With regard to for example an NEC 3 Option C Target Cost Contract, what happens to Actual Defined Costs ? :
E.G. The Cost of a Construction Manager working for a Contractor via a Limited Company / PSC on a Day Rate of £500 comes through as an Actual Defined Cost evidenced by an Invoice.
Post IR35, if the Construction Manager is forced to go down the IR35 Route and his rate via an Umbrella Company is increased to £750 Per Day to facilitate the same take home pay for the Construction Manager, the £750 will presumably be submitted by the Contractor as Actual Defined Cost
Without an increase to the Target Cost this will be reducing the Contractor’s Gain Share?
Or will this have to be managed under a Compensation Event with Target Cost increase?
Also as it is a change to Government Legislation do individual NEC 3 Contracts need to be checked e.g. for Additional Clauses to see which Party bears the Risk of IR35 Legislation ?