Statement of Work
Offering an alternative to conventional models
Offering an alternative to conventional models
Statement of work: what’s a SOW?
A Statement of Work (SOW) offers an alternative to conventional recruitment models for project-based work. Instead of supplying labour, SOW is the provision of a service, based on a fixed price subject to the achievement of deliverables. This model provides the end client with more certainty on project price and shifts most of the financial risk, onto the consultancy or agency.
A genuine SOW is exempt from the off-payroll legislation. This means that the agency or consultancy, rather than the end client, is responsible for issuing the status determination statements for any contractors it engages (unless exemptions apply).
When to use a SOW
SOWs are clearly only appropriate for certain types of projects, commonly found in IT or tech sectors. Are some of your assignments project-based and can easily be structured as an outcome-based piece of work? Why not manage them under a SOW?
Why a SOW risk assessment is so important
Why a SOW risk assessment is so important
In order for a SOW to work as a genuine outsourced arrangement, the end client must relinquish complete control of the project to the agency or consultancy and should accept anyone (subject to such personnel having the required skills and qualifications) to deliver the services.
If the engagement is not deemed to be a genuine outsourced service, this may result in a consequent tax risk for the end client.
SOWs usually sit underneath a framework legal agreement called a Master Services Agreement (MSA). The MSA sets out the legal provisions governing the arrangement. When assessing the engagement, it is key to not only ensure that the MSA and the SOW are in line with an outsourced services but also that working practices reflect the contractual position.
Discover our handy infographic which runs through 11 key factors clients should be considering when managing a SOW risk assessment.
What is your SOW risk assessment process?
How can we help?
For end clients, agencies and contractors alike, the SOW model can provide significant benefits for project-based services. If you are considering structuring your projects on a SOW basis we can assist you in the entire SOW lifecycle including:
- SOW Risk Assessment to ensure this model is appropriate
- MSA drafting/negotiation
- SOW drafting/negotiation
- Contractor/umbrella/employee contracts
- IR35 assessments for contractors
- Supply chain due diligence
Open. Honest. with Integrity.
Open. Honest. with Integrity.
Transparency across the whole supply chain is key. The same rules apply regardless of whether you are the end client, agency or contractor.
What can and does vary is the way the rules are interpreted, and the appetite to take on perceived risk by both the end client and the contactor themselves.
WTT Legal helps both parties navigate the complexities and provide independent, consistent and transparent advice to reach a mutually agreeable, and compliant, solution.
As a small consultancy delivering our services to our customers under a Statement of Work (SOW), it was crucial to us that our compliance processes were robust and that both our working practices and our contracts reflected a genuine outsourced arrangement.
WTT Legal assisted us by conducting a SOW Risk Assessment to ensure that our services were appropriate for this model, reviewed and updated our template contracts and assisted us in contractual negotiations with our customers.
WTT Legal have niche expertise in the SOW model and we would recommend them to any consultancy who wants to ensure that they are delivering a compliant SOW.
Defence Enterprise Solutions Ltd.
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About WTT Legal
About WTT Legal
Part of the WTT Group, WTT Legal is an Alternative Business Structure (ABS) authorised and regulated by the Solicitors Regulation Authority, (No. 654197) We provide niche legal expertise and advice on the Statement of Work (SOW) model, with particular expertise on IR35 and the off-payroll legislation.