Walking the talk of IR35 – by quitting a contract

Should you offer notice on a contract when it’s not compliant? I did, and I’ll tell you why.

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Winning the Work

A while back, I agreed to commence on a contract for a large Financial Services institution. After completing the ‘interview’ process (a format which, in my previous article on IR35, shouldn’t exist for B2B), I was sent a contract by the agency. I had this promptly reviewed for IR35 compliance and, as it always does, it came back with a couple of recommended changes. One of the offending clauses was a requirement for my business to notify the agency ‘by 9am’ if for any reason I wasn’t able to work that day. The language was deemed to be unduly controlling – in the event my business’ staff are out of action, I will of course notify my client as a professional courtesy. But to have this written as a strict requirement smacks too much of making sure you’re reporting in like an employee. It’s an example of confused writing that afflicts the average contract and unwittingly structures and refers to clauses as if the engagement is employer/employee and not, as it should be, business to business.

There was a significant delay going back and forth, as the agency’s legal advisers were pushing back on the minor changes, either claiming that they were redundant or outright accusing my own advisers of not understanding the wording properly. Eventually the agency decided to use a different contract template from their parent company which was compliant with being clearly outside-IR35 , and we went ahead. Because of all the toing and froing the desired commencement date was pushed slightly but I eventually turned up on the client site ready to get started….

Hitting the ground running?

The client was perhaps not best prepared for my arrival.

Many contractors will have had a similar experience where they arrive on site only for it to occur to the client for the first time that there’s a variety of system on-boarding, familiarisation, discussion on project objectives et al. that are needed to get started. Consequently the first few days are spent sat in limbo whilst you await turgid processes to be enacted and then grind their way through the system. In a proper B2B relationship this is something that should happen asynchronously ‘offline’ before you even commence. Since this is an expensive industry to engage a consultancy in, it’s terribly poor value for money to have your consultant turn up only to then allow them to spin their wheels to no productive end. This is exacerbated by the illogical insistence of the client to have you on-site continuously, even when it’s clear there’s nothing to require you to be physically present.

This doesn’t feel right

It was at this point the alarm bells really started to ring. I was expecting to have a significant discussion to clearly define what would be deliverable in the engagement’s duration (6 months), but this didn’t transpire. What actually happened is that I was given a brief overview of their system’s chequered history – hard to maintain, poor processes, extreme difficulty in deploying and upgrading – and I was then asked to attend to a couple of minor work items within their existing constraints.

This didn’t sound right to me, but I supposed this might be a tentative water-testing exercise to ensure I was capable of what my business had represented during ‘interview’. After knocking these off pretty easily, I was then in the awkward position of having to go back and ask for more. What do I do now? What do you want next? These are questions a contractor should never have to ask. A clearly defined project of work with objectives and milestones should allow you to work fairly autonomously whilst only providing the client with updates or asking for some clarifications. That also means you shouldn’t need to be on-site unless there’s a clear reason to be. Some senior purse-string types have an unfortunate tenancy to want to see ‘bums on seats’ to justify the costs, but I maintain that unless there is a clear requirement, the consulting business has the discretion as to whether they need to be there.

What didn’t help was that their system was entirely undocumented. No wiki pages or comments in code describing how any of their system worked – it all existed in the heads of two senior engineering leads. Whilst a lot of it can be worked out by an experienced engineer, albeit very slowly and with much frustration, there are often various areas of ‘magic’ that simply need explaining. This constant dependence again just felt too employee-esque – there wasn’t enough information available to do any independent working.

So I sat there, bored out of my mind, attending to a couple of rudimentary tweaks to their existing system whilst documenting other parts for my own future reference.

Breaking Point

After exactly 3 weeks, I felt I had no choice but to offer notice on the contract. There wasn’t a project here to do. I was sitting there, wasting time, attending to dribs and drabs within an existing and pretty poor system. A bad system isn’t a problem – quite the contrary, it represents a bursting seam of potential to be mined – with a formalised appraisal, project plan to remediate, and then execution and delivery. That’s what you engage a consultant contractor to do – not have them sit there like an employee doing whatever occurs to you on an entirely ad-hoc basis.

