Outside IR35 Accountant Services
What Is IR35 Legislation and Why It Matters
IR35 Legislation, officially known as the Intermediaries Legislation, was introduced by HMRC to tackle 'disguised employment'. Its purpose is to determine the difference between employment and self-employment for tax purposes. Essentially, it seeks to ensure that individuals who are working like employees but using an intermediary (such as a personal service company or limited company) to pay less tax are taxed correctly.
For contractors, navigating IR35 is complex—but crucial. Getting your status wrong can lead to significant liabilities, including paying the Income Tax, NICs, interest, and potentially a penalty that should have been paid.
This is particularly true since the responsibility for determining IR35 status has largely shifted to the end client for public sector and medium-large private sector businesses. However, contractors working for small private sector clients remain responsible for their own status determination.
Difference Between Inside And Outside IR35
Your IR35 status dictates whether you are treated as an employee or a contractor for tax purposes. Whether an engagement falls inside or outside of IR35 can make a huge difference to how you work and how you pay tax.
The core of the legislation lies in the difference between being inside and outside of IR35:
Inside IR35
Your contract and working practices suggest you are considered an employee for tax purposes. This means you are subject to PAYE. Your tax and NICs are deducted at source by the fee-payer (usually the recruitment agency or end client). This is less tax-efficient.
Outside IR35
Your contract and working practices demonstrate you are operating as a genuine business, and are therefore operating outside the IR35 rules. You can pay yourself a salary, draw the remainder of income as dividends, and remain responsible for your taxes as usual. You are able to claim genuine business expenses not available to an employee.
Our service is dedicated to contractors who should be, or are actively working to be, outside IR35. Does IR35 affect limited companies? Absolutely. Your limited company is the intermediary being assessed. Staying outside IR35 is the primary way limited company owners save taxes and benefit from the efficiency of their structure.
How Your IR35 Status is Determined
The tests used to determine IR35 status remain the same, based on common law. The courts use three key factors to distinguish a contract of employment from one of self-employment:
Personal Service/Substitution:
This examines whether the individual is required to provide the services personally. For example, having an unfettered right to send a substitute suggests a lack of personal service. Having no right to send a substitute suggests a requirement for personal service.
Mutuality of Obligations (MOO)
This assesses whether the engager is obliged to offer work and the individual is obliged to accept it. Having no obligation to accept further work after the contract has ended suggests a lack of MOO.
Control
This looks at the level of control the engager has over the supplier of the services. Full autonomy over how the services are carried out suggests a lack of control. Being closely monitored or required to follow client procedures suggests control.
HMRC will review the terms of your written contract and evaluate the actual working practices in place. Even if considered outside IR35, there remains the chance of an IR35 enquiry from HMRC.
Maximising the Benefits of Being Outside IR35
Our service is dedicated to contractors who should be, or are actively working to be, outside IR35. The benefits of being outside IR35 are significant: more tax efficient income drawing, the ability to claim expenses, and the professional status of running a business.
Does IR35 affect limited companies? Absolutely. Your limited company is the intermediary being assessed. Staying outside IR35 is the primary way limited company owners secure tax efficiency and benefit from their structure.
We address common concerns, such as:
What is IR35 compliance?
It's ensuring both your written contract and your actual working practices reflect genuine self-employment.
What is non-compliant behaviour?
Applying blanket determinations to avoid administration is not compliant with the legislation.
How LinkUp helps with IR35 status reviews
We look at your contracts and working arrangements proactively, helping to mitigate risks, ensuring your status is defensible, protecting your income, and helping people build up knowledge on this crucial topic.
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