How one word in a clause can fail a contract

Anyone responsible for drafting or reviewing clauses within contracts for services between independent contractors for a relationship deemed to be self-employment or ‘outside IR35’ understands that it’s not always the words themselves but rather how they are used.

A robust contract which correctly establishes the framework of an engagement and is supported by the actual working practices will determine whether clients will successfully defend their position if HMRC undertakes an employment status or IR35 challenge. One missing or misplaced word might not completely undermine the intention of a contract but a few carelessly drafted clauses could.

We frequently come across contractors clients and employment agencies who are confident that a particular contract sufficiently reflects the key components of self-employment or sits outside IR35. When asked to review contracts our focus is the three key tests set out in Ready Mixed Concrete: personal service...