Case Study | Industry: Digital Transformation
Early Action Pays Off: Soma Consulting Protects Its IR35 Position
Soma Consulting protected its IR35 position and resolved a complex audit query quickly by using early intervention and clear legal guidance from IR35 Shield.
I’m pretty sure that engaging IR35 Shield early made them consider how robust their position was and saved a lot of hard work. Having IR35 Shield's guidance at the right moment made a quick resolution possible. Your support helped us avoid what could have become a complicated dispute. We’re delighted with how quickly this was resolved and highly recommend IR35 Shield.
Mark Harvie – Soma
About Soma Consulting Partnership
Soma Consulting Partnership Limited is a change management consultancy that delivers fully contracted-out services to its clients.
The problem
When one of their clients began reviewing its IR35 compliance with support from an external auditor, questions arose about Soma’s role in the contractual chain and whether Soma was “the client” for off-payroll purposes.
Soma recognised the potential risk for their business immediately and approached IR35 Shield for professional guidance. With early intervention, clear legal arguments and a well-structured letter drafted by IR35 Shield, Soma was able to explain its position to the customer with confidence. The customer accepted the explanation, and the matter was resolved quickly with no further action.
How IR35 Shield supported Soma Consulting
Soma became aware that their customer’s IR35 auditor was questioning the nature of their services and suggesting that responsibility for off-payroll compliance might lie elsewhere. Because Soma provides fully contracted-out consultancy services, the suggestion posed a real risk of leading the client to an incorrect conclusion about their legal status.
IR35 Shield reviewed the circumstances and analysed how the statute applied to the commercial relationship. The defence team then drafted a clear, concise letter for Soma to send to its customer. This letter explained why Soma, as a consultancy delivering a contracted-out service, was the correct “client” under the off-payroll rules. The explanation also clarified why the auditor's proposed interpretation was inconsistent with the legislation.
Once the customer reviewed the letter, they accepted the legal position, and nothing further came of the issue.
The challenge Soma faced
The customer was conducting a more thorough IR35 audit and had appointed an external firm to review supplier relationships. During this process, the auditor questioned whether Soma should be treated as “the client” under the off-payroll working rules. If accepted, this misunderstanding could have caused unnecessary disruption and failed to reflect the statute correctly.
Soma recognised the potential risk early and sought expert advice before its customer reached any conclusions. By acting quickly, they ensured the situation could be addressed before any inaccurate assumptions were adopted.
Navigating the legal arguments
IR35 Shield analysed the contractual arrangements and applied the relevant legislation to demonstrate that Soma was operating as a genuine consultancy providing a contracted-out service. The letter prepared for Soma clearly set out the legal position, explained how the statute defines “the client”, and highlighted why the customer’s auditor's view did not apply in this case.
The explanation helped reset the conversation. After receiving the letter, the customer accepted the clarification, and the matter was resolved.
Lessons learned
- Early intervention prevents misunderstandings from escalating into formal disputes.
- Understanding who is legally the “client” under the statute is essential for consultancies delivering contracted-out services.
- Clear, well-structured explanations help customers understand their responsibilities and reduce the risk of incorrect assumptions.
- Professional guidance can save significant time and ensure that the correct legal position is communicated from the start.
Arguments over which party is ‘the client’ are not uncommon and usually arise from a lack of understanding of the statute. The best approach for consultancies is to provide clear information early, setting out why they are the ‘client’ under the rules. This prevents customers from making inaccurate decisions later on.
Dave Chaplin - CEO, IR35 Shield
Conclusion
The situation was resolved quickly and without escalation. The customer accepted Soma’s position once the statutory explanation was provided, and no further questions were raised. Soma avoided what could have easily become a more complex and time-consuming issue.
Need help with your IR35 processes?
IR35 Shield helped Soma Consulting protect its legal position and resolve a developing IR35 query swiftly and professionally.
If your consultancy delivers contracted-out services and needs support in explaining your IR35 responsibilities to customers, speak with an expert today. We can help you present a clear and accurate position and ensure your compliance is understood.
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