Belt and braces your IR35 status by getting an inside/outside opinion based on what actually happens in practice when working as a contractor
A contractors working practices i.e. what actually occurs on a day to day basis whilst working at an end client, should match the written contractual terms of the engagement.
Our working practices review works on questionnaire basis and asks questions as to how you actually work and engage with the end client.
Most contractors are under the false impression that the written contract is the most important piece of evidence should HMRC come knocking and open an investigation into your IR35 status. However, the ‘true’ contract is not the written one but the one that the review of the working practices reveals. This holds vast credence with HMRC during an IR35 status enquiry, as HMRC view the working practices as your actual working relationship with the end client.
During an IR35 status enquiry HRMC will contact your end client(s) and ask them about what actually transpired and what could transpire if a situation arose around the terms of the contract. It is therefore ket to ensure that your working practices match the terms of your contract, and is essential in establishing your IR35 status – there is no fooling HMRC.
HMRC will attempt to establish if the relationship between you and the end client is disguised employment or not, so it is crucial that you are in business in your own right and can demonstrate that you provide your services to them with the autonomy any normal business would. However, whilst the written contract between you and the end client might be perfect from an IR35 perspective and be exemplary in demonstrating key clauses such as substitution, mutuality of obligation, non-exclusivity and control, but unless it can be proved what would happen in reality it is worth very little in defence of your case. This is where the working practices review comes in.
When we review your working practices we provide a written opinion as to if it is a pass or fail i.e. outside or inside of IR35. If the review provides a fail/inside opinion, we highlight the issues that have caused this, and recommend actions to assist you in rectifying them.
Being able to evidence your status and provide this to HMRC with the necessary documentation, evidencing that you have taken proactive action to ensure you are outside of IR35 will greatly aid the defence of the case, which itself can a very stressful time. All contractors in business today need to be proactive and show that they have taken reasonable steps to understand IR35 and ascertain their status accordingly. By taking out an IR35 working practices review you demonstrate to HMRC exactly that, and is a key indicator in proving your IR35 status.
By using the vastly experienced in-house expertise of Roots, where our team have personally reviewed in excess of 2,500 contracts and working practices reviews from an IR35 perspective, you can ensure you put yourself in the best position to avoid being caught on the wrong side of IR35.