What happens if HMRC determines I am inside IR35?

If HMRC opens an IR35 investigation and determines you were inside IR35, they can assess backdated tax, NI, interest, and penalties. The total liability can be substantial. Taxbix's contract review service minimises this risk from the outset.

Can I be inside and outside IR35 at the same time?

Yes - you can have multiple contracts with different IR35 statuses. Taxbix handles each engagement separately and ensures correct tax treatment for each.

What is umbrella employment and is it safer than a Ltd company?

Umbrella employment removes IR35 risk entirely but is significantly less tax-efficient for most contractors. At a day rate of £500, a Ltd company outside IR35 typically saves £12,000-£18,000 per year compared to umbrella.

How much does IR35 cost if caught inside?

Inside IR35 contractors pay Income Tax and NI on their full contracting income. The total additional tax burden is typically £8,000-£20,000 per year compared to outside-IR35 Ltd company working at the same day rate.

IT Contractor Accounting

IR35 Specialist Accounting for UK Contractors

IR35 is the single biggest financial risk most UK contractors face. A wrong determination - or a poorly worded contract - can cost you £10,000-£20,000 per year in additional tax. Taxbix reviews every contract before you sign.

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IR35 Specialist Accounting for UK Contractors

What is IR35?

IR35 is HMRC's off-payroll working legislation, designed to prevent contractors from operating as "disguised employees" while paying less tax than permanent staff. If HMRC determines you are inside IR35, your contracting income is taxed like employment income - with no access to dividend tax advantages. The financial impact is significant: most contractors working outside IR35 pay 25-35% effective tax, compared to 40-50% inside IR35.

The Three IR35 Tests

IR35 status is determined by three key tests: Control (does the client dictate how, when, and where you work?), Substitution (can you send a qualified replacement to carry out the work?), and Mutuality of Obligation (are you required to accept further work from the client?). Outside-IR35 contractors must demonstrate genuine independence across all three.

IR35 After the 2021 Reform

Since April 2021, medium and large private-sector clients are responsible for determining IR35 status - not the contractor. Most large clients issue a Status Determination Statement (SDS). Taxbix helps contractors challenge incorrect SDS determinations, using the formal client disagreement process, and advises on contract structures that support outside-IR35 status.

How Taxbix Protects You

Every Taxbix contractor client receives a full IR35 contract review for every new engagement at no extra cost. We identify high-risk clauses, advise on compliant working practices, and recommend contract amendments before you sign. Our fixed monthly fee includes unlimited contract reviews - so there is no reason to skip the review on a new role.

Ready to get specialist advice?

Taxbix provides fixed-fee specialist accounting for IT Contractors. No setup fees, no long contracts.

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