IR35 Assessment: A few questions and possible answers

Understanding IR35: It goes beyond taxes

IR35 isn’t just about HMRC finding ways to tax you more. It is about correctly determining whether you, as a contractor, are genuinely self-employed or a “disguised employee.” Understanding the specific IR35 rules and keeping up with the latest IR35 news is essential for both contractors and businesses.

Businesses engaging contractors face similar concerns – understanding who is responsible for IR35 compliance is crucial, as getting the assessment wrong can lead to significant costs.

The heart of the assessment: What they’ll ask?

While no single question determines your IR35 status, HMRC (and any business assessing a contractors status) will look closely at these key areas:

Personal Service and the Right of Substitution: Could you send someone else?

Can you send a skilled substitute to do the work if you’re unavailable? Can the client refuse them? (an unfettered right of substitution is a strong indicator of being ‘outside IR35’. To learn more about the implications of being inside IR35, click here.)

Control: autonomy over your working method?

Does the client dictate what, when, where and how you complete your work? (generally having more autonomy over your work is a strong indicator of being outside IR35.)

Could the client move you to a different task before you finish the agreed-upon work? (Does the client need employee-like flexibility, or are you engaged for your specific skills to complete a project?).

Things to consider: HMRC may look at the degree of control the client has over how you execute the work. Excessive control, such as dictating work hours and methods, suggests an employee-like situation. Contractors often have more freedom to manage their own time and processes as long as they deliver agreed-upon results.

Financial risk: Could you lose money on this project?

Are you liable for fixing mistakes at your own expense? (Bearing financial risk for errors or project outcomes is a strong indicator of being ‘outside IR35’.)

Do you invest in your own equipment and insurance? (where reasonable, Using your own business resources is common for genuine contractors.)

The nitty-gritty of your contract

Do you get paid per project or hourly? Are you guaranteed ongoing work? Details in your contract matter alongside your actual working conditions. Understanding the difference between inside vs. outside IR35 is crucial for both contractors and businesses.

Beyond your day-to-day work, HMRC also examines how your contract and overall working relationship are structured. Remember, it’s not just the written contract that matters but how the working relationship actually operates in practice.

Operational independence

Were you interviewed like a traditional employee? (A formal interview process might suggest an employer-employee relationship.)

Do you primarily use your own equipment, or does the client provide it? (Providing your own tools is an indicator of being ‘outside IR35’.)

Can you work for other clients simultaneously?

Things to consider here: HMRC may consider how integrated you are into the client’s business operations. Functioning more like an outside business you bring in for a specific service supports a ‘self-employed’ status.

Key questions to consider

• “Is there a minimum number of hours you’re required to work?” (This probes whether you’re treated like a regular employee)
• “Could the client move you to a different task before you finish the agreed-upon work?” (Do they need your flexibility like an employee or your specific skills for this project?)
• “Are you responsible for paying any substitute you send?“

The big picture: It’s not just about the questions

HMRC examines the overall nature of your working arrangement. Even seemingly minor details can paint a picture of employee-like behaviour or genuine self-employment.

Unsure of your status? Kingsbridge can help.

IR35 is complex. If you need further assessment or guidance, Kingsbridge are IR35 specialists. We offer:

• In-depth IR35 assessments to clarify your status and protect your interests.
• An online IR35 tool to help you get a preliminary understanding of your situation
• Contract reviews to ensure your agreements reflect reality.
• Tailored IR35 insurance for peace of mind, no matter which side of IR35 you fall on.

Don’t risk costly mistakes. Get the clarity you need.

Contact us for an IR35 assessment