1. Ensure that you have a Consultancy Agreement in place which reflects the actual relationship between the parties. It is not enough to simply state that you are a self-employed consultant and not an employee. Tribunals will look behind contractual terms when determining employment status if they do not reflect the true agreement between the parties.
2. Ensure that you invoice the client for services and are not paid through their payroll.
Avoid being paid a predetermined wage or salary but show that you have negotiated a rate for services provided. Ensure that you are paid gross (without the client deducting income tax or national insurance contributions) and remain responsible for paying your own tax.
3. Consider whether to provide your services through a limited company. This removes the direct contractual relationship between yourself and the client and allows you to reduce your tax liability. However, beware of IR35 legislation. This makes the consultant company responsible for paying any income tax and national insurance contributions that may be due if HMRC deems you to be an employee for tax purposes. For further information on the impact of IR35 legislation please contact a tax specialist.
4. Maintain a sufficient amount of control over the way you perform the services, e.g. when you work and how you work.
5. Ensure that the client allows you to provide a substitute to provide the services if you are unable to do so, e.g. because of illness or holiday. Keep the client’s discretion for you to do so as wide as possible. Consider agreeing a list of approved substitutes that can be attached to the Consultancy Agreement.
6. Avoid carrying out services for the same client for an indefinite period without breaks. Provide your services for distinct tasks and projects and maintain your flexibility to work for others at the same time.
7. Use your own tools and equipment, e.g. a personal laptop rather than an office computer. Avoid using the client’s resources, such as support staff.
8. Do not become integrated into the client’s workplace, e.g. by using a company e-mail address or company business cards.
9. Avoid being paid when you are off sick or on holiday. If you are providing personal services you may be classed as a “worker” and be entitled to holiday pay and other rights. However, this is a factor that can point towards employee status.
10. Regularly review the arrangements between the parties (e.g. on a quarterly basis) in order to ascertain whether you are still a consultant or whether you are actually an employee and should be treated as such.
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