IR35 explained

IR35 asks whether the way you work for a client looks like employment. If it does, the engagement is taxed broadly as employment despite the company in between. For public sector and medium or large private clients, the client makes the determination; where the client is small, the responsibility stays with your own company.

Fifteen years of anxiety attached to a rule that asks a single question: does this engagement look like a job? Nearly everything else written about it is downstream of that.

The question the rules actually ask

Strip away the acronym and IR35 asks whether, if the company between you and the client were removed, what remains would look like employment. If it would, the tax should look like employment too.

That is why status cannot be fixed by a clause, and why it varies contract by contract. The same contractor can be outside on one engagement and inside on the next without anything about them having changed.

What decides it

Personal service

Could you send a competent substitute, and would the client accept one? A genuine, usable right of substitution points strongly away from employment. A clause the client would never permit in practice points nowhere.

Control

How much does the client direct what you do, how you do it, when and where? A specialist delivering an agreed outcome on their own terms looks unlike an employee. Someone slotted into a team, a rota and a line manager looks a great deal like one.

Mutuality of obligation

Must the client offer work, and must you accept it? An engagement that continues indefinitely, with new tasks assigned as they arise, has the shape of employment whatever the contract says.

The wider picture

Financial risk, your own equipment, fixing defects at your own cost, working for several clients, and how far you are integrated into the organisation — a pass, a place on the intranet, a line on the team chart.

Who is liable when it is wrong

This is the part that changed and the part that matters commercially. Where the client is public sector or a medium or large private business, the client determines status and the liability sits in the supply chain rather than with you. Where the client is small, your company remains responsible — for the determination and for the tax if it is wrong.

Which is why blanket determinations exist: a client that declares every contractor inside removes its own risk at your expense. That is precisely the kind of determination worth disputing, because it was not an assessment of your role at all.

What to do about it

1. Read the determination and its reasons. A determination without reasons is not properly made.
2. Compare it with how you actually work — not with the contract, with the week.
3. Use the dispute process if the two do not match. The client must respond.
4. Work out what it is worth before deciding anything, with the calculator.
5. Keep the company if it still earns its keep — see inside or outside and umbrella companies.

Figures are for the tax year shown and change every April. They are general information, not advice — we check the current position for your circumstances before anything is filed.

Reviewed 19 October 2026.

Part of our work on contracting and ir35 — if you want someone to take it off your hands, start with our accountant for contractors page.