Contracting offers flexibility, variety, and the chance to work on your own terms. But with that freedom comes responsibility - especially when it comes to IR35. Understanding whether your contract is inside or outside IR35 is crucial. At IT Works Recruitment, we partner with Qdos to guide both clients and candidates through this, making sure everything is clear, compliant and fair.
What is IR35?
IR35 is UK legislation designed to distinguish between genuine self-employment versus what HMRC sees as disguised employment. Essentially, it looks at whether a contractor is functioning more like an employee - even if they’re operating through a limited company or similar structure - and, if so, applies tax and National Insurance accordingly.
Inside IR35 vs Outside IR35: What’s the Difference?
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Inside IR35 |
Outside IR35 |
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You’re considered, for tax purposes, an employee of the end client. PAYE tax and NICs are due. |
You’re viewed as operating as a genuine business (i.e. self-employed/contractor), so you keep the control to structure income (salary, dividends) and manage your tax affairs. |
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“Deemed payment” may apply (at the end of the tax year) if you’re inside. |
You are responsible for your own tax, and can take advantage of tax efficiencies that come with limited company/dividend structures etc. |
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In many cases if the end-client is in the public sector or a medium-large private company, the fee-payer must deduct tax/NIC at source. |
If the end-client is small, you often determine your status and how you’ll work it through your contract and working practices. |
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There's risk: if HMRC determines you should have been inside, you may have to pay back tax, NICs, interest (and possibly penalties). |
Even outside IR35, you still need to ensure your contract and your working practices reflect your status. Discrepancies can trigger HMRC enquiries. |
How Do You Know Which Side You’re On?
It isn’t always obvious. Some key indicators include:
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Contract terms vs actual working practices: What’s on paper must reflect how you actually work.
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Control: Who decides how, when and where the work is done?
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Mutuality of obligation: Is there an obligation to give and accept work?
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Substitution: Can you send a substitute, or must you personally deliver?
Because it’s complex, many organisations now rely on independent experts rather than HMRC’s CEST tool, which has been critiqued for its limitation.
Why We Partner with Qdos
At IT Works Recruitment, we don’t just want to find the right role or candidate - we want everyone to feel confident about compliance. That’s where Qdos comes in. Their Status Review service is widely recognised as one of the most robust, reliable ways to manage IR35.
With Qdos:
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Expert human assessment: Every case is reviewed by an experienced IR35 consultant (not an algorithm). They handle over 2,000 engagements per month and have defended 1,600+ HMRC enquiries.
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Contractor involvement: Contractors contribute directly to the assessment, reducing disagreements and ensuring determinations reflect reality.
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Audit trail & visibility: Clients, contractors, and agencies can all track assessments in the secure online portal, providing transparency across the chain.
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Dispute process: If there’s disagreement with a determination, the system provides a clear route to raise and resolve it.
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Tax liability cover: Where a role is deemed outside IR35, Qdos backs it with insurance protection for the fee-payer, reducing risk.
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Track record: With over 20 years’ experience and £35m in tax saved for contractors, Qdos are trusted specialists.
What You Should Do Next
If you’re a contractor or prospective contractor:
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Get your contract and working practices reviewed, ideally with an independent service like Qdos Status Review.
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Keep good records of how you work (hours, location, substitution rights, etc.).
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Stay updated, IR35 guidance and case law evolve regularly.
If you’re a client or hiring organisation:
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Avoid blanket “inside IR35” calls - they can deter talent unnecessarily.
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Use case-by-case assessments backed by experts.
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Build an audit trail to demonstrate reasonable care if ever challenged.
In Summary
Knowing whether you’re inside or outside IR35 isn’t just a tax detail - it shapes the way you work and the risks you carry. We’re here to help both contractors and clients feel confident and protected. With Qdos Status Review, you can trust that every determination is fair, compliant, and backed by expertise.
