Should you refuse IR35 contracts?

As the IR35 changes draw ever closer, one question many contractors will be asking themselves is, ‘should I refuse IR35 contracts?’ But how do you know if that’s the right decision? In this blog we explore the different circumstances that can lead to refusing a contract, and why it’s best to run your decision past your SG accountant first.

Each case is unique

It completely depends on your own personal circumstances and whether completing the contract makes financial and / or professional sense. For example, if you’re offered a contract that could open up more opportunities in the future, or if you’re going through a dry-spell and the income (albeit at a reduced amount to what you’re used to) is much needed, then taking the contract may outweigh the negatives an inside IR35 outcome could bring.

What does SG advise?

Think carefully and speak to your SG accountant before you act. Even though you’re no longer responsible for determining your own IR35 status, you may be able to work with the client to increase your chances of ultimately having an outside IR35 status for your contract.

Before doing so, be sure you believe your status is outside. You can do so by getting your SG accountant to review your contract’s IR35 status, as well as running it through HMRC’s CEST tool (Check Employment Status for Tax).

What’s involved in an IR35 review?

Your SG accountant will look at your contract, terms of employment and working practices. If these factors are more aligned to those of employment rather than an independent contractor, then your contract could suggest you’re working inside IR35.

The three main areas which will be taken into consideration when determining your status are:

Control: What level of direct control and supervision are you subject to from the client?

Substitution: Are you able to send another contractor in your place? If so then this would suggest your working practices are outside of IR35

Mutuality of Obligation: Is there an expectation for you to complete work outside of the agreed contract? If the answer is no then it would also suggest your contract is outside of IR35

What can SG do to help?

Should your contract place you inside IR35 following a review, or if your client thinks it does, your SG accountant will suggest things you may be able to change either within your contract or to your working practices, and support you making these suggestions to your client. If your client still determines you as  inside IR35, we will support you in an appeal, and/or as part of your monthly service agreement with SG you’ll be able to use SG Umbrella free of charge. You can simply swap you back to SG Accounting when you change your contract (or win your appeal), whereby you can continue to contract through your Limited Company, should you wish to.

Final thoughts

IR35 can be tricky, especially ultimately when other people have control over your final take home pay. Your SG accountant is specialist in IR35, and is on hand whenever you need them to offer support, guidance and specialist advice. Get in touch with them today to discuss any matters you have concerning IR35 and your career moving forward.