It's our thing.
Trusted by over
contractors and freelancers
We've saved
in tax (estimated) for contractors
We've defended over
IR35 enquiries and counting
Limited company contractor

IR35 advice for contractors

The IR35 legislation was introduced in April 2000 to prevent workers from using an intermediary, such as a limited company, to avoid paying employment tax.

Working in this capacity is sometimes referred to as "disguised employment" and enables individuals to avoid tax and national insurance contributions they would have paid if simply employed, which HMRC intend to recover.

There are today two sets of rules depending on the specifics of the engagement, most notably the end client’s company size and operating sector. This means that the majority of contractors now have their status determined by their client (with the exception of those engaged to a 'small' client in the private sector).

We’ve been defending contractors against IR35 for over 20 years. In that time, we’ve successfully defended over 1,600 IR35 enquiries and completed over 150,000 assessments for IR35 status (50,000 of which we have away for free with our insurance policies!) becoming the most trusted opinion on IR35.

Our Head of Tax, Nigel Nordone, has personally represented hundreds of clients under IR35 enquiry over the past two decades, and as a former HMRC Inspector of Taxes specialising in IR35, tax investigations, status, PAYE and employer compliance, Nigel has first-hand experience in HMRC’s handling of enquiries.

Here you will find the latest news and advice, resources, and services to help you understand the IR35 rules and stay compliant with the IR35 legislation, whether working inside or outside IR35.

Happy self-employed professional

Subscribe to our newsletter

Get the latest news, advice, and resources from Qdos IR35 experts every month straight to your inbox

Beginner's Guide to IR35

IR35 is a UK tax legislation contained in Chapter 8, Part 2 of the Income Tax (Earnings and Pensions) Act 2003 ('ITEPA'). It applies to workers of personal service companies (limited company contractors) who provide services to clients via their own limited company.

Those providing what is seen as a genuine B2B service are able to pay tax more efficiently through the use of low salary and dividend payments, but HMRC believes there are thousands of workers using such an arrangement but acting more like an employee, and they want to reclaim the tax and national insurance contributions the worker would have paid if employed by the client.

HMRC may choose to carry out an enquiry on anyone they suspect to be "caught" by the legislation. Following this process, HMRC will calculate the individual's total income for the period in question as salary and attempt to recoup the applicable tax and national insurance contributions previously paid as dividends. 

If you’re a limited company contractor, you need to have your employment status assessed for tax purposes (IR35 status) and pay the relevant tax according to this status.

There are different rules in place dependent on if you’re working for a small business in the private sector, a medium-large business in the private sector, or a public sector body.


Contracting for a small business in the private sector

Congratulations! You still have complete control over your IR35 status as contractors have done since it was introduced in 2000. It does mean there’s more to do though.

You’ll need to assess your own IR35 status and make sure you’re paying the right tax. There’s plenty of guidance available to you and we can help you with the assessment, whilst your accountant should be able to take care of the taxes. Remember, your status and therefore tax payments can be different for each contract and even change within the same contract.


Contracting for a public sector organisation or medium-large company in the private sector

Your end client is responsible for assessing your status and if you’re considered inside IR35, the company which directly pays your fee has to deduct the tax before paying you (much like an employee). Welcome to the off-payroll working rules.

You don’t have a lot of control over this but remember these key things; your end client is obligated to give you written confirmation of your status (a Status Determination Statement) and you have the right to dispute the result.

The legislation is based on historic case law which means that each significant case which goes before a judge can change how future cases are assessed.

However, for the best part of the legislation's existence there have been three key tests which underpin every status assessment:

  1. Right of Substitution; the right to provide a substitute worker in order to fulfil the contract,
  2. Right of Control; over how the contract is delivered, and
  3. Mutuality of Obligations; or rather the lack of existence of a mutuality of obligations between the parties.

Using these three tests plus numerous other factors to view the nature of the relationship as a whole, Qdos, HMRC, the courts, and now end clients, can determine the status of a contractor operating as a limited company. This is usually done by reviewing the written terms and conditions of the contract, as well as the day-to-day working practices, which is how the contractor and client operates in reality.

Understanding whether an individual falls inside IR35 is complex and can have significant consequences should HMRC determine that tax is owed.
Why Qdos?
We want to make sure that self-employed workers are treated fairly when it comes to their employment status. We reckon the best way to do that is by working together to keep your contracts airtight.
All of our contract reviews include as standard:
Dedicated support
We’ll walk you through your results and answer any queries
Online account for 24/7 access
Upload your documents and access your report at any time
A written report
We’ll send you a report to keep for your records

Have a question?

Ask away! One of our team will get back to you

Prefer to talk to us in person?

Call our team on 0116 269 0999 or we can call you back at a time that suits you!