Work on Company's Contract

[doodle]

Dear Concern,
My company provides Data communication services (IT Services).if my company made a contract with another company (not with an agency or umbrella company) to provide networking core services on their premises for 3/6/12 months, and payments received from business account to business account under IT Services.

Am I allowed to work in this scenario ? At the moment we are providing services from our premises or remotely.

[zimba]

Depends on if you have a `contract of service` or `contract for service`. The former is NOT allowed under the Tier 1E rules but the later is allowed. The difference between the two also bears different legal and tax implications (e.g read on IR35 rule)
If you will be working under the banner of your company for a client but your contract terms oblige you to work as if you are an employee of that company, then you have contract of service. This is NOT allowed under Tier 1E rules.

The key rights and responsibilities of employee status under a contract of service are:

-The worker is controlled by their employer – they must perform the tasks they are instructed to by a line manager according to their job description
-The worker is expected to work at a specific place during specific hours on specific days (even flexi-time has core hours)
-The worker must present themselves for work and cannot send someone else as a substitute
- Employees have statutory rights to holiday pay, sick pay, maternity and paternity rights and redundancy payments
-Employees have statutory rights regarding how they can be asked to leave their employment
-Employees enjoy a range of additional benefits, which can vary according to the employer, but might include company cars, private health insurance, staff canteens, health clubs and gyms and so on
-Employees are not personally liable for any errors they make when completing work for their employer, nor are they expected to make good in their own time.

Read more: http://www.contractorcalculator.co.uk/d ... _ir35.aspx

[doodle]

Thanks Zimba for reply, that's what I am reading at the moment IR35 rules and Terms mentioned in IT contract.
I know I cannot work as an employee of that company or any agency. My contract will be "Contract for Service" but unfortunately this one point is included in my contract:

The worker is expected to work at a specific place during specific hours on specific days (even flexi-time has core hours)

[doodle]

-The worker is expected to work at a specific place during specific hours on specific days (even flexi-time has core hours)

In most of the IT contracts we define the rate per hour and often there are some packages. like if they are going to opt 50 hours a month, they will pay less rate for an hour. and mostly the places are development centre or NOC.

[zimba]

Most individuals taking up IT contracting end up in contracts of service unless you have a company/team of engineers taking on contracts from other business on your own terms without accepting any employee restrictions.
The contract requirements such as working in a certain place at a certain time, being managed by your client, being personally responsible to deliver something or having any employee restrictions means that you are working almost in capacity of an employee. So you have a contract of service without being formally employed by a company. You should NOT take such work as a Tier 1E migrant because a genuine entrepreneur or businessperson can NOT work in a role which is mostly aligned with the definition of an employee.

IR35 rules
IR35 was introduced so that employers do not hire contractors instead of employees to evade NI tax payments. The rules also prevent contractors from evading NI payments as they can take dividends instead of salary as company directors, meaning that the government will lose a substantial amount of tax

[mk074]

Most individuals taking up IT contracting end up in contracts of service unless you have a company/team of engineers taking on contracts from other business on your own terms without accepting any employee restrictions.
The contract requirements such as working in a certain place at a certain time, being managed by your client, being personally responsible to deliver something or having any employee restrictions means that you are working almost in capacity of an employee. So you have a contract of service without being formally employed by a company. You should NOT take such work as a Tier 1E migrant because a genuine entrepreneur or businessperson can NOT work in a role which is mostly aligned with the definition of an employee.

IR35 rules
IR35 was introduced so that employers do not hire contractors instead of employees to evade NI tax payments. The rules also prevent contractors from evading NI payments as they can take dividends instead of salary as company directors, meaning that the government will lose a substantial amount of tax

[mk074]

Most individuals taking up IT contracting end up in contracts of service unless you have a company/team of engineers taking on contracts from other business on your own terms without accepting any employee restrictions.
The contract requirements such as working in a certain place at a certain time, being managed by your client, being personally responsible to deliver something or having any employee restrictions means that you are working almost in capacity of an employee. So you have a contract of service without being formally employed by a company. You should NOT take such work as a Tier 1E migrant because a genuine entrepreneur or businessperson can NOT work in a role which is mostly aligned with the definition of an employee.

