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Schedules |
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Much
has been made of the need to have an IR35 "friendly" contract. What
many have overlooked is the need to have an IR35 "friendly" work description,
without this any contract may be severely limited in helping escape
IR35. |
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It
is vital that if the contract engagement is for a genuine project
then this is clearly described in the schedule. If the work is ongoing
and cannot be described as a project or series of discrete tasks then
no matter what the contract says it will be difficult not to be caught
by IR35. However a genuine right of substitution would help those
in support roles, especially if invoked. In order for most contractors
to escape IR35 it is necessary to move away from the time and skill-set
model towards a project and deliverables model. |
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A
clearly defined project with deliverables will result in no mutuality
of obligations, as the contract will be for the project and nothing
further. Such a description will state at the outset what is to be
done and the services should not be subject to variation by the client.
Services outside the initial project description or ad hoc consultancy
should only be undertaken via a separate agreement. In most cases
the client will not be exercising control over how the contractor
performs the services, as it is for their expertise that the contractor
has been engaged. |
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It
is in describing projects and services that some confusion occurs.
We are increasingly seeing standard schedules taken from available
precedents where the services are described as: |
| 1.
Knowledge and expertise of 'A' (eg. C++) |
2.
Knowledge and expertise of 'B' (further listing of software, systems
etc.) |
| Such
terms describe skills and the minimum requirements for the provision
of the services not the actual services to be performed and consequently
this does not reflect a project. |
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| The
services should ideally be described with specific deliverables.
Words such as analyse, plan, develop, implement, test, integrate,
establish, install, configure, build, migrate, design and deliver
all imply a process that is working towards a distinct endpoint
at which the services and thus the contract will be completed. Words
such as maintain, support, administer and operate imply an ongoing
requirement for the services. It is fundamentally important that
the description is an accurate portrayal of the nature of the engagement.
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Some
projects may be ongoing and developing over extensive periods of time.
If that is the case the description should be carefully drawn to demonstrate
the targets encompassed by the agreement and achievable within the
contract term. Extensions should be on the basis of the project over-running
or new project phase rather than just based on recurring time periods
and this should always be clear in any extension arrangements. If
the client wishes to engage the contractor for a new or different
project then this should always be undertaken with a new agreement.
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At
the interview with the client the contractor should establish from
the client a detailed understanding of the project requirements, and
what is to be achieved. It is for the contractor to ensure that an
accurate description is then inserted into the contract schedule,
as some agents may not have the necessary technical understanding.
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| Although
model contracts may be used in a variety of circumstances, it is
unwise to use a detailed model schedule. Schedules and work descriptions
will vary significantly between engagements and each schedule must
accurately describe the work. The schedule is a formal part of the
contract and it should be drafted in clear and concise terms. The
Inland Revenue will probably be on the lookout for standard or formula
schedules and it may be difficult to mount a successful defence
if the work description does not truly reflect the actual services
to be performed. |
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| This
article first appeared on shout99.com
on 4th July 2000. |
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