IR35 compliance remains one of the most challenging areas of contractor taxation in the UK. Since the off-payroll working reforms shifted responsibility to end clients in the private sector, the importance of accurate IR35 checks has increased significantly. Despite this, many organisations continue to make avoidable mistakes that expose them to HMRC investigations, tax liabilities, and reputational risk.

Relying Solely on CEST Without Proper Review

One of the most frequent mistakes is treating HMRC’s Check Employment Status for Tax (CEST) tool as a complete and unquestionable solution. While CEST can be useful, it relies heavily on how questions are interpreted and answered. If incorrect assumptions are made, the outcome may not reflect the true working arrangement.

Many organisations rush through the questionnaire or delegate it to individuals who do not fully understand the contractor’s day-to-day role. This often results in inaccurate IR35 determinations that fail to stand up to scrutiny.

To avoid this mistake, businesses should treat CEST as one part of a wider IR35 assessment. Outcomes should be reviewed carefully, supporting evidence should be documented, and borderline cases should be escalated for professional review. Independent IR35 specialists, such as The Infinity Group, can validate CEST outcomes and provide reassurance that determinations are defensible.

Ignoring Actual Working Practices

Another major error is focusing only on the written contract while ignoring how the contractor actually works in practice. HMRC places significant weight on real-world working arrangements, and if these differ from what is stated in the contract, the contract alone will not protect the business.

For example, a contract may include a right of substitution, but if substitution has never been exercised or would not realistically be allowed, HMRC may disregard the clause entirely.

To avoid this, IR35 checks must consider both the contract terms and the day-to-day reality of the engagement. Regular reviews should be conducted to ensure working practices remain aligned with the original determination. The Infinity Group supports UK organisations by carrying out holistic assessments that reflect both contractual and operational realities.

Blanket IR35 Determinations

Applying blanket IR35 decisions across all contractors is one of the most high-risk mistakes an end client can make. HMRC has made it clear that each engagement must be assessed on its own merits. Roles that appear similar on the surface can differ significantly in terms of autonomy, control, and risk.

Blanket decisions often result from time pressure or fear of non-compliance, but they can lead to disputes with contractors, talent loss, and potential HMRC challenges.

The correct approach is to conduct individual IR35 checks for each engagement, even where roles seem identical. A structured assessment process, supported by specialist providers like The Infinity Group, allows organisations to remain compliant while still engaging contractors legitimately outside IR35 where appropriate.

Failing to Issue Status Determination Statements Correctly

Under the off-payroll rules, end clients are legally required to issue a Status Determination Statement (SDS) and pass it down the supply chain. A common mistake is issuing an SDS without adequate reasoning or failing to share it with all relevant parties.

An SDS must clearly state the IR35 determination and explain the reasons behind it. Without this, the client risks becoming liable for tax and NICs if HMRC deems the process non-compliant.

To avoid this, organisations should ensure their SDS process is robust, transparent, and well documented. Using standardised templates and audit-ready processes, such as those provided by The Infinity Group, can significantly reduce compliance risk.

Lack of an Appeals and Dispute Process

Many businesses overlook the requirement to have a clear and fair disagreement process in place. Contractors have the right to challenge an IR35 determination, and failure to respond properly can invalidate the SDS.

Some organisations ignore challenges altogether or respond informally without proper review. This not only increases legal risk but can damage contractor relationships and employer reputation.

To avoid this mistake, businesses should establish a formal disagreement process with defined timelines, escalation routes, and independent review where necessary. Partnering with an experienced compliance provider ensures disputes are handled professionally and in line with HMRC expectations.

Not Keeping Adequate Records and Evidence

Poor record-keeping is another critical weakness in many IR35 compliance processes. In the event of an HMRC enquiry, organisations must be able to demonstrate how and why each IR35 determination was made.

Relying on verbal discussions or undocumented decisions leaves businesses exposed. HMRC expects clear evidence, including assessment outcomes, contracts, working practices, and SDS documentation.

The solution is to maintain a centralised IR35 audit trail for every contractor. The Infinity Group helps UK businesses implement structured documentation processes that provide peace of mind and long-term compliance protection.

Treating IR35 as a One-Off Exercise

IR35 checks are often carried out at the start of an engagement and then forgotten. However, working practices can change over time due to role expansion, contract renewals, or changes in management.

Failing to reassess IR35 status when circumstances change can invalidate an original determination and create unexpected liabilities.

To avoid this, IR35 checks should be reviewed periodically and whenever there is a material change to the engagement. Ongoing monitoring and reassessment services from providers such as The Infinity Group help organisations stay compliant throughout the contract lifecycle.

Lack of Internal Training and Understanding

Many IR35 errors stem from a lack of internal knowledge. Hiring managers, HR teams, and procurement staff often play a role in contractor engagement but may not fully understand IR35 rules or their responsibilities.

This can result in inconsistent practices, incorrect information being fed into assessments, and increased compliance risk.

Providing regular IR35 training and guidance is essential. Working with specialists like The Infinity Group enables organisations to educate internal stakeholders and embed compliant processes across the business.

Not Seeking Expert Support

Perhaps the most costly mistake is trying to manage IR35 compliance without expert assistance. IR35 legislation is complex, case law evolves, and HMRC expectations continue to change.

Relying on internal interpretation alone can leave businesses exposed to significant financial and legal risk. Professional IR35 advisors bring experience, objectivity, and up-to-date knowledge that internal teams may lack.

The Infinity Group supports UK end clients, agencies, and contractors with expert IR35 checks, independent assessments, and end-to-end compliance solutions tailored to business needs.

Conclusion

IR35 compliance is not just a legal obligation but a critical risk management exercise for UK organisations that engage contractors. Common mistakes such as blanket decisions, poor documentation, and reliance on incomplete assessments can have serious consequences.

By understanding these pitfalls and taking proactive steps to avoid them, businesses can protect themselves from HMRC challenges while maintaining flexible and compliant contractor engagements. Partnering with a trusted compliance specialist like The Infinity Group provides the expertise, structure, and confidence needed to navigate IR35 checks effectively in today’s regulatory environment.