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IR35 is a law that contains regulations for the correct determination of the status of companies, in general, as a Contractor, that is, of people who provide services through a signed contract. This law regulates situations where a person who is required to be a payroll employee within a UK firm avoids this, and earns their income by billing through a limited liability company of his own.

Also; the person who is the contractor, if he/she provides services to a company that is not the UK; If this foreign company has any structure or affiliate in the UK, this will also be considered within the scope of IR35 application.

As known; the person's being an employee (employee) or a contractor affects the amount of tax to be collected in terms of tax administration.

In the evaluation to be made according to the IR35 law, the rules regulated within the scope of this law; Business relations within the scope of IR35 are of great importance as they bring additional tax liabilities for companies and individuals.

Determining whether a working relationship is within the scope of IR35 is crucial. It can be determined by evaluating the criteria to be explained below according to the actual working conditions between the company and the person.


The level of control of the company over the person is important in terms of evaluating whether the employment relationship is within the scope of IR35. For example, if the company decides which work to do when, how and where, this means that the control is in the company, not in the contractor. In this case, the working relationship will be considered to be inside IR35.

Substitution of Someone Else

The question of whether the work to be done should be performed only by the relevant Contractor or whether another person can be assigned for the tasks is important for the evaluation. If the subject of the job is a service that must be provided by the same person all the time, it may form an opinion that it is within the scope of IR35.

Providing Services to a Single Company

If the person provides services to only one company through their limited liability company and there is no other company to which they provide service other than their company, this is also a situation that may lead to the conclusion that this business relationship falls within the scope of IR35.

The Person's Use of Tools, Equipment and Equipment, E-Mail Address Belonging To The Company

The person's use of the tools, equipment and equipment provided by the company, the allocation of an e-mail address belonging to the company, etc. can be counted as evidence for a business relationship under IR35.


The fact that the payments made to the person by the company are made monthly and regularly rather than per job strengthens the fact that this business relationship can be considered as a business relationship within the scope of IR35.

It should also be noted that when evaluating these criteria for a company, you need to include group companies and parent companies in the calculation.

If, as a result of the evaluation made in the light of the criteria mentioned above, it is determined that the business relationship is within the scope of IR35, the issue of who will be responsible varies depending on the size of the company. Liability of small, medium and large scale companies differ. Namely, if the company meets at least 2 of the 3 criteria below, it is considered as a medium and large-sized company.

  • Turnover of £10.2 million and above,
  • Asset total; £5.1 million and above,
  • The number of employees is above 50


There is no responsibility for making an IR35 assessment for companies considered small, and the responsibility lies directly with the person, namely the Contractor.

In terms of medium and large-scale companies, the responsibility lies directly with these companies. Companies are obliged to make all necessary evaluations, make a decision as to whether their business relations with each Contractor are within the scope of IR35, and notify their decision in writing to the persons they receive service with a notification called Status Determination Statement (SDS).

HMRC has included an evaluation test called CEST on its website, which can be accessed from the link, in order to be able to reach a conclusion as to whether a business relationship falls within the scope of IR35. However, this test result is not a definitive result, and it must be emphasized that the actual reality situation should be taken into account for the final result.

Before April 6, 2021, all responsible companies and people serving as Contractors have to evaluate their working status and make a decision, and all companies that are established or will be established later are expected to comply with this new regulation. If the result is a business relationship that should be evaluated within the scope of IR35, these people should be included in the payroll and related taxation should be made, and if this is not done, criminal liability arises.

You can contact us to ask detailed questions about your company and to get information.

-  Tugba EKEN

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