Policy and Procedures on IR35 Compliance for UK Government Contracts

1. Purpose

This document sets out Shaping Tomorrow's policy and procedures to ensure that engagements with the UK Government, and similar public sector bodies, are structured and managed to fall outside the scope of IR35 (off-payroll working rules). The objective is to protect both parties by maintaining legal compliance while supporting genuine business-to-business service provision.

2. Policy Statement

Shaping Tomorrow operates as an independent consultancy, delivering outcomes-based services to clients, including UK Government departments. We are committed to:

• Ensuring all contracts are evaluated for IR35 status before commencement.
• Structuring working practices and terms to reflect genuine self-employment and independence.
• Maintaining documentation to support outside IR35 status.
• Cooperating fully with clients in their status determinations and providing evidence as required.

3. Key Indicators of an Outside IR35 Engagement

To ensure a contract is outside IR35, the following principles must be met both in contract and in practice:

a) Control

• Shaping Tomorrow will determine how the work is completed (methods, tools, and hours), provided agreed deliverables are met.
• There is no expectation of supervision, direction, or control by the client.

b) Substitution

• Shaping Tomorrow retains the right to provide a suitably qualified substitute to deliver the services.
• The client's consent will not be unreasonably withheld.

c) Mutuality of Obligation (MOO)

• There is no obligation for the client to provide continuous work or renewals.
• Shaping Tomorrow is not obliged to accept further work once deliverables are completed.

d) Financial Risk

• Shaping Tomorrow assumes commercial risk for non-delivery or delay.
• We provide our own insurance (PI, PL, etc.) and supply equipment and resources needed for delivery.

4. Engagement Procedure for Government Contracts

To ensure compliance:

Step 1: Contract Review and Drafting

• All proposed contracts will be reviewed by a competent legal or compliance advisor.
• The following must be explicitly stated:
  • Project-based deliverables and milestones
  • Substitution clause
  • No obligation for future work
  • No control or supervision clauses

Step 2: Working Practices Confirmation

• Internal briefing will be held to ensure actual working practices mirror contract terms.
• All team members involved in delivery will be made aware of IR35-compliant boundaries.

Step 3: Client Engagement

• Shaping Tomorrow will:
  • Request a Status Determination Statement (SDS) from the Government department.
  • Provide supporting evidence of independence (insurance, business registration, past contracts, etc.).
  • Seek written confirmation of “outside IR35” status before commencement.

Step 4: Status Monitoring and Documentation

• Maintain records of:
  • Contracts and SDS
  • Correspondence with the client
  • Invoices, insurances, and substitution rights
  • A log of services delivered and project milestones
  • Periodic review (every 6 months or per engagement) to reassess IR35 status.

5. Training and Responsibilities

• The IR35 lead (named individual within Shaping Tomorrow) is responsible for overseeing contract reviews and maintaining compliance records.
• All directors and consultants involved in UK Government work will undergo basic IR35 awareness training.

6. Non-Compliance and Risk Mitigation

• If a contract is determined to be inside IR35, Shaping Tomorrow will:
  • Reassess the scope and delivery model.
  • Decline or restructure the engagement where feasible.
  • Consider working via an umbrella company only if no alternative exists and risk is fully mitigated.

7. Review and Update

This policy will be reviewed annually or upon any significant legal change to IR35 legislation.

Last updated: 12 December 2021

Next review due: 12 December 2026