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Is this contract a robust defence against IR35?

PCG, ATSCo think so

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A standard contract supplying a "robust defence against IR35" has been devised by the Professional Contractors Group (PCG) and The Association of Technology Staffing Companies (ATSCo).

The standard contract will be available for use by PCG members working through ATSCo recruitment agencies. IR35 is a controversial tax rule which affects the tax burden applied to many UK contractors.

To put contractors on a stronger legal footing, PCG/ATSCo have come up with a standard contract between an agency and a contractor that sets out in clearer terms the basis on which a freelancer is paid. This is a "contract for services" (a self-employment contract) which is different from a "contract of services" of the type an employee would have.

The standard contract covers areas like task based working (contractors are paid for completing a project - not by the hour), right of substitutions and mutuality that are important in distinguishing an employee-style relationship from a freelance contract. Armed with this contract, contractors are in a much stronger position to say they should not be subject to IR35.

The first such contract was signed this week, by freelancer Neil A'Violet, working through The Wreay Group, a PCG Affiliate member whose managing director, Derek Wreay, also serves on the ATSCo executive.

PCG director Ian Durrant said: "We are delighted to have reached agreement with ATSCo on the terms of a standard contract. This shows our willingness to work together and demonstrates the increase in understanding that has been achieved between the two groups.

"Since agencies and contractors 'share the same rice bowl', this has to be a positive step for all parties concerned. We sincerely hope ATSCO members take up the option of using this contract with their PCG member contractors."

Derek Wreay said: "Here at Wreay we made the option of using this contract available to freelancers from the day that it was agreed. The first freelancer offered this contract jumped at the chance to use it."

PCG said it intends to devote considerable effort over the coming months to "drive client demand" for this new industry standard contract. The standard contract so far only specifies the business relationship between contractors and agencies. The PCG hopes to develop it into contracts that also cover direct relationship between client businesses and contractors. ®

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