We know (or we should know) that Control is a key element in determining your IR35 status. To be precise, one of the key characteristics of a Master/Servant relationship, on which employment tests are based, is that the worker is under the Direction and Control of the end client.
The D&C test used in IR35 cases is based on the premise that
if the Client can tell you where and how to perform your work, then
an employee-like relationship exists and you are inside IR35.
Except, of course, it really isn't that simple.
Control may look like a black and white distinction, but in fact it
is many shades of grey. Is it Control if the client insists a
first-line support worker is on site at the same time as the users
they are there to support? Or the worker has to use the client's
hardware, usually because the client doesn't want someone else's
equipment plugged into his network (and he doesn't see why he
should spend time and effort validating such equipment for use)? Or
that the worker has to adhere to the client's coding standards? Or
that a tester has to have his work periodically reviewed for
quality?
All the above have actually been argued in recent
IR35 cases. Only one was found to represent control. That was in
Dragonfly, which judgement was sufficiently off the wall that it
can be ignored in this context (although what Dragonfly did settle
is that reality and contract have to be aligned).
Actually I suspect this whole issue of D&C, to
the client, is very simple: they want the worker to deliver what
they want delivering and usually aren't all that bothered about
precisely how it is delivered. The people that get worked up about
where contractors sit and when they are at their desk are usually
the middle managers, not the executive
Also, the reason it gains such prominence in agency
contracts is nothing to do with IR35 but everything to do with
whose fault it is if the worker screws up. The agency wants the
client to be "in control" because then if the worker does make a
mess of things, there's no comeback on the agency. This, of course,
ignores the fact that most agencies actually sell their services on
the basis of having their very own stable of excellent people
readily to hand.
Either way, what we need is a clear definition of
Control in the context of a client/worker relationship. And that
could then be used to our advantage. If that definition exists as
an accepted term, then we can say to the client that Control is
exercised or it is not. If it is, and you want full control over my
work, then you are responsible for paying my taxes and I'll take
the balance, because you want to treat me as an employee, then you
can have the extra overheads that an employee would demand. If it
is not, then pay me gross and I am liable for all my taxes; in fact
the relationship is now clear, so why not use a simple B2B contract
in stead of that complex, ambiguous pseudo-employment one you're
used to having?
And if we can do all of that, then IR35 evaporates in a puff of
smoke
The D&C test used in IR35 cases is based on the premise that
if the Client can tell you where and how to perform your work, then
an employee-like relationship exists and you are inside IR35.
Except, of course, it really isn't that simple. Control may look
like a black and white distinction, but in fact it is many shades
of grey.
Is it Control if the client insists a first-line support worker
is on site at the same time as the users they are there to support?
Or the worker has to use the client's hardware, usually because the
client doesn't want someone else's equipment plugged into his
network (and he doesn't see why he should spend time and effort
validating such equipment for use)? Or that the worker has to
adhere to the client's coding standards? Or that a tester has to
have his work periodically reviewed for quality?
All the above have actually been argued in recent IR35 cases.
Only one was found to represent control. That was in Dragonfly,
which judgement was sufficiently off the wall that it can be
ignored in this context (although what Dragonfly did settle is that
reality and contract have to be aligned).
Actually I suspect this whole issue of D&C, to the client,
is very simple: they want the worker to deliver what they want
delivering and usually aren't all that bothered about precisely how
it is delivered. The people that get worked up about where
contractors sit and when they are at their desk are usually the
middle managers, not the executive.
Also, the reason it gains such prominence in agency contracts is
nothing to do with IR35 but everything to do with whose fault it is
if the worker screws up. The agency wants the client to be "in
control" because then if the worker does make a mess of things,
there's no comeback on the agency. This, of course, ignores the
fact that most agencies actually sell their services on the basis
of having their very own stable of excellent people readily to
hand.
Either way, what we need is a clear definition of Control in the
context of a client/worker relationship. And that could then be
used to our advantage. If that definition exists as an accepted
term, then we can say to the client that Control is exercised or it
is not. If it is, and you want full control over my work, then you
are responsible for paying my taxes and I'll take the balance,
because you want to treat me as an employee, then you can have the
extra overheads that an employee would demand. If it is not, then
pay me gross and I am liable for all my taxes; in fact the
relationship is now clear, so why not use a simple B2B contract in
stead of that complex, ambiguous pseudo-employment one you're used
to having?
And if we can do all of that, then IR35 evaporates in a puff of
smoke…
Alan Watts
Freelance Consultant and Interim Manager
http://www.linkedin.com/in/alanwatts
© 2009 All
rights reserved. Reproduction in whole or in part without
permission is prohibited.
Image: Kids,
be nice or I shoot by Stefan
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