IR35 AND CHARGING FOR TIME

A recent article by a law firm in the IR35 space, stated 'Perhaps one of the clearest ways of distinguishing employees from the genuinely self-employed is the way that the work is paid for and this may be a useful indicator of the type of relationship that is being entered into.

Indeed, 'perhaps' and 'may'. In a borderline case, fixed price might elevate financial risk , such that the outside IR35 case is strengthened, IF risk of non / reduced payment is spelled out in the contract. But a direct differentiator of employment status that this quote might imply? I have my reservations.

In over 25 years on projects, even where consulting firms deploy PAYE remunerated resources, the majority case has been time & materials, not fixed price. Nothing to do with employment status. These are commercial mechanisms for setting the price based on the balance of risk between the parties. There's a danger from clients reading such opinion, that they conclude it's a major risk to engage resources on a T&M basis. They would be wrong. There are also more straightforward IR35 factors that can remove this tiny risk entirely, and yet companies may throw away the substantial commercial, operational and transformational benefits of contractors, to avoid it.