Contract templates: Consultancy Agreement (PSC) – Simons Muirhead Burton
Free contracts templates have been generously provided by our new legal partner, Simons Muirhead Burton.
Please find the template and more details for a Consultancy Agreement (Personal Service Company) below.
For more information about SMB and what other services they can offer our members, see our Business Services page here. For legal queries, please contact the SMB team directly here.
—
Consultancy Agreements
The purpose of consultancy agreements is to set out the terms and conditions of a company’s engagement of a self-employed contractor. They major difference between these types of agreement and employment contracts are to ensure that the agreements do not give the impression that a consultant is in anyway employed by the company they provide their services to and are, as a matter of fact, self-employed.
There are two ways that a company can engage a consultant, either directly or via a personal service company. Each method of engagement has with its own considerations that need to be taken into account, chief among them is the fact that the signatories of the contract are going to be different legal entities which, in turn, brings about an array of separate and unique issues that must be considered carefully.
Consultancy agreements for engaging individuals via a personal service company
This template particularises the terms and conditions that are appropriate when a company engages an individual via their personal service company. Typically, these individuals have, for tax purposes, set up their own company which enters into consultancy agreements with client companies and nominates an individual to carry out the services requested.
While most of the terms set out are similar to the individual consultant template, there are some notable differences which are vitally important to get right in order to avoid the engagement falling under the remit of the Off-Payroll Working Rules or the IR35 framework. If it does, then it may be that the client company will become responsible for deducting their consultant’s tax and National Insurance contributions through their own PAYE system.
The government’s CEST tool
Following on from the engagement of a consultant via a personal service company, it must be emphasised that this particular working relationship may, over time, develop into a situation which is akin to employment and therefore may be caught under the Off-Payroll Working Rules or the IR35 framework. It is recommended that you assess your working relationships with any consultants you engage through the Government’s Check Employment Status for Tax (CEST) Tool on a regular basis.
The link to the CEST Tool can be found here.
