This is a shortened guide to our Consultancy Agreement for a company template. This should be used if you hire a consultant that is:
1. a partnership or a company (or one or more shareholders operating via a company, including a “personal services company”); and
2. an independent contractor, and the individual supplied by the partnership or company is not an employee of the business hiring the consultant.
Below is a summary of the information that the guide to the template includes. The complete guide accompanies the template once you have purchased it.
This company version of our consultancy agreement includes options for you to select as appropriate, so it works:
1. whatever the nature of the services being supplied;
2. whatever the term of the contract – short-term, long-term, indefinite or fixed; and
3. whether or not a substitute worker or workers can be supplied to carry out the services by the consultant.
If the consultant is an individual and is contracting in his own right, then you should instead use our “consultancy agreement for an individual”.
Please note that the question of the right status of a contractor (i.e. employee or independent contractor) cannot simply be set by the parties. Both HM Revenue and Customs and the Employment Tribunal reserve the right to investigate the status. What status you give the consultant in your contract may not be conclusive.
In relation to personal services companies, the Revenue’s rule called IR35 has been in place for a good number of years and can be used by the Revenue to bypass the use of a company by an individual who they feel is but for the use of a company an employee of the hiring company, thus allowing them to charge more tax and national insurance, for which the hiring company can find itself responsible.
If you understand the factors that the Revenue considers in this regard, it can assist in your arranging your working practices so that it is more likely to be a genuine independent contractor situation. For more information on IR35, please see: https://en.wikipedia.org/wiki/IR35.
The agreement presumes a single individual will be provided by the consultant to carry out the vast majority of the work (e.g. a personal services company situation), rather than a team or a series of individuals. This agreement can be adapted to cater for the latter situation if need be (and there are then fewer risks of IR35 applying).
Clauses in this Consultancy Agreement for a Company
For the remainder of this guide, please click on this link and scroll down to the heading “Clauses in this Consultancy Agreement for an Individual”. Ignore references to individuals in the guide – this will mean the consultancy company. (You get the full guide that is specific to this consultancy agreement for a company when you buy the template.)