Question 1

What is IR35?

Accepted Answer

IR35 is a UK tax law designed to prevent disguised employment. If HMRC determines that your contract engagement is effectively employment (despite operating through a limited company), you must pay income tax and National Insurance as if you were an employee.

Question 2

How do I know if I am inside or outside IR35?

Accepted Answer

IR35 status is determined by three key tests: Substitution (can you send a replacement?), Control (does the client control how you work?), and Mutuality of Obligation (are both parties obliged to offer/accept work?). Other factors include financial risk, exclusivity, and integration into the client business.

Question 3

Who decides my IR35 status?

Accepted Answer

For medium and large private sector clients and all public sector clients, the end client is responsible for determining IR35 status. For small companies (meeting two of: turnover under £10.2m, balance sheet under £5.1m, fewer than 50 employees), the contractor determines their own status.

Question 4

Is the HMRC CEST tool reliable for IR35?

Accepted Answer

HMRC's Check Employment Status for Tax (CEST) tool gives a formal indication of IR35 status and HMRC will stand by the result if the information entered is accurate. However, it has been criticised for not adequately addressing mutuality of obligation. It should be used as one reference point, not the sole determinant.

IR35 Status Checker