IR35 legislation has significantly changed how end clients engage contractors in the UK. Since the off-payroll working reforms, responsibility for determining a contractor’s employment status for tax purposes often sits with the end client rather than the contractor. This shift has made IR35 checks a critical compliance requirement for organisations that rely on flexible or contract labour.

This blog explains the legal responsibilities end clients have under IR35, why accurate IR35 checks matter, and how professional support can help UK businesses meet HMRC expectations with confidence.

What IR35 Means for End Clients

IR35 rules are designed to prevent disguised employment, where individuals work like employees while operating through limited companies to gain tax advantages. For end clients, this means assessing whether a contractor should be treated as an employee for tax purposes.

If a contractor falls inside IR35, tax and National Insurance must be deducted at source. Accurate IR35 checks ensure this determination is made correctly.

When End Clients Are Responsible for IR35 Checks

In the private and public sectors, medium and large organisations are responsible for IR35 status determinations. Small companies are generally exempt, but they must still confirm their size status.

End clients must carry out IR35 checks for every engagement involving contractors operating through intermediaries such as limited companies.

The Legal Requirement to Take Reasonable Care

HMRC requires end clients to take reasonable care when making IR35 determinations. This means assessments must be based on accurate information and a thorough understanding of the contractor’s working practices.

Failing to take reasonable care can result in HMRC transferring tax liability to the end client, even if another party processes payments.

Understanding Key IR35 Status Factors

IR35 checks assess several key factors, including the level of control over the contractor, the right of substitution, and mutuality of obligation.

End clients must consider how the contractor works in practice, not just what is written in the contract. HMRC places significant weight on actual working arrangements.

Issuing a Status Determination Statement

End clients are legally required to issue a Status Determination Statement to the contractor and any relevant agency. This statement must explain the IR35 decision and the reasons behind it.

IR35 checks provide the evidence needed to support a clear and defensible Status Determination Statement.

Managing Disputes and Challenges

Contractors have the right to challenge IR35 determinations. End clients must have a process in place to handle these disputes and respond within a set timeframe.

Accurate IR35 checks help resolve disputes quickly by providing clear justification for the decision.

Financial Risks of Non-Compliance

If IR35 checks are incorrect or not carried out, end clients may be liable for unpaid tax, National Insurance, interest, and penalties. These costs can be significant and may apply retrospectively.

Proper IR35 checks reduce the risk of unexpected financial liabilities.

Impact on Contractor Relationships

IR35 decisions can affect contractor morale and working relationships. Blanket determinations often lead to dissatisfaction and loss of skilled contractors.

Fair and individual IR35 checks demonstrate professionalism and help maintain positive relationships with the contractor workforce.

The Role of HMRC CEST Tool

HMRC provides the CEST tool to support IR35 decisions, but it may not account for all nuances of working practices.

End clients should use IR35 checks alongside professional analysis to ensure decisions are robust and defensible.

Record Keeping and Audit Readiness

HMRC may request evidence of IR35 assessments during compliance checks. End clients must keep detailed records of determinations and supporting information.

Professional IR35 checks help maintain organised documentation that supports audit readiness.

Supply Chain Considerations

End clients are part of a broader supply chain that may include recruitment agencies and umbrella companies. Clear communication of IR35 determinations is essential.

IR35 checks support transparency and compliance throughout the supply chain.

Avoiding Blanket IR35 Decisions

HMRC discourages blanket IR35 decisions that assess multiple contractors in the same way without individual consideration.

IR35 checks ensure each engagement is assessed on its own merits, reducing compliance risk.

Staying Up to Date with Legislation

IR35 guidance and case law continue to evolve. End clients must stay informed to ensure ongoing compliance.

Professional IR35 checks reflect current HMRC guidance and legal precedents.

Supporting Business Reputation

Non-compliance with IR35 can damage a company’s reputation with HMRC, contractors, and the wider market.

Accurate IR35 checks demonstrate responsible governance and commitment to compliance.

How The Infinity Group Supports End Clients

The Infinity Group provides professional IR35 checks tailored to the needs of UK end clients. Their services include contract reviews, working practice assessments, and clear reporting.

By working with The Infinity Group, end clients can meet their legal responsibilities with confidence and clarity.

Reducing Administrative Burden

Managing IR35 compliance internally can be resource-intensive. Professional IR35 checks reduce administrative pressure on HR and finance teams.

This allows organisations to focus on core business operations.

Building a Long-Term Compliance Strategy

IR35 checks should form part of a wider compliance strategy. Regular reviews and updates help maintain compliance as roles and legislation change.

Professional support ensures consistency and reliability.

Conclusion

IR35 checks are a legal and financial necessity for end clients operating in the UK. They ensure accurate status determinations, protect against HMRC penalties, and support fair treatment of contractors.

By investing in professional IR35 checks and working with experienced providers such as The Infinity Group, end clients can fulfil their legal responsibilities, reduce risk, and maintain confidence in their contracting arrangements.