Business Legal Advice for Consultancy Agreements and IR35
We all use consultants in our businesses on a routine basis in order to bring in expertise that we don’t have in-house.
Many advantages exist for your firm and the contractor in having this relationship, including tax and National Insurance relief for both; it also frees you from a (vast) raft of statutory employment protection legislation.
But just because someone is labelled an independent contractor doesn’t prove that he is one. You have to consider the facts of the relationship and the overall picture to decide whether such a relationship exists.
This Act seeks to prevent disguised employment, which is where you engage independent contractors through a service company in order to avoid the resultant tax and employment duties.
In April 2020, these rules are set to change in such a way that will likely result in the IR35 rules becoming more difficult to avoid.
In terms of the current rules, liability for ensuring compliance with IR35 is on the contractor providing the services. As of 6 April 2020, this liability will lie with the client company instead.
Businesses and consultants alike are advised to get up to speed on the changes, which are due to come into effect in April 2020, to ensure they are not in breach of tax legislation.
So, contractors can be as important to the business as employees, but you don’t necessarily know them that well or have as much control over what they do, so you need to make sure that your agreements give you the best platform for getting the most out of your consultants.
Alternatively, if you are going to be a consultant, you will want to make sure that your duties and compensation are clearly laid out. Our consultancy agreement works whether you are a company or a contractor.
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