IR35 Advice – Be Safe, Be Secure, Be Compliant

IR35 advice is a complicated area, and we are happy to provide guidance to both contractors and companies. 

We know that even very subtle changes to contracts can lead to HMRC changing their decision. Remember, while the contract is important, HMRC believe actual working practise to be more important. Your right to substitution isn’t going to be taken into account very strongly if it’s been two years, you’ve turned up to the client’s premesis every day, and never made a substitution. 

IR35 Advice for Contractors

The recent changes to IR35 advice mean that it is not the engaging company’s responsibility to judge the contract inside or outside of IR35, not the individual’s. 

We have seen companies “playing it safe” and inappropriately classifying all or most of their contractors as employees. This can result in paying more tax for no reason, and will just turn off the best contractors from applying to your business. 

Factors that point to employment

Factors that point to a contract

  • Control over location

    The employer can control where the individual works - usually with core hours and a requirement to be in the office.

  • Control over who does the work

    If there is no right to send a substitute, this is a very strong pointer that this is a contract of employment.

  • Providing employment benefits

    If the company is providing sick pay, maternity leave (etc.) then HMRC is likely to consider the engagement "employment".

  • Contractor has no strict hours

    If the contrator can perform the work at any particular time of day, this points toward a proper contract.

  • VAT registered, limited company

    Not enough by themselves, but the contractor working through a VAT registered limited company is an indicator against employment.

  • Payment by Results

    Payment is to be made per project or on agreed-upon milestones (rather than a day rate or monthly rate).

IR35 Advice for Companies

If you’re concerned that some of your existing contracts are going to be judged as inside IR35, call us. The best approach would be to have Andach review your external contracts – we can work with you to make changes, keep your contractors happy, and save tax all around. We’re also happy to offer payroll services, to save time on administering your employeed staff. 

Unlike some offering IR35 advice, we don’t just artificially change your contracts to include certain wording or tick a certain box. Rather, we’ll work to understand how and why you use contractors in your business, and whether any bona fide changes in working could help you both. 

Especially with people working from home more due to COVID-19, it’s easier to rewrite contracts to not require onsite attendance. 

ir35 advice

Don’t forget to use HMRC’s CEST (Check Employment Status for Tax) tool

The tool doesn’t log any results, and gives you a PDF export to print out, showing clearly whether the contract will be inside or outside IR35.