'I've worked as a Contractor for some years; I have skills which are in demand in a particular field (it costs me a fortune in training to keep them up to date!); I have a 'home-office' and an extensive reference library. A potential client wants to engage my skills for a particular project, but the agency insists on terms which would bring the contract within IR35, saying that if I work through an agency then I'll be subject to IR35, period - and he refuses to discuss it further.'

This is typical of a large number of the enquiries that I am getting nowadays from Contractors. All income of Contractors from 6^th April onwards will be subject to the IR35 test. But that doesn't necessarily mean that it will be taxed according to the new rules - the taxation basis will depend on the test of whether or not, if one disregards the Contractor's limited company, the relationship between the Contractor and the Agency or Client would have been one of employment.

The test itself depends on three things:

1. The actual relationship between the agency/client and the individual Contractor (there is a list of points to be considered here)
2. The extent to which the 'employment-type' status of that relationship is supported or undermined by the terms of the written contract between the agency and the Contractor's company
3. Factors within the Contractor's sole control, which may tend to either support or undermine the argument that the Contractor is in fact carrying on business on his/her own account.

I have seen and advised on a very large number of agency-contractor contracts during the past few years. And I have come to the conclusion that the majority of them would pass parts 1 and 3 of the test, but fail part 2 - simply because most agency standard contract terms do not accurately reflect the reality of the relationship.

The Revenue themselves say in their recently-released material that where a Contractor works through an Agency on the agency's standard terms, and where those terms require the individual

• to work where the client requests, and
• for an agreed number of hours per week, and
• at an agreed rate; and
• to keep a timesheet checked by the Client, and
• to be subject to the control of the Client, and
• not to subcontract the work to anyone else,

then they will treat the contract income as being subject to IR35. And, whilst these are only a few of the factors to be considered, by applying this 'rule-of-thumb' test, they would probably arrive at a legally correct result most of the time.

In your case however, the reality is that your services are being engaged for a particular purpose. Where the contract states that you agree to perform a specific defined task (as opposed to accepting a position); and to perform it at a specific defined place and times, all of which you have agreed in advance (ie at the time of signing the contract), and does not say that you are to perform the task as directed by the client, then it would be very difficult for the Revenue to argue that you were submitting to control (either by agency, or by client) in either what you do, or in where, how, or when you do it. You would simply have agreed in advance to perform a particular task, in a particular way, and at particular place(s) and times. That cannot in my view amount to control - and therefore the contract would not satisfy the Revenue's rule-of-thumb test.

The real question here is whether or not the client or the agency has the right to require you to change any of these - whether to re-deploy you onto different tasks, or to a different location, or at different times, or to require you to do what you do in a different way. The right of the agency or client to require you to change any of these things implies a submission by you to control, and is a completely different matter to a right to ask you to change them (which right of course anybody has, regardless of what a contract says).

Where the reality of the situation is that there will not be control on any of these four aspects (what, where, how and when), then from a tax point of view it becomes critically important that the contract does not undermine your position, by saying there is control - where in reality there is not.

If you were to accept this contract on the terms offered, then it is likely that your income would be subject to IR35. If on the other hand you were to accept a contract from another agency for exactly the same position, but on terms whereby you did not submit to control, then the answer might very well be different.

Agencies depend for their income entirely on the Contractors who work through them. It is perfectly possible (and wholly legitimate) for them to offer terms of business which neither undermine the Contractor's IR35 position, nor compromise their own commercial positions. I remain thoroughly baffled at the attitudes of those who refuse to do so.