IR35 rules
IR35 was introduced so that employers do not hire contractors instead of employees to evade NI tax payments. The rules also prevent contractors from evading NI payments as they can take dividends instead of salary as company directors, meaning that the government will lose a substantial amount of tax

[mk074]

Hi Zimba88,

Tier 1 Entrepreneur ( 50 K )
Extension Due--> September 2017
Nature of Business: IT Support/Management Services

Just want to confirm if it is okay if you have multiple Supplier Contracts ( Contract for Services) with Clients and invoices are cleared after certain period into your business account. I have a scenario in which I have few contracts with small businesses and I provide remote support/weekend support as an IT Support Consultant. However, one of main contract is with XYZ as a supplier and provide services on client site as a contractor and length of the contract is two years to complete the migration Project. Clearly, am not on the payroll and not getting any employee benefits and company is involved for invoice ( Written Supplier Contract with Company). Does that will ring the bell during the extension ( Employee Status) that certain amount is coming into business account on a monthly basis? Also, small business invoices are only of couple of hundred pounds and XYZ invoice =( hourly rate* number of days). Please advise if am on the right direction or I need to be more clear to avoid stress during my extension next Year.

Your expert opinion on this will be really appreciated.

Thanks in advance

Most individuals taking up IT contracting end up in contracts of service unless you have a company/team of engineers taking on contracts from other business on your own terms without accepting any employee restrictions.
The contract requirements such as working in a certain place at a certain time, being managed by your client, being personally responsible to deliver something or having any employee restrictions means that you are working almost in capacity of an employee. So you have a contract of service without being formally employed by a company. You should NOT take such work as a Tier 1E migrant because a genuine entrepreneur or businessperson can NOT work in a role which is mostly aligned with the definition of an employee.

IR35 rules
IR35 was introduced so that employers do not hire contractors instead of employees to evade NI tax payments. The rules also prevent contractors from evading NI payments as they can take dividends instead of salary as company directors, meaning that the government will lose a substantial amount of tax

[zimba]

I cannot determine you employment status, seek legal advice for that based on your contract terms.
Just bear in mind that if your contract obliges you to work as if you are an employee of that company, you have contract of service.

[mk074]

Hi Zimba,

Thank you so much for the response which is really appreciated.

The Legal Department of the client ( XYZ) has confirmed that am setup as an supplier with Procurement not HR. ( Limited company). i will double check with Solicitor and will make necessary amendments in the Contract to reflect Contract for Service rather Contract of Service. Future Plan is to send some one else to complete the Project on behalf of my company.

Also want confirm if we need to submit all of our Business Contracts/Invoices for the extension application.

Many thanks in advance

I cannot determine you employment status, seek legal advice for that based on your contract terms.
Just bear in mind that if your contract obliges you to work as if you are an employee of that company, you have contract of service.

[zimba]

i will double check with Solicitor and will make necessary amendments in the Contract to reflect Contract for Service rather Contract of Service. Future Plan is to send some one else to complete the Project on behalf of my company.

That is a good idea. Seek legal advice from specialists in contracting and business law. Make sure your contract terms are reviewed legally so that you never end up anywhere near IR35. This is good for tax and immigration purposes.

Also want confirm if we need to submit all of our Business Contracts/Invoices for the extension application.

No. There is no such requirement

[mk074]

Hi Zimba,

Thank you so much for advise and prompt response.

Going Forward, I will ensure to follow the policy guidance to meet the extension requirement. Already have had left one small project secured via agency ( last year) due to lack of information and misguidance from solicitor.

Thank you for clarification that i don't need to submit invoices/Contracts that give me a big relief.

Cheers

i will double check with Solicitor and will make necessary amendments in the Contract to reflect Contract for Service rather Contract of Service. Future Plan is to send some one else to complete the Project on behalf of my company.

That is a good idea. Seek legal advice from specialists in contracting and business law. Make sure your contract terms are reviewed legally so that you never end up anywhere near IR35. This is good for tax and immigration purposes.

Also want confirm if we need to submit all of our Business Contracts/Invoices for the extension application.

No. There is no such requirement