Scotland: contract of services for self employment

Who will use these documents?

• Contractors;
• any construction business;
• a self employed tradesman;
• householders;

These contracts have been drafted specifically to deal with the Construction Industry Scheme (CIS), and can therefore be used by those within the scheme and those who fall outside the scheme such as householders.

They help provide a self employed status for tax purposes.

They are not suitable:

Where the subcontractor is anything other than a self employed individual. There are two reasons for this:

• the documents have been drawn for one person only.
• the CIS deduction scheme applies only where the sub contractor is an individual

Key features:

• provisions for assignments;
• sub-contractor’s obligations;
• sub-contractor’s fees and expenses;
• sets out all contractor’s obligations;
• strict health and safety clauses;
• confidentiality clauses;
• provisions for data protection;
• plus all other usual legal provisions

Why use this document?

For thousands of self employed people some version of this document will be presented to a new client as “my contract”. For any business using self employed people it provides the essential starting point for the relationship.

• may also be used for a series of assignments or a single assignment;
• very flexible to suit the requirements of either or both parties ;
• provides a complete framework ;
• protects both sides;
• establishes as far as possible a self employed status for tax purposes and reduces the chances for employer obligations to arise; 

Employee or self employed?
Note that although the agreement clothes the transaction with all the characteristics of self employment, simply using one of these contracts will not necessarily avoid the relationship of employer and employed. Both Revenue and Customs, the ATO and any industrial tribunal will be entitled to look behind the agreement at the reality of the contract. Some of the questions they might ask are:

• is this the contractors only work or does he work for others too?
• does the client control how the work is done?
• are the hours fixed by the client or can the contractor choose when he works?
• does the contractor work on the clients premises, using the client's equipment?
• to what extent is the contractor at risk as a self employed person?