Statement of Work and IR35: Why SoW won’t protect you from IR35 changes

With IR35 changes fast approaching, end clients and agencies are looking into the most effective, and indeed alternative, ways to protect themselves. One of these alternative methods is a Statement of Work (SOW). However, when it comes to IR35 changes, a Statement of Work will simply not offer protection for end clients.

In this article, we take a look at the Statement of Work and IR35 and discuss why SoW won’t protect end clients from IR35 changes and subsequent HMRC investigations.

About IR35 changes

In  April 2021, IR35 legislation is set to change. In a nutshell, these changes make the end client reponsible for determining the IR35 status of existing and new contracts.

As businesses spend tens of thousands preparing for IR35 changes, HMRC estimate that IR35 changes will deliver £1.3 billion in revenue by 2024. 

Meanwhile, these changes are estimated to affect over 170,000 contractors who work through their own personal service company. 

With these changes and the colossal effects they bring, it is understandable that end clients are looking for the best way to protect themselves. But, is a Statement of Work the way to go?

What is a Statement of Work?

A Statement of Work (SoW) is exactly what it says: a statement that details the work that is to be delivered. Basically, it is a contract between an agency and end-hirer that essentially maps out all deliverables and services.

But, what is the deal with a Statement of Work and IR35 changes?

Although a SoW is beneficial in that it outlines the agreement of work between two parties to avoid any misunderstandings, it is not suitable IR35 protection. In fact, a SoW does not protect end clients at all.

HMRC investigations are based on actual practice as opposed to purely documented models or services. Therefore, a SoW alone will not protect clients. 

Instead, clients need a fully insured, bespoke IR35 protection service that mitigates risk to the entire supply chain.

Find out more about how Optimus Shield can help deliver prime protection for IR35 changes here. Alternatively, request a call back below to find out more about the risks of using a SoW and see how our innovative IR35 service can help your business prepare for changes due in 2021.


Talk To Us Today To Learn More

Optimus Shield is the result of heavily invested research and development to tackle the issues now facing the private sector due to changes to the IR35 legislation being rolled out in April 2021.