How is “IR35 status” determined?

Dave Chaplin, CEO of IR35 Shield tells us how “IR35 status” is determined.

Employment status, contrary to common sense, is an extremely complex topic, and there is no statutory test for determining status. Instead, it’s based on case law, which means relying on all the key cases that have gone through both the tax tribunals and employment tribunals over the last 50 or so years.

Also, the case law changes over time, as new rulings are made - so firms will need to keep up with key court decisions and understand whether material changes need to be made to their assessment regimes. The goal posts don’t wildly change all the time, but refinements do happen.

Therefore, unless firms have in-house legal expertise then it is strongly advisable they do not attempt to do this themselves without taking specialist advice.

The status tests themselves are built upon a key case called Ready Mix Concrete from 1968, and are designed to ascertain whether there is a master-servant relationship in place.

IR35 status should be assessed based on the contract and have regard to the working arrangements. When it comes to evaluation at a tax tribunal, the evidenced fact-pattern will be considered by the judge who will apply the rules of evidence and case law authorities to arrive at a decision.

Suffice to say, assessing status is best left to specialists.

If you need help with your assessment regime then please book a demo of IR35 Shield