The CleverHub

A central source of accountancy related news, arcticles and reviews

Call 0800 756 9786 Call me back

What makes a contract outside or Inside IR35?

by | Jan 4, 2021 | IR35

What makes a contract role genuinely outside IR35?

As we approach the introduction of new IR35 rules, it’s important to ensure you are well-informed about how you may be affected. The rules can be confusing so it’s no surprise that myths and misunderstandings arise from time-to-time. Here we address some of the common areas of confusion.

All long engagements are caught by IR35?

This isn’t true.
Your IR35 status has nothing to do with your length of contract and everything to do with how you work. So whilst there is no specific time limit that makes an assignment ‘inside’ IR35, it’s fair to say that the longer an assignment lasts, the more likely you are to adopt working practices akin to being an employee.

For example – if you’ve been in place for a number of months, you might find yourself included in the holiday rota or you may find there is resistance if you want to substitute yourself, both factors that would count against you remaining genuinely outside IR35. Our advice is to manage your working practices carefully so the original working practices remain in place and you don’t, albeit unintentionally, fall foul of the rules.

I have more than one client, so I’m ‘outside’ IR35.

Again, this simply isn’t true. Your IR35 status is determined by your contract and your working practices, so simply adding another client to your portfolio won’t automatically change your status. Indeed, you can be ‘inside’ IR35 for one client, and ‘outside’ for another, or both ‘inside’, or both ‘outside’. 

It’s certainly fair to say that if you serve several end clients simultaneously, or quickly move between assignments, then you’re more likely to work in a way that conforms to an ‘outside’ status assessment.  This is because you are likely to be less embedded in each organisation and your arrangement is, therefore, less likely to morph into an appearance of employment.

As long as my contract says I’m not an employee I’m fine?

Again, working practices are the thing you will be judged on, not the wording of your contract. The contract is important, of course, but it’s only part of the picture. The main consideration will be your actual working practices, whether you’re behaving like and being treated like a member of staff. Whatever your contract says, your working practices will hold more weight with a status determination expert or a tribunal.

Find out how you’re affected by IR35 reforms

Our IR35 experts are here to help you to navigate the forthcoming IR35 reforms. You can also visit our IR35 Hub for detailed information on the topic.

Remaining ‘outside’ IR35

Whilst your end hirer and agency will be responsible for determining your IR35 status, we can provide advice and guidance on how to ensure you can continue working ‘outside’ IR35 as a limited company contractor post-April 2021 if that’s what you’d like to do.

Working ‘inside’ IR35

If you’re looking to switch to Umbrella, either because your working practices mean you’re ‘inside’ IR35 or your end hirer and agency insist, then we can help with that too via our sister company, JSA Group. JSA is one of the UK’s largest Umbrella companies helping thousands of contractors to get the most from this working option.

Switch easily between ‘inside’ and ‘outside’ IR35

If you’d like to keep all options open you can use our simple FLEX solution.
FLEX will provide you with the flexibility of being able to switch seamlessly between your limited company and Umbrella working anytime you need and all for the same monthly fee.

Some of the benefits of our FLEX Umbrella solution:

    • Switch seamlessly between limited company and Umbrella.
    • No restrictions on the amount you switch.
    • You are automatically enrolled in FLEX.
    • No additional costs or fees.
    • You retain your own dedicated accountant for unlimited support.
    • JSA are FSCA accredited and have 1000’s of relationships with agencies.

What to do now?

Getting prepared for the changes as early as possible will ensure the transition is smooth as you will fully understand what actions you need to take.

If you are affected now by the changes, speak with your accountant at Clever Accounts and they will help you with any immediate actions needed.

If your agency or end-client has not communicated yet, please visit our IR35 hub for further information and speak to your accountant about how Clever Accounts and JSA can provide you with an end-to-end IR35 solution.

IR35 - read more about it

Find out what changes are coming, how this could affect you and what we can do to help.

COVID-19

Information for contractors, freelancers and limited company on what help is out there

Our accounting packages

Limited Company

Used by thousands of limited companies and contractors, you get unlimited accounting support and advice, easy-to-use online accounting software all for a single fixed monthly fee. This package also includes our Flex solution to allow seamless switching between a limited company and Umbrella plus free insurance*

Growing Company

Our fully bespoke accounting service for limited companies that are growing or in need of additional services. This package includes a dedicated bookkeeper and payroll solutions for multiple employees together with fully pro-active support and advice and face-to-face meetings via video conferencing.  If you need that extra hands-on service, this is perfect for you.

Need an accountant?

Clever Accounts offers fixed-fee online accountancy support for contractors, freelancers and limited companies.

Dedicated accountants, online accounting software and 15 years expertise in the market makes us the perfect choice.

Find out more Request a call back

Z

Designed for contractors & limited companies

Z

Your own dedicated, experienced accountant

Z

Monthly fixed-fees - no surprise bills

Z

End-to-end IR35 support and guidance

Z

Year end accounts, payroll and VAT