Do I need an IR35 contract review?

A Contractor’s Guide to IR35 - Part 5 - Female contractor sat at desk look confused as she reads IR35 paper documents.

For contractors who have a limited understanding of IR35 or would like to seek a second opinion on their status, an IR35 contract review can be a great solution.

If this is you, an IR35 contract review will allow you to gain expert advice and prove due diligence to HMRC.

While HMRC are not bound by the opinion reached by a tax specialist, it will certainly help should you ever be subject to a HMRC tax investigation.

What is a contract review?

A Contact Review is a report that independent tax specialists, like our partner Markel Tax, provide to contractors giving an opinion on their IR35 status.

The review is used to understand the contractor’s situation, regarding IR35, by evaluating the contractual terms and working arrangements and whether the opinion is that it is within or outside of IR35.

 

What does an IR35 contract review involve?

A contract review service provides a breakdown of the key tests when establishing IR35 status.

These include Personal Service, Control and Mutuality of Obligation.

Clients will often be asked to complete a working practices questionnaire which will ask questions about the background of the limited company and how the contractor provides services on a day-to-day basis.

These answers are consequently evaluated in combination with the contract terms, to discover whether the key tests are present, or if any changes are required.

It is essential that the working arrangements and contract mirror each other. A contract could have positive clauses which would be deemed outside of IR35 but if the working arrangements are weak, HMRC may be inclined to question how genuine the contract is and consider it a pretence, if the tests are not completely reflected in the working arrangements.

An argument could also be presented around the belief that the contract is simply a template, sent out to many contractors, especially if they are working through an agency. Given this, it is essential for the actual working arrangements to be reviewed.

If the working practices show more positively and the contract is weaker on the tests, Markel Tax Specialists would recommend changes to particular wording in the contract, the removal of clauses or additional wording to be added, in conjunction with what is expected to be seen within a contract for services (self-employment).

 

What are the benefits of a contract review?

The key benefits of an IR35 contract review include:

  • Obtaining an expert opinion on your IR35 status
  • Having both your contract and actual working practices evaluated
  • Demonstrating due diligence should you ever be investigated
  • Peace of mind
  • Personalised recommendations on how to avoid working inside IR35

How can I get an IR35 contract review?

If you would like to seek a contract review, complete the online form here or call 0345 223 2727 for more information.

The specialist team at Markel Tax, who have been defending IR35 disputes for over 13 years, will be happy to help.

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