IR35 is an important consideration for contractors, recruitment agencies and businesses across the UK. The rules are designed to determine whether a contractor working through an intermediary, such as a personal service company, should be treated as an employee for tax purposes.

Completing an IR35 check correctly can help businesses and contractors understand the appropriate tax treatment of an engagement. A thorough assessment considers the actual working relationship rather than relying only on the wording of a contract.

IR35 can be complicated because every engagement is different. Factors such as control, substitution, mutuality of obligation and the overall working practices can affect the assessment.

Professional IR35 check services can help businesses review engagements and maintain appropriate records. The Infinity Group provides professional IR35 checks, payroll, accountancy, tax advice and HMRC compliance support for businesses and contractors across the UK.

This guide explains how to complete an IR35 check correctly and what UK businesses and contractors should consider.

What Is an IR35 Check?

An IR35 check is an assessment of a contractor's working arrangement to determine whether the engagement is likely to fall inside or outside the IR35 rules.

The assessment considers whether the contractor would be regarded as an employee if the intermediary were removed from the arrangement.

An IR35 assessment can be relevant where a contractor provides services through a personal service company or another intermediary.

The purpose of the check is to establish the appropriate tax treatment for the engagement and identify the responsibilities of the relevant parties.

Who Needs to Consider IR35?

IR35 can affect contractors who provide services through intermediaries.

It can also be relevant to:

• Private sector businesses
• Public sector organisations
• Recruitment agencies
• Personal service companies
• Contractors
• End clients

The rules and responsibilities can vary depending on the size and type of organisation involved.

In some circumstances, the client is responsible for determining the contractor's IR35 status. For smaller private sector clients, the contractor's intermediary may remain responsible.

Businesses should therefore establish who is responsible for making the determination before completing the assessment.

Start by Reviewing the Contract

The first practical step in an IR35 check is to review the written contract.

The contract should describe the relationship between the parties and the services being provided.

Important areas to review include:

• Description of services
• Contractor responsibilities
• Payment arrangements
• Working arrangements
• Substitution provisions
• Notice periods
• Control
• Termination arrangements
• Responsibility for equipment
• Liability for work

However, reviewing the contract alone is not enough.

The actual working practices must also be considered because an engagement can operate differently from what is written in the agreement.

Consider the Actual Working Practices

One of the most important parts of an IR35 check is examining how the engagement operates in practice.

For example, a contract may describe a contractor as independent, but the actual working relationship may involve significant client control.

Businesses should therefore ask practical questions about how the contractor performs their work.

Consider:

• Who decides how the work is completed?
• Who determines working hours?
• Where does the contractor work?
• Can the contractor choose how to complete tasks?
• Can the contractor provide a substitute?
• Is the contractor integrated into the client's organisation?

The answers can help provide a more complete picture of the engagement.

Assess Control

Control is an important factor in an IR35 assessment.

Businesses should consider how much control the client has over the contractor.

This can include control over:

• What work is performed
• How the work is performed
• When the work is performed
• Where the work is performed

A contractor who has significant independence over how their services are delivered may have characteristics associated with genuine self employment.

However, control is only one factor and should not be considered in isolation.

Consider the Right of Substitution

The right of substitution can also be relevant.

A genuine contractor may sometimes have the ability to provide another suitably qualified person to perform the services.

An IR35 assessment should consider whether the contractual right of substitution is genuine and whether it could realistically be used in practice.

A substitution clause that exists only on paper may carry less weight than a genuine right that reflects the actual relationship.

Businesses should therefore consider both the written contract and practical working arrangements.

Examine Mutuality of Obligation

Mutuality of obligation is another factor that can be considered when assessing employment status.

Businesses should consider whether the client is required to provide ongoing work and whether the contractor is required to accept it.

The nature of the engagement should be examined throughout the contract rather than based on a single interaction.

Understanding the expectations of both parties can help provide a clearer picture of the working relationship.

Review Financial Risk

Financial risk can also be relevant to an IR35 assessment.

A genuine business may take on some financial risk when providing services.

Consider whether the contractor:

• Corrects defective work at their own cost
• Provides their own equipment
• Has responsibility for business expenses
• Can make a profit or loss
• Has multiple clients
• Bears some responsibility for delivering the agreed service

These factors may help demonstrate the commercial nature of the relationship.

Again, no single factor determines IR35 status.

Consider the Contractor's Independence

The level of independence enjoyed by the contractor can provide useful information during an IR35 check.

A contractor operating as an independent business may have greater control over how services are delivered.

They may also have their own business infrastructure, marketing activities, insurance and other clients.

However, the importance of each factor depends on the specific engagement.

The assessment should consider the overall relationship rather than focusing on one characteristic.

Consider Integration Into the Business

Integration can also be relevant.

