IR35 service for contractors and businesses

IR35 can affect how contractors are paid, how much tax is deducted and which party is responsible for making an employment status decision. Getting it wrong can lead to unexpected tax liabilities, National Insurance contributions, interest, penalties and time-consuming HMRC enquiries.

Asmat & Co Accountants provides practical IR35 support for contractors, personal service companies, end clients and other businesses within contractor supply chains. We help you understand your responsibilities, assess individual engagements and maintain the records needed to support your decisions.

Every engagement is different. We consider both the written agreement and what happens in practice, giving you clear guidance without relying on generic assumptions or promising a particular outcome.

Clear IR35 advice based on your circumstances

IR35, also known as the off-payroll working rules, applies when an individual provides services through an intermediary, such as their own limited company, but would have been treated as an employee for tax purposes if they had worked directly for the client.

The rules do not mean that every contractor is automatically inside IR35. Status must normally be considered separately for each engagement.

A contractor may therefore have one contract that falls inside the rules and another that falls outside them. The conclusion depends on the terms of the engagement, the actual working arrangements and the responsibilities of each party.

Our role is to help you understand the relevant factors, identify potential risks and take the correct accounting and tax steps for the position reached.

Who we support

Contractors and personal service companies

When you operate through your own limited company, IR35 can affect your take-home income, payroll, Corporation Tax position, dividends and reporting responsibilities.

We help you review new and existing engagements, understand status decisions received from clients and assess the accounting impact of working inside or outside the rules.

Our wider contractor accounting services can also cover your annual accounts, bookkeeping, VAT, payroll and personal tax requirements.

Businesses engaging contractors

If your organisation engages people through personal service companies, you may be responsible for deciding whether the off-payroll working rules apply.

Medium and large private sector organisations, voluntary sector organisations and public authorities generally have responsibility for assessing employment status. A decision should be made with reasonable care rather than applying the same result automatically to every contractor.

We can help you introduce a practical assessment process, gather the relevant information and maintain evidence explaining how each conclusion was reached.

Small private sector clients

When a contractor works for a small private or voluntary sector client, responsibility for assessing IR35 will usually remain with the contractor’s intermediary.

However, the client may still need to confirm its size when asked. Contractors should not assume that a client is small without obtaining appropriate confirmation.

We help both parties understand where responsibility falls before work begins or payments are made.

Agencies and other parties in the supply chain

Agencies, recruiters and other fee-payers may have responsibilities when contractors are supplied through more complex labour chains.

We can review the payment arrangements, identify who is expected to operate PAYE and help maintain a clear flow of information between the end client, agency, contractor and intermediary.

What our IR35 support can include

Your support will be tailored to the engagement and the responsibilities you hold. Depending on your circumstances, we can assist with:

• Reviewing the proposed engagement from a tax perspective
• Comparing contractual terms with actual working practices
• Identifying factors that may affect employment status
• Supporting the use and documentation of HMRC’s CEST tool
• Explaining inside and outside IR35 decisions
• Helping clients prepare status determination information
• Reviewing the accounting impact on a personal service company
• Calculating or reviewing deemed employment payments where applicable
• Supporting PAYE and National Insurance reporting
• Helping you respond to an IR35 disagreement
• Reviewing your position when a contract or working arrangement changes
• Organising records in preparation for an HMRC enquiry

Where a matter requires specialist employment law advice or changes to legal contract wording, we will make this clear rather than presenting tax guidance as legal advice.

How an IR35 status assessment works

We understand the full engagement

We begin by establishing who is providing the services, which organisation receives them, whether an agency is involved and how payments move through the supply chain.

We also identify whether the client is responsible for the status decision or whether responsibility remains with the contractor’s intermediary.

We review the contract and working practices

A written contract is important, but it is not enough on its own. HMRC may consider how the work is actually carried out.

For example, a contract might contain a substitution clause, but that clause may carry little weight if the client would never accept a substitute in practice. Similarly, a contractor may appear to control their schedule on paper while being closely directed by a manager each day.

We therefore compare the contractual wording with the real working relationship.

We consider the main employment status factors

No single clause determines IR35 status in every case. The engagement needs to be considered as a whole.

Relevant factors may include:

• Personal service: Whether the individual must perform the work personally or can provide a suitably qualified substitute
• Control: Who decides what work is completed and how, when and where it is carried out
• Mutuality of obligation: Whether the client is expected to provide continuing work and whether the individual is expected to accept it
• Financial risk: Whether the contractor risks making a loss or must correct defective work at their own cost
• Equipment: Whether the contractor supplies important equipment required to complete the work
• Integration: Whether the contractor operates independently or has become part of the client’s internal organisation
• Business activity: Whether the contractor markets their services, works for different clients and operates as a genuine business
• Payment arrangements: Whether payment is based on deliverables, milestones, hours worked or a regular salary-style amount
• Benefits and procedures: Whether the contractor receives employee benefits or is subject to the same internal processes as employees

We explain which factors are most relevant to your circumstances and where the evidence may be unclear or inconsistent.

Understanding an inside IR35 decision

An inside IR35 decision means the engagement is treated as employment for tax purposes. It does not automatically turn the contractor into an employee or provide employment rights from the end client.

Where the client or another organisation in the supply chain is the deemed employer, it will normally deduct Income Tax and employee National Insurance contributions from the relevant payment. It may also need to pay employer National Insurance contributions and the Apprenticeship Levy where applicable.

