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IR35 is probably one of the most confusing and worrying topics for construction contractors in the UK. You hear about it. You know it is important. But you are not always sure what it means or how it affects you.

The truth is that IR35 is not as mysterious as it seems. If you understand the basics and know what to check, you can determine your IR35 status and stay compliant.

But here is the thing: getting IR35 wrong can be expensive. If you should be inside IR35 and you are paying self employed taxes, HMRC can request back taxes plus penalties. That can be thousands of pounds.

This is why IR35 check are so important. Let me explain what IR35 checks are, why they matter, and how The Infinity Group helps contractors get their IR35 status right.

What is IR35?

Before we talk about IR35 checks, let me explain what IR35 actually is.

IR35 stands for IR35 Off Payroll Working Rules. It is a set of tax rules created by HMRC.

The basic idea is this: if you work like an employee, you should be taxed like an employee, regardless of what you call yourself.

Before IR35 existed, some people set up their own companies and called themselves contractors when they really worked like employees. They did this to save money on taxes. HMRC thought this was unfair.

So they created IR35. The rule says that if your actual working situation looks like employment, you should be taxed as an employee.

This is important because the tax treatment is different. If you are self employed, you pay one amount of tax. If you are inside IR35 and treated as an employee, you pay a different amount. Usually you pay more tax if you are inside IR35.

Why IR35 Checks Matter

IR35 checks are important because they determine how you are taxed.

If you do an IR35 check and determine you are outside IR35, you can pay self employed taxes. You keep more of what you earn.

If you do an IR35 check and determine you are inside IR35, you know you need to be taxed as an employee. You plan for higher taxes.

If you do not do an IR35 check and HMRC investigates you, they make the determination. And they might determine that you should have been inside IR35. Then you owe back taxes plus penalties. This can be very expensive.

So IR35 checks are about knowing your status and staying compliant. They protect you from HMRC problems.

How IR35 Checks Work

An IR35 check looks at your actual working situation. It asks specific questions about how you work.

Here are the kinds of questions an IR35 check asks:

Control

Does the client control when you work? Do they tell you what hours to work? Do they tell you how to do your work? Do they tell you what methods to use?

If the client has a lot of control over when and how you work, this suggests you might be inside IR35.

If you have control over your own work schedule and methods, this suggests you might be outside IR35.

Substitution

If you are sick or unavailable, can you send someone else to do your work?

If you can send a substitute, this suggests you are outside IR35.

If the client requires you specifically to do the work and you cannot send someone else, this suggests you might be inside IR35.

Financial Risk

Do you have financial risk in your work? Can you make a loss? Do you have to cover costs if something goes wrong?

If you have real financial risk, this suggests you are outside IR35.

If the client covers costs and you have no real financial risk, this suggests you might be inside IR35.

Multiple Clients

Do you work for one client or multiple clients?

If you work for multiple clients at the same time, this suggests you are outside IR35.

If you work for one client most of the time, this suggests you might be inside IR35.

Employment Benefits

Do you get employment benefits like holidays, sick pay, or pensions?

If you do not get employment benefits, this suggests you are outside IR35.

If you get employment benefits, this suggests you might be inside IR35.

Integration

Is your work integrated into the client's business? Are you doing work that is central to what the client does? Or are you doing specialized work that is separate from their normal operations?

If your work is integrated into their operations, this suggests you might be inside IR35.

If your work is specialized and separate, this suggests you might be outside IR35.

An IR35 check looks at all of these factors. It does not look at just one thing. It looks at the complete picture of your working situation.

Inside IR35 vs Outside IR35

Based on an IR35 check, you end up in one of two categories.

Outside IR35

If you are outside IR35, you are genuinely self employed. You are not treated like an employee for tax purposes.

You pay self employed tax. You file self assessment returns. You pay self employed National Insurance.

You keep more of what you earn compared to someone inside IR35.

Inside IR35

If you are inside IR35, you are treated like an employee for tax purposes, even if you technically work as a contractor.

You are taxed as if you were an employee. Income tax and National Insurance are deducted from your pay.

You keep less of what you earn compared to someone outside IR35.

The difference between inside and outside IR35 can be significant. It affects how much tax you pay and how much you take home.

Common IR35 Mistakes

Let me tell you mistakes that contractors make with IR35 so you can avoid them.

First mistake: not doing an IR35 check at all. They ignore IR35 and hope it does not apply. This is risky.

Second mistake: doing a quick informal check and assuming they are outside IR35. They do not do a thorough analysis. HMRC later investigates and determines they should be inside IR35.

Third mistake: assuming all their contracts have the same IR35 status. Different contracts can have different working arrangements. Each contract might need its own IR35 check.

Fourth mistake: not documenting their determination. They make an IR35 check but do not keep records of what they found or why they made that determination.

Fifth mistake: not updating their determination when their working situation changes. The client changes something about how they work. The contractor does not revisit their IR35 status.

Sixth mistake: relying on what the client says about IR35. The client might say they are outside IR35 but the actual facts suggest they should be inside. The contractor trusts what the client says rather than looking at the actual situation.

