Do You Need to Be IR35 Compliant?
If your organisation engages limited company contractors, often referred to as contractors operating through a Personal Service Company (PSC), it’s important to understand your responsibilities under the IR35 (Off-Payroll Working) rules.
For medium and large businesses, responsibility for determining a contractor’s IR35 status usually sits with the end client. This involves assessing whether a limited company contractor falls Inside IR35 (treated similarly to an employee for tax purposes) or Outside IR35 (genuinely self-employed).
An appropriate Status Determination Statement (SDS) should then be issued.
What Does “Outside IR35” Mean?
Assignments are more likely to fall outside IR35 where:
- The contractor controls how the work is delivered.
- A genuine right of substitution exists.
- The contractor can work for other clients.
- There is no ongoing obligation for either party to provide or accept future work.
Supervision, Direction and Control
One of the key considerations in determining IR35 status is the degree of supervision, direction and control exercised by the client.
If the client requires the contractor to work under significant supervision, direction and/or control regarding how, when or where the work is carried out, the assignment is likely to be considered Inside IR35.
Conversely, where a contractor is engaged to deliver a specific outcome, project or service and retains autonomy over how the work is performed, the engagement is more likely to be considered Outside IR35.
While supervision, direction and control is an important factor, it is only one part of an overall IR35 assessment and should be considered alongside other status indicators.
Small Company Exemption
A business may be exempt from the off-payroll working rules if it meets at least two of the following criteria:
- Annual turnover of £15 million or less
- Balance sheet total of £7.5 million or less
- 50 employees or fewer
How Hunter Selection Can Help
We recruit high-quality contract professionals across all of our divisions; Engineering & Manufacturing, IT & Digital, Science & Technology and Service & Sales, helping businesses quickly secure the specialist skills they need.
In addition to recruitment support, through our partnership with Kingsbridge Contractor Insurance, we can support clients engaging limited company contractors with IR35 assessments and Status Determination Statements (SDS), helping to reduce risk and support a compliant recruitment process.
Whether you need a single contractor or a team to support a critical project, we provide both the recruitment expertise and compliance support needed to engage contractors with confidence.
This information is provided for general guidance only and does not constitute legal or tax advice.