Contractors should understand how these deductions affect their company records, VAT invoices, salary, dividends and year-end tax position. We can coordinate this with your company accounts and personal tax return support so that income is not taxed incorrectly or recorded twice.

Understanding an outside IR35 decision

An outside IR35 decision indicates that the engagement is treated as a genuine business-to-business arrangement for tax purposes.

The contractor’s company will normally receive payment without employment taxes being deducted and will remain responsible for its own Corporation Tax, payroll, VAT and other obligations.

An outside decision should be supported by the real working relationship. Adding favourable wording to a contract will not be sufficient if the day-to-day arrangements reflect employment.

You should also review the position when a contract is renewed or when responsibilities, reporting lines, hours, location or working methods change.

Status determination statements for end clients

Where an organisation is responsible for deciding status, it should communicate its conclusion through a status determination statement.

The statement should provide the decision and the reasons behind it. It should normally be passed to the contractor and the party with which the client contracts.

A decision made without reasonable care may expose the client to responsibility for tax and National Insurance liabilities. Blanket decisions that place every contractor inside or outside IR35 without considering individual circumstances can also create unnecessary financial and commercial risks.

We help you develop a consistent process that considers each engagement while remaining manageable for your finance, HR and procurement teams.

Managing IR35 disagreements

A contractor or deemed employer can challenge a status determination when they believe relevant information has been overlooked or incorrectly interpreted.

The client must consider the reasons provided and respond within the required 45-day period. It must either confirm the original decision with reasons or issue a revised determination.

We can help you organise the facts, review the financial and tax points raised and keep an appropriate record of the challenge and response.

For contractors, we can help you understand whether there is meaningful evidence supporting a disagreement. For clients, we can help you respond consistently without dismissing a challenge automatically.

Payroll and payment support

When an engagement is inside IR35, the correct party must operate the appropriate deductions and report payments to HMRC.

Our payroll services can support businesses with the relevant PAYE calculations, Real Time Information submissions and payroll records.

For contractors working through small private sector clients, we can also assist with deemed employment payment calculations when responsibility remains with the personal service company.

We review the wider accounting position so that payroll treatment works correctly alongside Corporation Tax, VAT, company accounts and Self Assessment.

Support during an HMRC enquiry

An HMRC enquiry can involve much more than reading the written contract. HMRC may ask for correspondence, project documents, invoices, working arrangements, payment records and explanations from the parties involved.

We can help you gather information, reconcile relevant figures and respond to accounting and tax questions clearly.

Good records prepared at the start of an engagement are usually more reliable than explanations reconstructed months or years later. This is why our approach focuses on documenting decisions as they are made and reviewing them when circumstances change.

Why choose Asmat & Co Accountants?

Asmat & Co Accountants has 19 years of hands-on accountancy and HMRC compliance experience. Our qualified team supports contractors, limited companies and growing businesses with both individual tax matters and ongoing financial responsibilities.

You will receive practical guidance from accountants who understand that IR35 cannot be considered separately from payroll, company accounts, Corporation Tax, VAT and personal tax.

Our approach includes:

• Advice based on the facts of the engagement
• Clear explanations without unnecessary technical language
• Support for both contractors and hiring organisations
• A dedicated point of contact who understands your circumstances
• Careful consideration of tax, payroll and accounting consequences
• Ongoing support when contracts or working practices change
• Transparent guidance about matters requiring legal advice

We will not promise that a contract is outside IR35 before considering the evidence. Our priority is to help you reach and document a reasonable position that reflects how the work is genuinely carried out.

Get practical help with your IR35 responsibilities

Whether you are reviewing a new contract, challenging a status decision or introducing a contractor compliance process, contact our team for clear advice based on your circumstances.

Frequently asked questions

What does an IR35 service include?

An IR35 service can include reviewing the engagement, assessing contractual terms and working practices, identifying employment status factors and explaining the accounting consequences of the result.

Support may also cover status determination records, CEST responses, payroll calculations, deemed employment payments, contractor disputes and preparation for HMRC enquiries. The exact work required will depend on whether you are a contractor, end client, agency or fee-payer.

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

Your status depends on the full working relationship rather than your job title or a single contract clause.

Factors such as control, personal service, substitution, mutuality of obligation, financial risk, equipment and integration into the client’s organisation may all be relevant. The written contract should also reflect what happens in practice.

Each engagement must be considered separately, so your status may differ between clients or projects.

Who is responsible for determining IR35 status?

Public authorities and medium or large private and voluntary sector clients are generally responsible for deciding the tax status of contractors providing services through intermediaries.

When the end client is a small private or voluntary sector organisation, responsibility will usually remain with the contractor’s intermediary, such as their personal service company.

Agencies and other fee-payers may also have responsibilities for passing on the determination and operating PAYE.

What happens if my contract is inside IR35?

When an engagement is inside IR35, the relevant fee-payer or personal service company must account for employment taxes in accordance with the rules.

This may involve deducting Income Tax and employee National Insurance contributions and paying employer National Insurance contributions. Contractors should also consider how the payment is recorded in their company accounts and how it affects salary, dividends, Corporation Tax and Self Assessment.

An inside IR35 tax decision does not automatically provide the contractor with employment rights from the end client.

Can I challenge an IR35 status determination?

Yes. A contractor or deemed employer can disagree with a status determination and provide reasons and supporting information to the client.

The client should review the points raised and respond within 45 days. It must either confirm the original determination and explain why it remains correct or issue a new decision.

The original treatment generally continues while the disagreement is being considered, so it is important to raise concerns promptly and provide evidence relating to the real working arrangements.