IR35 Factors

IR35 Factors

There are many factors which determine if you are inside of IR35 or not. However, the three main IR35 factors are:-

1. The right of substitution
2. Control
3. Mutuality of Obligation

Further IR35 factors are:-

1. Financial Risk
2. The length of engagement
3. The right of dismissal
4. Basis of Payment – How you are paid
5. Part and Parcel of the Organisation – The level of integration
6. Provision of equipment – whether or not you provide your own equipment
7. Employee Benefits – Whether you get any benefits that the employees get
8. Whether you have the opportunity to benefit from sound management
9. The Intention of the parties

IR35 Friendly Contracts

You don’t, therefore, have to tick all of these boxes to be outside IR35. However, the more that you can tick the better. So, you should have as many provisions in your contract as possible that take you outside IR35.

However, of even greater importance is the way you operate. You must differentiate your way of working as much as possible from that of an employee of the organisations. As far as HMRC and the Government are concerned if it looks like a duck and it walks like a duck and it quacks like a duck, it’s a duck. That’s no matter that it says in its contract that it is a goose.

So, these are the major IR35 factors and the minor IR35 factors. You do not need to tick all of the boxes as regards the IR35 factors. However, the more you can tick positively the better.

Bookmark This Page

As IR35 can potentially affect all contractors why not bookmark this page. You can, therefore, have a look each time you get a new contract.

Also, if you are an Accountant or Umbrella Company why not put a link to this page for the benefit of your contractors.

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Contractor Services

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