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IR35 – Length of Engagement

Q. I’ve been contracting with the same client in the private sector for 3 years and they would like to extend for another year. I’ve had my contract reviewed and in itself it’s outside of IR35. However, I was wondering if I’d be better off switching to a new client at this point?

I’m thinking that if I did get investigated, it would be easier for HMRC to check working practises of my current contract rather than older ones. So rather than my contract being found to be inside and having to pay back 3+ years, I’d have to pay back just the current contract and they may be less likely to look into the 3 year contract as (I’m guessing) that’s a whole other investigation and one which would be less clear.

A. Under normal circumstances HMRC can enquire into the last 4 years, so if the department launched an enquiry & discovered that you had been contracting to the same end client during that time, then they would review the whole period.

Length of engagement is not a significant factor in itself but the longer the contract then the more likely that there is mutuality of obligation present & some control might be established by the end client, although this is wholly dependent on the overall arrangements.

I would recommend that, in conjunction, with your end client, you complete a Statement of Working Practices (aka Confirmation of Arrangements) & have this signed off by both parties. This can then be inserted in your IR35 dossier & presented as useful evidence in the event of an enquiry.

This answer was provided by Qdos Contractor.

By Contractor Doctor

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