4. Working From Client Premises

It is not unusual for clients to expect you to work from their premises, for example because you need to be in close contact with other members of a team or because the documents they need you to work on cannot be accessed outside their organisation.

Obviously this gets round having to find a place to work and, if you are working on the client’s computer systems, saves wear and tear on your own equipment. Against this, your travel costs are likely to go up (and you may not be able to recharge them) and you will be wasting money if you are paying for office space of your own.

From the outset, then, it is probably a good idea to establish whether your clients expect you to do most of your work from your own premises, or on theirs.

IR35

An important factor to bear in mind when working from client premises is whether you will fall foul of an HMRC (Her Majesty’s Revenue and Customs) regulation called IR35, to do with whether workers providing personal services should be classed as employees or not.

HMRC introduced this legislation in 2000 as a way of closing a tax avoidance loophole, used mainly by IT workers, whereby employees would leave their jobs to set up their own business, then carry on doing their old work under the guise of ‘independent consultants’. The benefit to consultants is that, as I will show in the next chapter, it is possible to pay less tax as a sole trader or by owning a company than one would as an employee. In addition, the employer pays less as it does not have to cover costs such as National Insurance.

IR35 was an attempt to clamp down on this practice by extending the definition of ‘employee’ to cover many workers who are not on the payroll and who, under the regulations, would henceforth have to be paid under the Pay As You Earn (PAYE) scheme, like traditional employees.

The problem is that the extended definition of what constitutes an employee is extremely fuzzy.

The precedents set by the small (but increasing) number of cases that have been contested in court have much to do with where, when and how long you work for a particular client. Although investigations so far have mostly been restricted to workers in IT, IR35 extends to other providers of personal services, potentially including copywriters.

For the record, some of the criteria used by the HMRC to determine if you should be deemed an employee under IR35 include whether:

• you generally work for one client at a time, rather than having a number of contracts
• you work set hours, or a given number of hours a week or a month
• you have to do the work yourself rather than being able to hire someone else to do the work for you
• someone can tell you at any time what to do or when and how to do it
• you are paid by the hour, week or month
• you get overtime pay
• you work at the premises of the person you work for, or at a place or places he or she decides.

The nature of an independent copywriter’s work means that the answer to many of these questions may be ‘yes’, which, according to HMRC, means you would theoretically be an employee and have to be paid under PAYE.

Will this make a difference? It all depends on how much money you earn. If your earnings from a single client are under the higher tax rate threshold, getting paid via PAYE is unlikely to be much of a worry. It might even be advantageous, as at least you will be assured of receiving your money promptly.

On the other hand, if your income from a client is enough to ‘attract’ (as accountants say) higher rate tax, then being on PAYE will give you little or no scope to avoid it, so you could end up paying the tax man more than you need to. In such a case you might well want to review your working practices to make sure you fall outside the IR35 rules. To do this, you may need to prove that:

• you have a number of customers at the same time
• you have the final say in how you do the work for the client
• you can make a loss on the contract
• you provide the main items of equipment (computers, fax machines and so on) you need to do the job for the client, not just the small items, like pens and stationery, that many employees provide for themselves
• you are free to hire other people on your own terms to do the work you have taken on and if you do, they will be paid out of your own pocket
• you have to correct unsatisfactory work in your own time and at your own expense.