IR35 Caught Contractor
Are you an IR35 caught contractor?
HMRC have published six scenarios showing whether people are inside or outside of IR35 (in their opinion). Here is one scenario.
Caught by IR35
According to HMRC‘s website, Barbara has a Limited Company called B Ltd and is the sole worker, shareholder and Director.
She gets her work through an agency who has a contract with the end client.
Furthermore, she invoices every month and the agency pays her by the hour.
Because she is highly skilled no one else can substitute for her.
She wasn‘t hired for a particular task and the client can move her from task to task.
A Project Manager manages her work along with permanent employees on the project. Barbara is part of the team.
Her contract states that she works 9am to 5:30pm like the permanent staff.
So, the client decides which part of the project Barbara will work on.
If she wants time off she has to ask for it, even if her leave is not paid.
Therefore, if she has no work currently on her part of the project she would be expected to do something else.
She has to do the work at the client‘s site and has to use their equipment.
So, why is she caught by IR35?
The client decides what Barbara does and also how and when she does the work.
This means that they have control over her and this points very strongly to her being caught by IR35.
Moreover, the end client has not engaged Barbara for a specific task. They can move her to a variety of tasks. This suggests, therefore, that the end client has control over what Barbara does. It is a pointer that IR35 applies.
Also, she cannot decide when she is having time off and has to ask permission like an employee which points to IR35.
2. Personal Service
As she is a bit of an expert and a specialist in her area she couldn‘t easily find a substitute with the same skills.
Also, as there is no substitution clause in the contract, this would point to IR35 applying.
3. Other Factors
As the client provides all of Barbara‘s equipment that she needs to do her work and she is part of a team of employees doing basically what they do this is a pointer towards IR35.
Verdict on Contractor
– Barbara is caught by IR35.
She is an IR35 caught contractor.