If you’re operating via a limited company and providing services, then it’s very likely that you’ll need to consider IR35. Technically, it applies to anyone working via an ‘intermediary’ – for example, via a limited company (sometimes called personal service companies, or PSCs) or a partnership.
If you’re a sole-trader then you won’t need to consider IR35. That’s because you are your business – there’s no separate legal identity that differentiates you from your business.
Some people think that IR35 only impacts IT contractors working in large banks, but the scope is much broader. All of the following would need to consider IR35 status if they’re using a limited company:
- Business consultants
- Locum doctors, bank nurses, care workers, technicians, pharmacists
- Freelance marketers or designers
- Small creative agencies
- Design engineers
- Construction workers
- Supply teachers
- Sub-contracted architects
This list isn’t exhaustive – it simply highlights how diverse the impact of IR35 is.
Does IR35 apply to my company
Your IR35 status is determined on a per-assignment (or per-contract) basis. It’s not something that simply applies once to your entire company. Your status will need assessing each time you start a new contract, and may need re-assessing if your contract continues to run for a reasonable duration, or if your working practices change.
Who assesses the IR35 status of my contracts?
If you’re working with a public sector client, or a medium or large-sized private sector client, then they will be responsible for determining your status. Your end client will be liable if they make an incorrect determination.
If you’re working with a private-sector small company as an end client, then you are responsible for self-assessing your IR35 status. You will be liable if you make an incorrect determination. A ‘small company’ is defined in law as having two or more of the following:
- a turnover of £10.2m or less;
- a balance sheet total of £5.1m or less; and/or
- 50 employees or less.