IR35 Guidance for Agency Workers
Understand your contractual relationships and avoid falling foul of bogus schemes. Essential guidance to ensure you're operating within the law and protecting your interests.
What is IR35?
IR35 (off-payroll working rules) determines whether contractors should be treated as employees for tax purposes
The Purpose of IR35
IR35 was introduced to prevent tax avoidance where individuals work like employees but operate through companies to pay less tax and National Insurance. It ensures that people who work like employees are taxed like employees.
- Prevents disguised employment
- Ensures fair tax treatment
- Protects genuine contractors
How IR35 Works
IR35 looks at the actual working relationship, not just the contract. If you work like an employee (under direction, with no substitution rights, and regular work), you're likely inside IR35 and must pay employment taxes.
- Examines working practices
- Looks beyond contracts
- Applies to all sectors
Common Bogus Schemes:
- Loan schemes
Paying you through "loans" that are never repaid to avoid tax
- Offshore arrangements
Using offshore companies to disguise employment relationships
- Artificial structures
Complex arrangements designed to avoid employment status
- False self-employment
Claiming to be self-employed when working like an employee
Warning Signs:
- Promises of huge tax savings
If it sounds too good to be true, it probably is
- Pressure to sign quickly
Legitimate schemes allow time for consideration
- Lack of transparency
Unclear about how the arrangement actually works
- No professional advice
Discouraging you from seeking independent advice
Consequences of Bogus Schemes:
- • Personal liability for unpaid taxes
- • Interest and penalties on back taxes
- • Criminal prosecution in serious cases
- • Damage to professional reputation
- • HMRC investigations and scrutiny
- • Potential bankruptcy from tax bills
- • Loss of legitimate tax reliefs
- • Stress and uncertainty for years
Control
Who decides what work you do, how you do it, when you do it, and where you do it?
Substitution
Can you send someone else to do the work in your place without asking permission?
Mutuality of Obligation
Is there an ongoing obligation to provide and accept work beyond individual assignments?
Signs You're Outside IR35 (Self-Employed):
- You control how, when, and where you work
- You can send a substitute to do the work
- You take financial risk (profit or loss)
- You provide your own equipment
- You work for multiple clients
- No obligation to accept future work
Signs You're Inside IR35 (Employee-like):
- Client controls your working methods
- You must do the work personally
- Regular hours and workplace required
- Client provides all equipment
- Ongoing work relationship expected
- Integrated into client's business
Important for Agency Workers:
Most agency workers are likely to be inside IR35 due to the nature of agency work. You typically:
- • Work under client direction and control
- • Must work personally (no substitution)
- • Follow client's working patterns
- • Use client's equipment and systems
- • Are integrated into client operations
- • Have ongoing work relationships
Do:
- Understand your working arrangements
Be clear about your actual working relationship, not just what's in the contract
- Use HMRC's Check Employment Status tool
Get an indication of your IR35 status using the official HMRC tool
- Keep detailed records
Document your working arrangements and any changes to them
- Seek professional advice
Get independent advice from qualified tax professionals
Don't:
- Fall for get-rich-quick schemes
Avoid arrangements that promise unrealistic tax savings
- Ignore your actual working practices
Don't rely solely on contracts - HMRC looks at reality
- Take unnecessary risks
Don't gamble with your financial future for short-term gains
- Assume you're outside IR35
Most agency workers are inside IR35 - get proper assessment
Our Recommendation for Agency Workers:
Given the nature of agency work, we strongly recommend operating through compliant structures that assume you're inside IR35. This provides:
- • Complete peace of mind
- • No risk of HMRC challenges
- • Transparent tax treatment
- • Professional credibility
- • Protection from bogus schemes
- • Clear contractual relationships
- • Compliance with all regulations
- • Focus on your work, not tax worries
Need IR35 Guidance?
Don't risk your financial future with uncertain arrangements. Get expert guidance on IR35 compliance and safe working structures for agency workers.