A professional review can help establish whether a contract falls inside the scope of the IR35 rules, and also support a contractor to challenge a client’s status decision under the off-payroll rules.
In this guide, we explain why professional reviews remain essential for contractors who determine their own status (if they work for small companies), and also why they are still useful even if your client determines your employment status.
Do you need a contract review since the off-payroll rules came into force?
The answer depends on who is responsible for determining your IR35 status.
Where the client is a small company (Chapter 8):
You remain responsible for your own IR35 status. In this case, a professional contract review is often essential, as you carry the full tax risk if you mis-assess your status.
Where the client is a medium or large organisation (Chapter 10):
The client is responsible for making the IR35 determination. However, contract reviews are still commonly used to check the accuracy of the decision, support a challenge, or strengthen your position before the Status Determination Statement is issued.
What happens if you are caught by IR35?
IR35 is aimed at people who provide services via their own limited companies, but whose working practices and written contracts imply that they are merely ‘disguised employees’.
Your contract work may be caught by IR35 if your working arrangements appear more like those of an employed person than of someone genuinely in business on your own account.
Your entire income for that contract will be subject to standard income tax and National Insurance Contributions, rather than the more tax advantageous route of a small salary and large dividends favoured by most limited company directors.
Try our IR35 tax calculator to assess the full impact on your take-home pay.
As a result, it is in the best interests of all professional contractors to demonstrate that their contracts fall outside IR35, particularly given that the only scenario in which contractors can set their own status is when they are engaged by a small private sector company.
How to show that your engagement is outside IR35
Since the off-payroll rules were introduced in the public sector in 2017 and in the private sector in 2021, clients are now responsible for determining employment status unless the client is covered by the small company exemption.
Until 2017 in the public sector and 2021 in the private sector, contractors’ focus was on demonstrating to HMRC that their contracts were outside IR35. Since reform, it’s arguably about demonstrating to a client that this is the case.
Having an independent IR35 expert review the contract and working practices is a smart first step.
Providing objective advice – along with recommendations to strengthen outside IR35 status – often proves vital in demonstrating to a business that an engagement sits outside the rules.
Given the complexity and ambiguity of IR35, proceeding without specialist support is a risk, whereas the opinion of a trusted, independent expert carries greater weight.
CEST tool: useful but flawed
Many clients and workers use HMRC’s official employment status tool, CEST, for employment status decisions.
The tool was refreshed in April 2025 (it now uses simpler language and provides more comprehensive guidance), but it still has some fundamental limitations:
- It often returns “unable to determine”.
- Not fully aligned with evolving case law, including the Mutuality of Obligation.
- It has been overlooked or criticised in some status tribunals.
Even if you use CEST and return an ‘outside’ IR35 result, it is still worth having your contract reviewed by a specialist, not only to provide a more accurate determination, but also to demonstrate that you have taken care in demonstrating your employment status.
The importance of contract wording and working practices
Another thing to bear in mind is the difference or potential differences between the contract itself and the working practices.
While the contractual terms outline the agreement, the working practices reflect the reality of the engagement – in other words, how the service is delivered on a daily basis.
To ensure IR35 compliance and enable contractors to demonstrate outside IR35 status to clients and, if approached, HMRC, it’s crucial that the contract terms mirror their working practices.
In an IR35 enquiry, working practices carry significant weight, as they show how the contract is actually carried out, regardless of what the contract terms say.
Not having a contract is not a sufficient excuse
Not having a contract in place with a client isn’t an excuse, nor will it serve as a workaround for IR35.
When enquiring into IR35 status, HMRC will look at the ‘hypothetical contract’, which is based on the working arrangements deemed to exist between the contractor and the end client.
IR35 contract review services
To recap, while IR35 reform has transferred the IR35 burden to businesses in all but one scenario, IR35 contract reviews remain a valuable service to contractors.
They can be used to demonstrate outside IR35 status to a client and to support any challenge when seeking to overturn an IR35 decision.
In an IR35 contract review, an expert will conduct a rigorous analysis of the contract, focusing on all aspects of IR35 legislation, and provide a detailed report on the outcome.
What does an IR35 contract review involve?
A typical review will look at both the written contract and the reality of the engagement. This usually includes:
- Assessment of key IR35 status factors such as control, substitution and mutuality of obligation.
- Review of working practices alongside contractual terms.
- Identification of risk areas.
- Recommendations to strengthen an outside IR35 position.
If a contract is deemed inside IR35, a specialist, such as Qdos, will recommend changes to clauses – which must also be reflected in working practices – to support outside, rather than inside, IR35 status.
A review can also be useful where a client has issued an inside IR35 determination, and you want an independent opinion before using the client-led disagreement process.
Read more about how to challenge an IR35 determination and the client’s duty to take reasonable care.
Further information
Qdos Contractor and similar providers will analyse your contract, tell you which clauses are likely to pass or fail, and analyse your working practices as well.
Depending on the depth of the service you choose, contract review specialists can also liaise with any third parties to suggest changes to the contract if it ‘fails’.
You can also take out IR35 insurance if you self-certify your IR35 status, or perform a mixture of work for both small company and larger company clients.
The costs of this type of insurance are very reasonable and can cover the costs of professional representation, along with the cost of paying any backdated taxes, depending on your level of cover.
Worried about an IR35 challenge?
HMRC investigations can be expensive and time-consuming. Qdos provides expert defence and financial cover if your status is challenged.