Clients are more likely to determine roles to be “inside IR35” as it is the least risky. However, clients find themselves in a great disadvantage attracting the right talent when they ignorantly move to a blanket decision of “inside IR35”.
We have seen cases of RED10’s contractors receive an ‘inside IR35” Statement Determination Statement (SDS) from clients. Some of which we did not agree and have subsequently helped those contractors to address their dispute by running our own CEST SDS.
In our experience and in line with RED10’s contracts, you will find below an overview of the most likely working practices to deem contractors “inside IR35” incorrectly.
1. Flexibility and Reactive work
One of the top reasons we see clients incorrectly concluding that contractors fall “inside IR35” is the requirement of reactive actions. Clients believe that in case they decide to move contractors to another role or task at a short notice, it is expected by contractors to accept this flexibility on the original agreed payment terms without the requirement of a new contract.
However, contracts with RED10 and clients have clear and set deliverables. Yes, the contractors may accept additional tasks at short notice, but only when it is directly affecting the completion of the pre-agreed deliverables. Any new tasks or workstreams outside of contractual obligations will need to be discussed, negotiated and require a new contract.
2. Hours per week
Clients deem contractors “inside IR35” on the basis that they contractually perform an agreed number of hours per week, on a similar basis to an employee. Stating that this allows contractors to be deployed on relevant jobs at the discretion of the client.
However, contractors’ contract (with RED10 and the clients) clearly state a defined start and end date, with deliverables and set milestones. The hours are capped for billing at 40 per week to avoid day rate charges to be in excess of clients’ expectations. Therefore, this does not allow the client to ‘deploy’ contractors on any relevant jobs that fall outside of the set deliverables.
3. Remedial work
Finally, another working practice reasoning we see clients deem contractors “inside IR35” is remedial work. Clients state that in the case of contractors’ unsatisfactory completion of their initial attempt, it is anticipated by the client to provide relevant support and equipment to allow the contractor to undertake the work fully.
This is incorrect. Any work that is unsatisfactory to the clients would have to be corrected at the expense of the contractors, who will not charge for the time that the work takes to be corrected.
Here at RED10, we can support both clients and contractors during these daunting and uncertain times with any payroll advice, general contracting queries and disputes that may come up.