Our Approach to Consultancy Agreements
Consultancy arrangements can be complex, and recent years have seen numerous high-profile cases challenging the traditional understanding of who is and who isn’t acting as a self-employed individual.
We recognise the unique opportunities and risks inherent in entering into a consultancy arrangement.
Our approach is to provide specialised, practical and clear legal advice in combination with contracts tailored to your needs, to ensure that you are equipped to create opportunities for your business and mitigate against known risks.
By working closely and drawing on the experience within our Employment and Commercial Teams, we can keep you fully abreast of legal and tax developments relating to consultancy arrangements and deliver a complete service for your requirements.
Our Consultancy Agreement Service
Businesses often engage consultants via a company – ordinarily, a personal service company (known as a PSC) owned wholly by the consultant providing the services, or, can appoint a specialist company to provide ad-hoc consultancy services.
When contracting with a consultant via a PSC, the agreement must document the commercially agreed terms to formalise the relationship.
A consultancy agreement ordinarily contains provisions such as:
- responsibilities and obligations of the consultant;
- the identity of any individual who is to provide the consultancy services, and how replacements for such individual can be appointed;
- payment and financial terms, including whether the consultant is to be paid on a time and materials or commission basis;
- responsibility for tax and social security;
- liability of the consultant in respect of the advice or services they are providing; and
- intellectual property rights of the deliverables and materials the consultant delivers during the course of the services.
Consultancy arrangements can be complex and can lead to disputes and legal or tax issues if not dealt with correctly. Developments in employment and tax law in recent years have added further complexity as legal and tax authorities now tend to look at the reality of the relationship in place (rather than the terms of the contract or names the parties have given to the relationship) to identify the status of the consultant.
Businesses who create a relationship with the consultant indicating one of employment may find themselves liable for the associated tax payments and to the individual for various employment rights. In conjunction with a written consultancy agreement, seeking early legal advice is essential for businesses to understand such risks and ensure they have the correct arrangements in place.
Businesses looking to engage a company (other than a PSC) to provide consultancy services generally require a supply of services agreement or terms and conditions together with a service level description. See Commercial Contracts and Standard Terms and Conditions for more information on these documents. We can draw on our experience in drafting PSC consultancy contracts and supply of services agreements to ensure your agreements cater to your specific requirements.
Our Commercial solicitors regularly act for clients seeking a consultancy arrangement on both a domestic and international basis.
Recent examples of our work include:
- Preparation of a consultancy agreement via a PSC for the provision of technical and product support, technical advice and customer services to a software development company.
- Advising in relation to, and drafting, an international consultancy services agreement catering for the licence of know-how and intellectual property rights, and provision of consultancy services within the orthotist and prosthetist sector.
- Advising an IT Consultancy Company on the provision of services to an international fashion retailer
- Advising a construction company on, and drafting appointment terms for, the provision of consultancy services as part of a wider national project;
- Assisting a management company with an international consultancy service contract for the provision of outsourced accounting and business management consultancy and management services;
- Reviewing and reporting on the terms of a consultancy agreement for a national supplier of wood plastic composite products.
Why Work With Our Commercial Team
- We have been ranked as a Top Tier law firm by the Legal 500 for the last seven years and recognised as a Top 200 Law Firm in 2022.
- You will have access to 10 commercial lawyers across the Myerson Commercial Group that can help with issues relating to commercial contracts, consultancy agreements, distribution arrangements and franchising.
- You will receive city-quality commercial legal advice and commercial services at regional prices.
- We provide a partner-led service to ensure you receive the best commercial legal advice and support.
- We have a large and proactive commercial team which can meet your deadlines.
- We understand that each matter is unique to your circumstances and that you need support from a commercial lawyer experienced in dealing with various clients and types of work.
- We are a full-service law firm operating from a one-site office, which means our teams communicate effectively and efficiently. Our commercial team often assists with commercial property and IT / Technology matters.
- Our commercial team use the latest technology to ensure that we are working as efficiently as possible, and that geographical distance does not prevent us from providing excellent legal advice and client service.
- Our commercial lawyers were the winners of ‘Corporate Commercial Team of the Year 2021’ at the Manchester Legal Awards.
- Look at the Myerson Promise for further benefits of working with us here.
Is the consultant self-employed?
The question of whether the consultant is self-employed is important, as this will determine how its income is taxed and whether the consultant is entitled to additional rights from the client on the basis that they are an employee.
There is no single test for determining the employment status of a consultant, or whether the consultant is self-employed. From a legal and tax perspective, the day-to-day reality of the relationship (rather than the contract or any labels the parties have given to the relationship) will determine this.
It is essential to seek early legal advice before engaging a consultant to explore these issues.
How are consultants ordinarily paid?
Consultants are ordinarily paid on a time and materials basis. In order to maintain a genuine consultancy relationship (and not one of employment), the consultant’s invoices ideally should be issued ad hoc (not at regular monthly intervals) and should be for different amounts each time, depending on the work completed by the consultant.
Who is liable to pay VAT and other taxes when engaging a consultant?
The consultancy agreement should stipulate who is liable for the payment of VAT or other taxes. If the consultancy relationship involves an international element, local law advice may be required as the requirement to withhold sums for tax purposes can vary within jurisdictions.
Who owns the intellectual property rights of what the consultant creates?
The consultancy agreement should make clear who owns the intellectual property rights (IPR) in what the consultant creates. Without such express written agreement on this issue, any IPR created by the consultant will, by default, be the property of the consultant as the author/creator.
Who is liable for the consultant?
Depending on the circumstances, the client may be liable for any losses or harm a consultant causes if the consultant was acting on the behalf of the client at the time such loss or harm occurred. A consultancy agreement can place a consultant under an obligation to maintain insurance to cover any of their acts and indemnify the client for any losses or harm the client may incur.
Meet Our Consultancy Agreement Solicitors
Home-grown or recruited from national, regional or City firms. Our specialists are experts in their fields and respected by their peers.
Carla is a Partner and Head of our Commercial Team
Richard is a Senior Associate in our Commercial Team
Olivia is a Solicitor within our Commercial Team
Jo is a Partner and Head of our Employment Team
Jo is a Partner in both our Employment and Compliance Teams
Patrick is a Senior Associate in our Employment Team
Jack is a Senior Associate in our Employment Team
Contact Myerson Solicitors
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