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IR35 can create a tax problem, a contractual problem and, in some cases, an employment-status problem at the same time.
The off-payroll working rules look at whether an individual providing services through an intermediary would have been an employee if they had provided those services directly to the client. The decision is based on the terms of the engagement and the actual working arrangements, not simply the label used in the contract.
We review contractor and consultant arrangements from both the legal and tax perspectives. Adroit Legal handles the legal analysis, with tax input from Adroit Accountax where required, giving you one joined-up assessment of the engagement.
We advise UK businesses and overseas companies engaging UK-based contractors.
An IR35 assessment should not be based on the contract alone.
The written agreement is important, but the way the engagement operates in practice also matters. HMRC’s guidance asks clients to consider factors including the worker’s responsibilities, who decides how and when the work is done, how the worker is paid and other features of the engagement.
The exact factors and their significance depend on the engagement.
The responsibility for determining status depends on the client.
For public-sector clients and medium or large private-sector clients, the client is generally responsible for determining the worker’s employment status for tax purposes and, where the off-payroll rules apply, issuing a Status Determination Statement (SDS). For a small private-sector client, responsibility generally remains with the worker’s intermediary.
| Client situation | Who generally determines status? | Key point |
|---|---|---|
| Public-sector client | Client | Client determines status for tax purposes |
| Medium or large private-sector client | Client | Client determines status and provides an SDS |
| Small private-sector client | Worker/intermediary | The worker’s intermediary generally determines status |
| Engagement involving an agency | Depends on the supply chain | Additional responsibilities can apply to the parties involved |
The rules can become more complicated where agencies or other intermediaries sit between the client and contractor. The contractual chain should therefore be reviewed before responsibility is assumed.
An IR35 status review assesses the specific engagement and considers the written contract alongside the working practices.
A typical review can involve:
We examine the agreement between the parties, including provisions concerning:
We look at how the engagement actually operates.
For example:
The contractual terms and practical working arrangements are considered together to establish the position for the particular engagement.
Where required, Adroit Accountax can consider the tax implications of the assessment alongside the legal analysis.
You receive a clear explanation of the position and the issues that need attention.
A contractor can have one engagement that falls within the off-payroll working rules and another that does not.
HMRC confirms that the rules apply on a contract-by-contract basis, including written, verbal or implied agreements.
This is important for businesses using several contractors.
A business should not automatically copy one determination across an entire contractor workforce without considering the relevant engagements and facts.
Where the client is responsible for the off-payroll determination, it should provide a Status Determination Statement setting out the status decision and reasons for that decision. HMRC guidance states that the determination should be communicated to the relevant parties.
An SDS should reflect the actual engagement. It should not simply repeat the wording of the contract.
If the off-payroll working rules apply, the responsible party in the supply chain may need to account for Income Tax and National Insurance through PAYE.
For medium and large private-sector clients, the client generally makes the status determination, while the fee-payer may have responsibility for operating PAYE depending on the contractual chain.
The precise consequences depend on the engagement and supply chain.
A worker who disagrees with a client’s determination can use the disagreement process to challenge the decision.
The client must consider the reasons given and respond within the applicable process.
HMRC provides its Check Employment Status for Tax (CEST) tool to help determine employment status for tax purposes. It can also be used to review how a change to a contract or working arrangement affects a previous result.
CEST can be useful, but the quality of the result depends on the accuracy of the information entered.
HMRC guidance states that organisations should not manipulate CEST answers to obtain a preferred outcome and should consider the actual working arrangements.
Our role can include reviewing the underlying engagement and the information used for the assessment, particularly where the result is disputed, unclear or commercially important.
The aim is to identify the actual point of disagreement rather than simply arguing over the label attached to the engagement.
The contract should reflect the genuine commercial arrangement.
Contract wording alone cannot turn an employment relationship into genuine self-employment. HMRC’s guidance makes clear that status depends on the contractual terms and the actual working practices.
Long-standing arrangements can change over time.
A contractor may initially operate as an independent business but gradually become more integrated into the client’s organisation.
A change in the contract or working arrangements can justify reassessing the position. HMRC specifically notes that CEST can be used again where the contract or working practices change.
IR35 concerns employment status for tax purposes.
Employment rights are a separate issue.
An individual can have one status for tax purposes and a different status for employment-rights purposes. HMRC’s own contractor guidance specifically distinguishes the off-payroll rules from employment-rights status.
That distinction matters for businesses because resolving an IR35 question does not automatically resolve every employment-status issue.
Where relevant, we can identify the employment-rights question alongside the tax analysis.
Overseas businesses engaging contractors who work in the UK can face additional questions about the application of UK off-payroll rules and the structure of the engagement.
The rules differ depending on the client’s circumstances and the contractual chain. HMRC guidance specifically provides different treatment for clients that are entirely overseas.
We can review the engagement structure and identify where UK legal and tax advice is required.
Where appropriate, Adroit Accountax can provide the corresponding tax input.
Understand the engagement and identify the key status questions
Examine the written agreement and relevant contractual provisions
Review how the engagement operates in practice
Consider the employment-status position for the engagement
Adroit Accountax provides tax input where required
Explain the determination, key risks and practical next steps
Where appropriate, help revise contracts or working arrangements
If an existing contractor arrangement presents concerns, the answer is not always to terminate the relationship immediately.
Where tax exposure needs to be assessed or dealt with, Adroit Accountax can provide the relevant tax advice.
For businesses with several contractors, portfolio reviews can be scoped and priced as a defined project.
Indicative prices are available on our Pricing page.
IR35 sits at the intersection of contractual arrangements and tax.
Adroit Legal handles the legal analysis. Adroit Accountax can provide the tax input required for the engagement.
This means the assessment can consider:
For broader matters involving both legal and tax advice, see our Combined Legal & Tax service.
You deal directly with the lawyer handling the legal work.
For public-sector clients and medium or large private-sector clients, the client is generally responsible for determining the worker’s employment status for tax purposes. For a small private-sector client, responsibility generally remains with the worker’s intermediary. Agencies and other parties in the supply chain can have additional responsibilities.
If the off-payroll rules apply, the relevant party in the supply chain may need to operate PAYE, including Income Tax and National Insurance obligations. The exact responsibilities depend on the client and contractual chain.
CEST is HMRC’s official tool for checking employment status for tax and can be useful as part of the assessment. The information entered needs to accurately reflect the contract and actual working arrangements.
No. The contractual wording is relevant, but the actual working relationship also matters. HMRC’s guidance states that employment status depends on the terms and conditions of the contract and actual working practices.
IR35 concerns employment status for tax purposes under the off-payroll working rules. Employment status for employment-rights purposes is a separate question and can produce a different result.
Yes. We can review the contract, working practices, determination and supporting reasoning and identify areas that may need further consideration.
Yes. We can review a disputed determination and help assess the contractual, factual and tax issues. The appropriate process depends on the parties and the engagement.
Yes. We can review UK contractor arrangements for overseas businesses and identify the UK legal and tax questions that need to be addressed.
If you are engaging a contractor, reviewing an existing arrangement or dealing with an IR35 determination, start with the contract and the actual working relationship.
Book a free 20-minute call to discuss the engagement and the questions you need answered.
Employment contracts for new hires, senior employees and directors.
Joined-up legal and tax advice where a business decision has implications across both areas.
Ongoing legal support for businesses managing contractors and employment documentation.
Commercial contract drafting and review for customers, suppliers and other business relationships.