IR35: Subcontracting

Q. I am new to contracting and so about to draft my first contract. My first contract is subcontracting for a consultancy company who have a contract with a client. They are putting me forward as the lead on it. I am not full time with them, I will be set up on their systems, but I can choose my days and work for other companies on the other days. If I needed to be replaced the consultancy and I would sub with someone else that they subcontract to or one of their employees. I think I am outside IR35 but want to ensure that the contract is worded correctly. I am outside IR35 and can I just use the ‘Through agency’ template here?

A. There are a number of tests to address when considering employment status, of which the more important ones are control and personal service (including right of substitution) which you have touched on.

That you have autonomy over your own working time is a positive sign but there are other aspects to this test. It is vital that the end user (the company who has responsibility & control of the project you are working on) has no right of control over what you are doing & how you go about doing it. Having said this, it is perfectly acceptable for the end user to provide you with a specification but beyond this they should not be supervising or managing you in any way.

With regard to proving an absence of personal service, should your company possess the ability to sub-contract any or all of the work or send a substitute in your place, then this would be a strong pointer towards the contract being one of services (self-employment) BUT ONLY if your company remains responsible for appointing & paying the replacement worker as well as their workmanship.

Provided that the contract you speak of is a true reflection of your working practices then you could use such a template but it would be futile if the contract contained sham clauses that bore no relevance to the working relationship. The terms of the contract should therefore be tailored to represent a true and accurate view of how the relationship works on a day-to-day basis.