Since the IR35 reforms came into effect in 2021, most contractors will no longer be responsible for their own IR35 status. However, if their end client is a small business or wholly overseas, contractors are still responsible for their own IR35 determination. In all other circumstances, that responsibility falls to end clients. In both of these instances, though, there are reasons that contractors should consider having their contract reviewed for IR35 compliance.
Whether checking their own IR35 status or gathering evidence to challenge an end clients Status Determination Statement, an IR35 contract review can help by offering a valuable insight to the status of the engagement.
What is an IR35 contract review?
Having an IR35 contract review will demonstrate that you have taken steps to evidence reasonable care or due diligence in determining whether you are inside or outside of IR35. This can reduce the risk later on of penalties being applied by HMRC if your IR35 status is successfully challenged by HMRC in the future.
An IR35 contract review will examine the written terms that you have with your client or agency, and assesses the contractual terms in respect of the key IR35 status tests. These include among others:
- The Right of Substitution/personal service
- End Client Control
- Mutuality of Obligation
Once this has been completed, you’ll be given a determination on whether the contract on its own positions you as inside or outside IR35, and such reports usually include recommendations on how to improve the contract if there are any distinct faults.
In the early stages of an IR35 enquiry, HMRC will request copies and assess your written terms and conditions. Therefore, in defending your position, it’s important to have a strong written contract in order to close an IR35 enquiry in its early stages.
Your review should always be conducted by an IR35 specialist – who can work with you to ensure your contract is compliant and to fully understand where you stand in terms of IR35.
What if my IR35 contract review is inside IR35?
Following a review of your written contractual terms, if your contract is deemed to be a fail or inside IR35, the reviewer will highlight the points within it that need to be amended, or clauses that should be removed entirely in extreme cases. Alternatively, they may suggest clauses that could be added to the contract to strengthen its position.
If alternative wordings have been suggested and amended within the terms, most reviewers will happily re-assess your contract for you free of charge to ensure the amendments /additions have been made to the contract correctly.
What are the benefits of a contract review?
There are several benefits to having your contract reviewed for IR35 compliance. These include:
- Peace of mind: if you are responsible for determining your own IR35 status, it can give you confidence that you have done so correctly – this will also go some way to showing you have taken reasonable care in determining your status should HMRC investigate
- Status Determination Dispute Process: if your client is responsible for your status determination and you disagree with them, your contract review can provide evidence for an dispute of status
- Expert support: determining your own IR35 status can be complex and difficult. Having experts to support you with a professional opinion on your IR35 status can help you to pay your taxes correctly
How long does it take to get my contract reviewed?
Kingsbridge’s Contract Review service has an up to five working day turnaround time from the day of submitting all required documentation. For an additional cost, we also offer a next working day turnaround.
How can I get an IR35 contract review?
While you are not obliged to have your contract reviewed, it’s a service that can make your life a lot easier, while helping you gain insight into what an IR35 compliant contract looks like. Not only can this help you with your current contract, but will also give you valuable learnings that can be applied to future contracts.
To get your contract reviewed by a member of our specialist IR35 consultancy team, simply complete this form and one of our team will contact you to arrange the next steps.
