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What is IR35?

IR35 is UK tax legislation designed to determine whether a contractor is genuinely self-employed or effectively working as an employee for and therefore should be taxed as such.

Following recent legislative changes, the responsibility for determining the workers IR35 status now sits with the End Client.

That means if a contractor is incorrectly classified, the tax liability falls to the fee payer, not the contractor.

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Who does IR35 apply to?

IR35 rules apply to:

→ UK-registered businesses

→ Organisations with a UK entity engaging contractors

What's the difference?

Inside vs. Outside IR35​

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    Inside IR35

    ​If a role is deemed "inside IR35", this means the scope of work is the same as that of an employee of the client. This means the contractor would receive the same benefits as an employee would such as holiday days and sick pay.

    → Subject to Income Tax and National Insurance Contributions (NICs)

    → Tax is deducted at source by the fee payer

    → Reduced take-home pay for the contractor

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    Outside IR35

    If a contractor is deemed "outside IR35", this means they must be self-employed for the entire assignment and will not be treated like an employee. For example, no sick days, holiday or NIC.

    → Paid gross with no deductions at source

    → Responsible for managing their own tax

    → Typically reflects a project-based, independent engagement

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Are you at risk?

If you don't classify the worker correctly, it could lead to a hefty tax bill from HMRC. In short, getting it wrong is expensive on a financial and reputational level.

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How Vallum supports you...

Our solution is designed to help you protect your business. Through our partnership with Kingsbridge, we are able to provide a structured, defensible approach to IR35 compliance.

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    Status determinations

    Using our internal platform,
    we are able to conduct determinations for you.

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    Audit trail protection

    Alongside the determination result, we are able to provide you with a detailed, documented audit trail for how the status was determined.

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    ​Ongoing guidance

    Support when roles change or contracts evolve.

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    Peace of mind

    Confidence that your decisions are compliant and defensible.

Our compliance & contractor care team

Cheryl Mann
Clarizze Balagat
Ebun Anifowoshe
Betty Kurpas
Klaudia Warchol
Jillian Carr-Carolus
Janine Letitia Mannel

FAQs

Who is responsible for determining IR35?

The End Client is responsible for making the determination. However, the fee payer liable for any unpaid tax if determination is incorrect.

Can IR35 status change during a contract?

Yes. If the scope of work or working practices change, the IR35 status should be reassessed.

Do I need to assess every contractor individually on IR35 status?

Yes. IR35 assessments must be role specific and based on actual working practices, not blanket decisions. It seems a lot of work but that's what we're here for! We'll take the legwork away from your internal teams.

What if I don't assess IR35 properly?

You could be liable for backdated tax, NICs, interest, and penalties from HMRC.

Can Vallum manage IR35 determinations for us?

Yes definitely! We provide fully supported IR35 solutions, including assessments, audit trails, and ongoing compliance support.

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Let's make IR35 simple

IR35 doesn't need to slow you down. If you have any concerns or want to make sure your contractor engagements are set up the right way from day one.

Speak to our team today.

Contact us