Since my contract was actually with the agency – I contacted them to offer notice. Amusingly they then asked if I’d told the client and I reminded them that, technically, they were the ones I had to offer notice to, and it was up to them to notify their own client. Which they then dutifully do, and exactly 10 minutes later the client asks for a meeting.

Hope for the future?

First of all – ouch, it felt awkward. Having to tell a perfectly nice bunch of people that you can’t work for them any more – but also that it’s nothing personal. There are very many ways this can turn into a very nasty and unpleasant conversation if not handled well.

Much to my relief, it was actually a really positive experience. After carefully explaining my concerns around the nature of the work, lack of specification, and the need for IR35 compliance, they completely conceded to all of it. They admitted that they often treat contractors like backfilled employees, and whilst they were somewhat aware of IR35 regulations they agreed they needed to be better, and that engagements should be properly scoped pieces of work. It was simply that they were under too much day-to-day pressure, and their need was too urgent to stop to try to work it out properly. They’d also not had any top-down guidance from management, but also seemingly felt like they didn’t have enough internal political punching power to make the structural changes required. In a word, they were between a rock and a hard place.

I felt sincerely sorry for them. They were genuinely nice guys, working hard, doing their best under pressure. I also felt like I was leaving them in the lurch when they clearly needed help – and yet everything I’d said was true, and to remain was just too much of a risk for my business. They asked if I’d consider re-engaging if they could get their act together and come up with a project specification – and I said I would. I also said that such an effort wouldn’t be wasted regardless, as the next contractor would have a much better time of it.

Why not just shut up and keep your head down?

A lot of contractors might take this attitude, and fair enough. There are a three factors that allowed me to take such a position, namely:

  • My business has cash reserves. Contractors usually refer to this as a ‘warchest’. It means that if I don’t have a contract right now I won’t die of hunger any time soon.
  • My industry is a busy one – at least for the moment. Endless demand for particular skills means there’s always someone knocking at the door wanting to know if I’m available. Quite the fortunate luxury not available to many people.
  • I’m annoyingly principled whilst being sensibly cautious. Sometimes you deliberately shoot yourself in the foot because it’s the right or safest thing to do.

Three simple things, and yet if I didn’t have the first two I seriously doubt I’d have the third. If I needed the work badly and contracts were few and far between, could I really afford to argue the toss with an agency or client that their terms of engagement weren’t strictly by the regulations? My fellow contractors have often told me that it’s not worth the martyrdom to quit a contract on the principle. Consistently late payments, poor treatment, horrendous working environment – sure, switch to a new contract as soon as possible. But because you’re trying to future-proof against possible non-compliance with IR35? Madness.

Not all contractors are equal

It does make me wonder – how many ‘businesses’ are falling foul of the rules not because they’re willfully non-compliant, but because they have no choice? The responses to my last article raised an important point that I hadn’t addressed – some individuals are being compelled to register and work through a limited company. Clients and agencies are often demanding it as part of the contract, and individuals want the boxes ticked and so they comply. But unlike me, they don’t want to be a business, and probably don’t think of themselves as such. They’re in prime position to fall foul of the rules, probably have very little awareness of that fact, and will not be well-armed if and when the taxman comes knocking.


Not every industry has a specialist-skills shortage, and very many people can’t be precious or demanding about their terms. Yet at the current time Her Majesty’s finest will come down on these people with a sledgehammer if given the merest hint that there’s avoided tax to be clawed back, legitimately or not.

It’s a sorry state of affairs where, in classic style, the Treasury’s response to a relatively minor issue is to nuke it from orbit, because it’s the only way to be sure. The collateral damage to legitimate industry has already been felt in the public sector, but it’s at least hoped that the private sector will be much less-inclined to bend the knee, whilst also proving itself more adept to ensuring technical and genuine compliance with the rules, no matter how pedantic those rules are.


Related: IR35 is easily avoided, but it’s time to get with the programme

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Pete is the person that owns this website. This is his face. His opinions are his own except when they're not, at which point you're forced to guess and your perception of what is truly real is diminished that little bit more.