Contractor Pay Guide

The Core IR35 Questions for IT Pros

When HMRC or your client is figuring out your IR35 status, they're essentially trying to see if your working relationship looks more like a traditional employee or a genuine independent business. For us IT folk, this often boils down to a few key areas:

• Control: How much say does your client have over *how* you do your IT wizardry? Are they just giving you the project goals and letting you crack on with your expert methods? Or are they dictating every step, tool, and technique? The more autonomy you have in your approach, the better for an Outside IR35 stance.
• Substitution: This is a biggie. Could you, in theory, send another equally skilled IT contractor to do the work if you were unavailable (fancy a holiday, perhaps?) or if the project needed different skills? A genuine right to substitute, even if you never actually use it, is a strong pointer towards being Outside IR35. If the client insists on *you* and only you, that looks more like employment.
• Mutuality of Obligation (MOO): Is this a specific IT project with a clear start and end, and defined deliverables? Or are you basically just 'on the books', with the client expecting to keep feeding you work indefinitely, and you feeling obliged to do it? Genuine project-based work strengthens an Outside IR35 case.
• Equipment: Are you using your own high-spec laptop, software licences, and development tools? Or is everything provided by the client? Using your own gear is a good sign you're in business for yourself.
• Integration: How much are you 'part and parcel' of the client's team? Do you have a company email address, report to a line manager in their hierarchy, attend all their internal staff meetings, and get employee-like perks? The less integrated you are, the more you look like an external service provider.
• Financial Risk: Are you taking on any financial risk like a real business would? For example, do you have to fix any mistakes in your code or system at your own cost? Do you have business insurance (Professional Indemnity is a must for IT contractors!)? These things show you're not just a risk-free employee.

It's not just one factor, but the whole picture of your working relationship that counts. Our main Understanding IR35 guide goes into these in more general detail.

Common IT Contract Scenarios and IR35 Twists

IT contracts can come in all shapes and sizes, and each can have different IR35 implications:

• Long-term Project, Embedded in a Team: This is a common one for developers or sysadmins. If you're working full-time, at the client's office, using their kit, and taking direction from their managers for many months (or years!), it can start to look a lot like employment, making an Inside IR35 determination more likely.
• Short-term Specialist Consultancy: If you're brought in as a highly specialised expert for a specific, short-term task (e.g., a security audit, a database migration plan, a specific module build) and you define the 'how', this often leans more towards Outside IR35.
• Statement of Work (SoW) Based Projects: These can be great for demonstrating an Outside IR35 status, *if* they're genuine. A proper SoW clearly defines the deliverables, timelines, and fixed price for a specific outcome, rather than just selling your time. The client is buying a result, not just your bums on seats.

Navigating IR35 Determinations in the Tech World

Since April 2021, for medium and large private sector clients (and all public sector ones), it's the client's responsibility to determine your IR35 status for each contract. They should give you a Status Determination Statement (SDS) explaining their decision. If you disagree, you have the right to challenge it.

Agencies, if they're in the chain, also play a role, often as the 'fee payer' responsible for deducting tax if you're Inside IR35. For IT roles, getting your contract reviewed by an IR35 specialist can be invaluable. They can spot clauses or working practices that might cause issues.

If you genuinely believe your contract is Outside IR35, be prepared to articulate *why* based on your working practices – how you maintain control over your work, your right of substitution, etc.

Top Tips for IT Contractors in 2025

• Focus on Deliverables: Try to shape your engagements around specific projects and outcomes (Statements of Work) rather than just open-ended time.
• Act Like a Business: Have your own website? Business cards? Professional Indemnity and Public Liability insurance? These all help paint the picture of a genuine business.
• Keep Records: Document everything that supports your Outside IR35 status – your contract, any SoWs, correspondence showing your autonomy, evidence of marketing your services elsewhere, etc.
• Seek Expert Advice: If you're unsure about a contract's status, or how to structure your business, an accountant or IR35 specialist who understands the IT sector is your best friend. Don't forget, IR35 insurance can also offer peace of mind.

And of course, use our IR35 Calculator to understand the financial difference between an Inside and Outside IR35 determination. It can really help you see the impact.