Businesses should consider whether the contractor is operating as an independent service provider or has become part of the organisation in a way that resembles an employee.

Questions may include:

• Does the contractor have an employee style role?
• Do they receive the same benefits as employees?
• Are they included in internal staff structures?
• Do they have responsibilities similar to permanent employees?
• Are they subject to internal procedures in the same way as employees?

These factors should be assessed alongside the other elements of the engagement.

Review Employee Benefits

The availability of employee benefits can also be relevant.

Contractors should generally understand whether they are entitled to benefits such as:

• Holiday pay
• Sick pay
• Pension benefits
• Bonuses
• Employee discounts
• Other staff benefits

The presence or absence of benefits can provide information about the nature of the relationship, although it does not determine IR35 status on its own.

Use HMRC Guidance Carefully

HMRC provides guidance and tools to help businesses and contractors understand employment status and IR35 considerations.

However, online tools should be used carefully and the information provided should accurately reflect the actual engagement.

Businesses should avoid selecting answers simply because they produce a preferred result.

The purpose of an IR35 check is to establish an evidence based assessment of the working relationship.

Document the IR35 Decision

Once the assessment has been completed, businesses should document the reasoning behind the decision.

Useful records can include:

• Contract documents
• Working practices
• Assessment results
• Relevant correspondence
• Evidence supporting the decision
• Information provided by the contractor
• Client records

Maintaining clear documentation can help demonstrate how the decision was reached.

It can also be useful if the engagement is reviewed at a later date.

Review IR35 Status Regularly

An IR35 assessment should not necessarily be treated as permanent.

Working arrangements can change during an engagement.

For example, the contractor may take on different responsibilities, work under different levels of control or change how services are delivered.

Businesses should therefore consider reviewing IR35 status when there is a significant change to the engagement.

Regular reviews can help ensure that the assessment continues to reflect the actual working relationship.

Common IR35 Check Mistakes

Businesses and contractors can make several mistakes when completing IR35 checks.

Common issues include:

• Looking only at the contract
• Ignoring actual working practices
• Treating one factor as decisive
• Using inaccurate information
• Failing to document the decision
• Assuming every contractor is outside IR35
• Assuming every contractor is inside IR35
• Failing to review changes to the engagement

A structured assessment can help reduce these risks.

Why Professional IR35 Check Services Can Help

IR35 can involve complex employment status considerations.

Professional IR35 check services can help businesses review relevant factors, assess working arrangements and maintain appropriate documentation.

Professional support can be particularly useful where:

• The engagement is complex
• The contract has unusual terms
• The business works with many contractors
• Working practices have changed
• The business is unsure about its responsibilities

Professional advice can provide greater confidence and help businesses establish a consistent assessment process.

How The Infinity Group Can Help

The Infinity Group provides professional IR35 checks and financial services for businesses and contractors across the UK.

Their services include:

• IR35 checks
• Tax advice
• Payroll services
• Payroll outsourcing
• Payroll services for contractors
• Umbrella payroll support
• CIS payroll
• Construction payroll services
• Bookkeeping services
• VAT return services
• Accountancy services
• HMRC compliance support
• Audit and assurance services

The Infinity Group works closely with clients to understand their individual circumstances and provide practical financial support.

Their experienced team can help businesses and contractors understand their IR35 responsibilities and maintain better organised financial and payroll processes.

Tips for Completing an IR35 Check Correctly

Businesses can make the assessment process more effective by following a structured approach.

Start by identifying who is responsible for determining IR35 status. Review the written contract carefully and then examine the actual working practices.

Consider control, substitution, mutuality of obligation, financial risk, independence, integration and other relevant factors.

Document the reasoning behind the decision and retain supporting evidence.

Finally, review the assessment if the contractor's responsibilities or working arrangements change.

Conclusion

Completing an IR35 check correctly is important for UK businesses and contractors involved in intermediary working arrangements. The assessment should consider both the written contract and the reality of how the engagement operates.

Factors such as control, substitution, mutuality of obligation, financial risk, independence and integration can all help provide a clearer understanding of the working relationship.

Businesses should avoid relying on a single factor or simply using contract terminology to determine IR35 status. A detailed and evidence based assessment provides a stronger basis for making the appropriate decision.

Keeping clear records is also important. Documenting the assessment and reviewing it when working arrangements change can help businesses maintain a consistent approach.

The Infinity Group provides professional IR35 checks, tax advice, payroll, payroll outsourcing, bookkeeping, accountancy and HMRC compliance support for businesses and contractors across the UK.

Whether you are a contractor reviewing an engagement or a UK business assessing the status of its contractors, The Infinity Group can provide practical professional support to help you understand your responsibilities and manage your financial and compliance requirements with greater confidence.