Control a Major IR35 Factor
One of the big three factors as regards whether a freelancer is caught by IR35 or not is Control & Direction. Is it a master / servant relationship or is it one between equals. There are two parts to control. The first is what the contract says. Is it a Contract of Service or is it a Contract for Services?
The second is what is the relationship in reality? The judge can override the contract if the reality on the ground is actually a relationship of master / servant.
The most important thing here is for the freelancers to differentiate themselves and their way of working as far as possible from the permanent employee.
Employee v Freelancer
1. Control – The boss, or controlling person, tells the employee what to do and he, or she, does it. The freelancer decides what needs doing and does it after a broad outline form the client. What contractor negotiates what to do with the client. They put an agreement between two equals, supplier and customers, in place.
2. The boss tells an employee how to do a task. The freelancer decides how to do the task. So, there is no control of the freelancer
3. The employer supervises the employee during the performance of a task whereas a freelancer is self supervised. So, there is no control.
Agreeing the Timeframe
4. The employer tells the employee how long a task will take and he, or she, tries to do it within that time. The freelancer negotiates how long a task will take with the client and agrees the timeframe. So, he or she is not under their control.
5. The company tells the employee where the task should be done. The freelancer decides where the task should be done, at the office or at home or elsewhere. He, or she, will negotiate this with the client. Minute that you negotiated an agreement between equals about where it is best that the work takes place. So, there is no control here.
6. The company tells the employee which equipment he, or she, should use, e.g. the PC to complete the task. The Freelancer will decide himself, or herself, which equipment is best to use for the task whether it is his or her own PC or the companies. He, or she, will negotiate this with the client. Again there is no control.
Company Hierarchy Chart
7. The Company will place the Employee on the Company’s Hierarchy Chart showing whom he, or she, reports in to. The Freelancer will not appear on this chart. So, there is no control of the freelancer.
Indeed it would be best that you draw an East-West Chart showing two bubbles or two boxes with arrows going between the two showing a supplier / customer relationship and what needs to be supplied by the contractor to the client (and vice versa). Furthermore, both parties should sign his chart as showing the nature of the relationship.
Differentiating Freelancers and Employees
If all of these hold true then this is a contract for services. However, even if some of them are true this differentiates freelancers from employees.
It is all about differentiating yourself from company employees as much as possible via the contract and the actual working practices.