6 steps to improve your IR35 position as a contractor

by Shoaib Qureshi

With private sector IR35 deadline approaching in April 2020, there is no better time than the present to ensure you are protecting yourself as a contractor.

As part of their IR35 investigations, HMRC may look for evidence of your contractor status, so it is important to be able to show adequate proof of your own financial risk as someone who is in business for themselves rather than their clients. To provide that proof, follow as many of the following six steps as possible, as showing just one or two may not be enough to satisfy HMRC.

1. Choose the right company name

Don’t name your company after yourself, instead use a company name that represents the work you do, and also suggests that there may be more than one person working at the company e.g. ABC Architects

2. Work with multiple clients

If possible, try to evenly split your time between 2 or more clients. This will make it more difficult for HMRC to claim that you are an employee of any of them.

3. Use your own marketing materials

Set up your own website and business cards to sell your services, or arrange a listing on a relevant service website, and ensure that your branding is different from that of your clients.

4. Arrange company insurance

Having professional indemnity or other company insurance is a good way to demonstrate that you are a contractor and not an employee.

5. Find an office space, even one in your home

Having an office, even one in your own home, software licences and professional memberships in your company name helps to imply that work goes beyond your current client.

6. Pay for your own training

Paying for your own professional development helps you demonstrate that you are in business on your own account.

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Visit our IR35 page to learn how to best protect yourself, and for the latest IR35 news, to learn what happens on 6th April 2020 and how an HMRC investigation may work, for best practices on how to protect yourself contractually and to ensure that you are not seen as part and parcel of the client organisation, including contract terms to include or avoid, and how to handle rights of dismissal, notice periods, holidays, use of equipment, email addresses, and more.