If your end client is classed as a small private sector company, then you’ll take responsibility for determining IR35 status yourself, you will pay the appropriate taxes if you’re inside IR35, and be liable for taxes, penalties and interest should HMRC deem that you have made an incorrect determination.
There is a statutory definition of a small company, and if your client meets two or more of the following conditions then they’re likely to be a small company:
- A turnover up to £10.2m
- Balance sheet assets up to £5.1m
- Average number of employees up to 50
If you are engaging with a small end client we recommend that you continue to take care in determining your IR35 status. We recommend using a third-party specialist to review your contract and working practices.