Contractors' Questions: Is a single client OK and how to broach time off?
Contractor’s Question: Is it legal as a contractor to have only one client and would the legality of this differ if I was a sole trader rather than a limited company?
Separately, but also to do with how I work, how should I go about broaching the subject of a holiday with the client? As I’m ‘in business on my own account,’ do I just ‘tell’ the client in an instructional way when I’m going away, or am I meant to ask when I should take some time off, like an employee would?
Expert’s Answer: Firstly, it is perfectly fine for a contractor to have one client – it certainly doesn’t have any legal impact. From an IR35 perspective it would certainly be positive if a contractor had more than one contract running concurrently, but this situation is very rare and the vast majority of contractors will service one client at a time.
If you have been at the same client for a prolonged period of time, HMRC would look to argue that you had become ‘part and parcel’ of the client’s organisation. However, providing you continue to work as a genuine contractor, the length of time at one place should not be a pivotal factor in determining status.
It would be the same for a sole trader, although IR35 itself would not be an issue. The tax status of sole traders is a separate issue and, unlike IR35, any liabilities would rest with the client rather than the worker.
Regarding holidays, technically-speaking as an independent business you should simply inform your client out of courtesy of any impending breaks in the provision of your services. Even better would be if you supplied a substitute if you were personally unavailable – that’s one way of virtually guaranteeing your IR35 status.
In reality, of course, it’s not always possible for contractors to merely tell the client they are not going to be there as they might be a key part of a project. However, you certainly shouldn’t follow the same process as employees and should always remember that you are in a business-to-business agreement.
The expert was Seb Maley, operations director at Qdos Consulting, an IR35 advisory for freelance and contract professionals.
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Contractors’ Questions: Can I beat IR35 by being a sole trader?
