Are you IR35 ready? Use our checklist to make sure you’re protected from the HMRC before, during & after an outside IR35 assignment.

With IR35 looming we’ve put together a checklist that you can use to ensure that you’re keeping yourself protected and following best practices when working on an outside IR35 assignment.

We’ve made some assumptions on the checklist which include: You already have a LTD company set up; you have professional indemnity insurance & if required public liability insurance; you already have a trusted accountant helping you with your financials; you already know what IR35 is and how it impacts you as a contractor.

HMRC enquiries can last months and in some cases even years and paying for hourly representation throughout can be extremely costly which is why we recommend having insurances in place throughout our checklist, not only to quickly dispel any enquires but also to ensure you’re not left out of pocket at any point throughout.

IR35 Checklist

Your client is NOT exempt to the new rules under the Companies Act 2006

If your client meets 2 or more of the following criteria: An annual turnover of under £10.2 million; a balance sheet under £5.1 million or under 50 employees, then responsibility for determining the IR35 status remains with the PSC and the changes do not apply.

You have been provided with, and agree with the details in, a Status Determination Statement (SDS) confirming the IR35 status of your assignment from the end-client

Examples of what needs to go into an SDS are available here. If you are unhappy with the determination you do have the right to appeal and the client must get back to you within 45 days, but they are under no obligation to change their minds.

You’ve reviewed your contract with the end client and are confident when considering key IR35 tests that your assignment is a ‘Contract for Services’ arrangement rather than a ‘Contract of Services’ one

A ‘Contract for Services’ is a buyer & supplier agreement between two businesses (i.e., a LTD company and an end client) whereas a ‘Contract of Services’ Is an agreement between an employer & an individual whereby the individual is employed by that company. Key IR35 tests include Mutuality of Obligation; Right of Substitution; Support, Direction or Control & Financial Risk.

You’ve completed a Confirmation of Arrangements (CoA) with the end-client to ensure that the true working conditions reflect those outlined in the contract

HMRC will want to determine not only that the contract between a contractor & end-client are fit for purpose if they are deemed to be outside IR35, but also that the true working practices of the assignment that consider the key IR35 tests including Mutuality of Obligation; Support Direction or Control; Right of Substitution & Financial Risk. A signed agreement by the end client confirming this will hold a lot of weight if the HMRC does come knocking.

You’ve had a full IR35 Contract Review & Working Practices Review completed by a professional

Having a professional check both your contract & working practices questionnaire to ensure they stand up under scrutiny is best practice when working on an outside IR35 assignment to ensure that you are covered if the HMRC decides to investigate your assignment. There are several companies that offer this service with prices ranging from around £100 + VAT.

You’ve taken out Tax Liability Insurance against your IR35 determination

Tax Liability Insurance is designed to protect you in the event HMRC decides to open an enquiry into your accounts. It is comprehensive cover and professional representation against any and all of HMRC’s advances.

You’ve created a Supporting Documentation file to store information relevant to your IR35 status & to prove that you are acting as a genuine business

By collecting key evidence proving your IR35 status at the beginning of and throughout your assignment you’ll be able to quickly bring a halt to any investigations from the HMRC. Examples of what to have in your key evidence file is available here.

You’ve received a Key Information Document (KID) from your Recruitment Agency

A KID is a short document that all recruitment agencies are required to provide as part of assignments for contracts post-April that aims to improve transparency of information provided to contractors. An example of a KID is available here.

You’ve ensured that any changes to working practices or anything related to your IR35 status have led to a new SDS, CoA & Contract being written & reviewed and have had your insurances updated accordingly

If anything changes throughout the course, or even before your assignment begins it is imperative to update all relevant documentation and to keep a log in your Supporting Documentation file to keep up with your obligations as part of the supply chain

Make sure to hold on to ALL documents, emails and files relating to each assignment as the HMRC can investigate up to the last 4 years for innocent errors, and up to 6 years for what they deem to be noticeably careless infringements. Having them to hand and filed correctly can quickly quash any investigation.