrary to the rights of substitution.
Onto a Winner
When having a room at home with a desk, computer, and phone will get the Commissioner to tilt towards you being a small business makes things a little easier.
When having a badge at your client‘s site that says ‘˜Contractor‘ on it tilts the Commissioner towards ruling that you are a small business, this is an easy bonus.
When not getting holiday or sickness pay will tip the Commissioner in your favour, all contractors are onto a winner.
When having your own business cards and website tilts the Commissioner towards agreeing that you are a small business, this gives you plenty of arguments and opportunity at a low cost.
When not being able to participate in the client‘s Sports and Social club tilts the Commissioner towards you, don‘t get upset by your client‘s mean-spiritedness. Let‘s hope that you are not allowed to eat at the company‘s canteen or restaurant either.
Do Yourself a Favour
You can do yourself a favour as well by making sure that your contract says that your contract term, e.g. six months, is an estimate for the time needed to complete your work, and that, and that the weekly number of hours is just an estimate too.
From some of the points where the Commissioner ruled that they went towards proving that the contractor was a small business and not a disguised employee, it might even be harder for a contractor to prove the opposite, i.e. that he or she was a disguised employee and not a small business.
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