Control is considered one of the most fundamental tests that make up the IR35 legislation, but how do we demonstrate this and what particulars are needed to demonstrate a lack of control?
HMRC’s own ESM0526 specifically refers to ‘how the work is done’, which we consider to be the most important factor that makes up this tricky test.
When we consider control, we are looking specifically to see whether the contract and working practices demonstrate a lack of supervision, direction and control from the client and that as the Contractor, you are free to determine ‘how’ the work is carried out without any interference from the client. As an employee, you can be supervised in the way in which the work is carried out, you can follow certain procedures and a manager can influence any changes, tell you your work should be done in ‘this way’.
However, the expectation from a genuine self-employed person of significant control (PSC) is that they have been engaged for their specific skill set and experience, meaning supervision, direction and control should not be present. So how do you demonstrate this?
When carrying out contract reviews for clients, we specifically ask:
‘Who controls the nature of the work with regard to what, when, where and how?’
What – Can you choose what is carried out with regard to the services you provide? Of course, your client will have a defined project requirement, but what you choose to do to reach completion should be at your discretion as the contractor.
When – Are you restricted to normal client hours or are you able to determine your own working hours? It is understood that you may need to work standard hours especially where you are attending a client’s site around opening times. However, it will show flexibility if you can determine your own working hours.
Where – Can you decided where you provide your services? Are you restricted to working at your client’s office? If so, how often and what are the restrictions? We would expect contractor’s to be free to determine as to where the services are provided whether this be at home or in a remote office. However, it is deemed acceptable to provide services at the client’s site if you are restricted to for security purposes.
How – This is what we consider to be the most ‘valuable’ at determining a lack of control. Do you have control as to how you provide the services or does the client have an element of control or more control than expected over the work carried out? We would expect that you retain full autonomy over the way in which you provide your services without control implications from the client.
Click here to learn more about IR35 and how to determine your IR35 status.