You’ve found a project, you’ve had the interview, you’re ready to discuss your potential new contract and keen to ensure your IR35 status is clear within it, where do you begin?
The financial impact of being caught inside IR35 can be significant, so it’s worth ensuring that you’re clearly operating outside of the legislation wherever possible in both your working practices and your contracts. By having an open and upfront conversation with your agent or end-client, you can ensure you’re always working to the best-suited contract.
1. Get to know IR35
First and foremost, to be able to successfully and confidently hold these conversations, you need to have an understanding of IR35. Key indicators of operating outside of IR35, such as direction and control in your contracts and the right of substitution, should form an integral part of both your contract and working practices. With a firm understanding of IR35, you can hold open conversations and negotiate your contracts to ensure you’re getting what’s best for you.
2. Have the conversation openly
You’ll likely know far more about IR35 and its impacts than your clients. By openly engaging you can help to ensure the correct boundaries are in place and you continue to act as a separate business entity in your own right. When working within the public sector, as your client has the responsibility for deciding your status, it’s especially important to ensure accurate and well-informed decisions are being made. Make sure how you’ll be working is accurately represented by your contract. With the public sector application changes here to stay and the likelihood they could soon be pushed out to the private sector, you need to ensure you’re able to discuss IR35 and negotiate your contracts accordingly. Ensuring you’re capable of navigating your IR35 status with any client no matter their sector is competitive edge well worth having.
3. Negotiate your contracts
When it comes to negotiating contracts, remember that you can influence both your rate and your contractual terms.
‘When faced with an appealing contract it can be tempting to jump straight in. But, it’s ultimately up to you to ensure contracts are working in your best interests. Negotiation skills are crucial to ensuring the contract meets your needs as a contractor. If you don’t agree with certain terms you’ll need to have them removed or amended. This is especially true when it comes to managing your IR35 status with clients.’
– Matt Poyser – Director of Customer Experience and previous contractor
Should you receive a contract that would place you inside IR35, you’ll want to consider how the terms of the contract and working practices could be changed, and engage with the client to review them as appropriate. Should you find the terms suit the project or your client proves unwilling to budge on the matter, you can always try to negotiate for an increase in your rate.
4. Independently assess your IR35 status
By having a firm understanding of IR35, you’ll likely already have an idea of when a contract should be outside/inside IR35. But if there’s any uncertainty, you can always engage an independent specialist to access your contract’s IR35 status; providing peace of mind and certainty for all involved parties.
HMRC also offers advice to all contractors. You can submit a contract and basic outline to them for review and feedback.
5. Evaluate what it means to you
So, the project looks ideal; it’s the perfect time length and exactly the type of thing you’d like to be working on. The catch? The contract would place you inside IR35, and no amount of negotiation over your terms or independent assessment would see that changed. Is it a deal breaker? There’s no getting around that working inside IR35 will impact your take-home pay, but for many contractors, other incentives can outweigh this. Before turning down a contract solely on the reasoning of IR35 status, it’s worth taking the time to consider what the project means for you and whether the experience, work, contacts and general level of enjoyment gained might make it worth proceeding with. Managing contracts inside IR35 can be simple and straight-forward with a specialist accountant.
It’s always worth assessing and negotiating each contract individually to ensure you’re getting the best option for you.
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