Seventh mistake: not getting professional advice. They try to figure out IR35 on their own and make the wrong determination.

How Contractors Can Do IR35 Checks

If you are a contractor, how do you actually do an IR35 check?

First, be honest about your working situation. Look at how you actually work, not how you would like to think about it.

Second, ask yourself the key questions. Do you have control over your work? Can you send a substitute? Do you have financial risk? Do you work for multiple clients? Do you get employment benefits?

Third, look at the evidence. Do you have a written contract? What does it say? What does your working arrangement actually look like? Do you have emails showing how you work?

Fourth, document your determination. Write down what you found. Write down your reasoning. Keep records.

Fifth, get professional advice if you are unsure. Do not guess. Get help from someone who understands IR35.

If you do this properly, you can determine your IR35 status.

The Risk of Getting IR35 Wrong

What happens if you do an IR35 check and get it wrong?

If HMRC investigates and determines that you should be inside IR35 when you said you were outside, you have a problem.

You might owe back taxes for previous years. HMRC can go back several years and demand back taxes.

You have to pay interest on the back taxes. The interest adds up.

You might have to pay penalties for not complying with IR35 rules.

You might owe money to your client or agency if they have to pay HMRC because of your IR35 status.

All of this can be expensive. It can amount to thousands of pounds.

This is why getting IR35 right is so important.

How The Infinity Group Helps With IR35 Checks

This is where The Infinity Group comes in. They specialize in helping contractors with IR35.

The Infinity Group can help you do a proper IR35 check. They have experience with hundreds of contractors. They understand the nuances of IR35. They know how to look at your working situation and make a proper determination.

They can look at your specific contracts and circumstances. They can advise you on whether you are likely inside or outside IR35.

They can help you document your determination. They can keep records showing what they found and why.

If your IR35 status is uncertain or borderline, they can advise you on the risks.

If you work through The Infinity Group umbrella company service, IR35 becomes much simpler. You are an employee of The Infinity Group. You are clearly inside IR35. Everything is handled correctly from day one. You do not have to worry about determinations or compliance.

IR35 for Different Types of Contractors

IR35 checks might look different depending on what type of contractor you are.

Construction Contractors

If you work as a construction contractor, IR35 checks are particularly important.

You might work for a main contractor on a specific project. You might work for multiple clients. Your working arrangement might be flexible or strict.

An IR35 check would look at these specifics. It would look at whether the main contractor controls your work. It would look at whether you can work for other clients. It would look at your actual working situation.

The Infinity Group has extensive experience with construction contractors and IR35 checks.

IT Contractors

If you work as an IT contractor, you might have different working arrangements.

You might work remotely. You might work on site at the client location. You might work for one client or multiple clients.

An IR35 check would look at your specific situation. The Infinity Group understands IT contractor arrangements and can help with IR35 checks.

Agency Workers

If you work through an agency, IR35 might be more complicated.

The agency might arrange your work. The client might use you. Your working arrangement might be complex.

An IR35 check would look at the complete picture. The Infinity Group can help you understand your IR35 status even when you work through agencies.

Documentation and Evidence

A key part of IR35 checks is having good documentation and evidence.

You should keep your contract with the client. This shows the terms of your working arrangement.

You should keep emails and communications showing how you actually work. These show the reality of your situation.

You should keep records of your working hours and your work. These show how you actually work.

You should keep records of your client relationships. Do you work for one client mostly or multiple clients?

All of this documentation supports your IR35 determination. If HMRC ever investigates, you have evidence showing what you concluded and why.

Getting Professional IR35 Checks

Many contractors get professional IR35 check rather than trying to figure it out themselves.

A professional who understands IR35 can give you confidence that your determination is correct.

They can review your contracts and working arrangements. They can analyze the facts against IR35 rules. They can advise you on your status.

They can document the determination properly. They can keep records.

This gives you protection. If HMRC ever investigates, you have documentation showing that you made a reasonable determination based on professional advice.

The Infinity Group's IR35 Support

The Infinity Group offers IR35 support for contractors in the UK.

They can review your contracts and working arrangements. They can advise you on your IR35 status.

They can help you document your determination. They can help you stay compliant.

If you work through their umbrella company service, IR35 is handled for you. You don't have to figure it out.

They provide peace of mind that your IR35 status is correct and documented.

Common Questions About IR35 Checks

Let me answer some questions contractors ask about IR35 checks.

How often should I do an IR35 check?

You should do an IR35 check when you start a new contract. If your working situation changes significantly, you should revisit your determination.

What if I work for multiple clients with different arrangements?

Each contract might have a different IR35 status. You should do separate checks for each contract based on how you actually work for each client.

What if my client says I am outside IR35?

Do not just accept what your client says. Look at the actual facts of your working situation. Your client might be wrong. You are responsible for your tax position.

What if my status is uncertain?

If you are unsure, get professional advice. Don't guess. The cost of professional advice is small compared to the cost of getting IR35 wrong.

Can my status change?

Yes. If your working situation changes, your IR35 status might change. You should revisit it if things change.