~5 min read
It's a common question we hear from contractors: "If I work for lots of different clients, does that mean I'm automatically Outside IR35?" It's a good thought, and while having multiple clients can certainly be a helpful pointer towards being a genuine business, it's not quite a magic wand that makes IR35 disappear. Let's unpack this a bit.
Why Having Multiple Clients Can Be a Good Sign
When HMRC looks at your IR35 status, they're trying to build a picture of your working life. Having a portfolio of clients can definitely add some strong colours to that picture, suggesting you're 'in business on your own account'. Here's why:
- Demonstrates Business-like Behaviour: Actively seeking out and servicing multiple clients is what real businesses do. It shows you're not just tied to one "employer-like" source of income.
- Reduces Financial Dependence: If you're not relying on a single client for all or most of your income, it makes you look less like an employee who is economically dependent on one company.
- May Indicate Less Integration: If your time is split between different clients, it's often harder for any single client to argue that you're 'part and parcel' of their organisation in the same way a permanent employee would be.
Hold On, It's Not a Free Pass!
This is the crucial bit: IR35 status is determined on a contract-by-contract basis. This means that even if you have ten clients, if your contract and working practices for Client A look like employment, then *that specific engagement* could still be deemed Inside IR35. Having nine other 'Outside IR35' contracts won't change the facts of your arrangement with Client A.
Think of it like this: if you're a freelance web designer and you do a small logo job for a local bakery (clearly Outside IR35), that doesn't automatically make your other long-term, full-time contract where you work at a large company's office, using their equipment, under their direct supervision, also Outside IR35. Each one is judged on its own merits.
The core IR35 status tests – like Control (who decides how, when, and where you work?), Right of Substitution (can you send someone else?), and Mutuality of Obligation (MOO) (is there an ongoing obligation to provide and accept work?) – apply to EACH engagement.
Making Multiple Clients Work for Your IR35 Status
So, while not a guarantee, having multiple clients *can* strengthen your overall position if you're doing things right. Here's how to make it count:
- Clear Contracts for Each: Ensure you have separate, well-drafted contracts or Statements of Work (SoWs) for each client that accurately reflect a business-to-business relationship.
- Market Yourself: Actively marketing your services (e.g., having a website, LinkedIn profile showcasing your business, networking) helps to show you're genuinely seeking work from various sources.
- Consistent Working Practices: Crucially, ensure your actual working practices for each client align with an Outside IR35 determination. If your contract says one thing but you're treated like an employee on the ground, that's a problem.
Potential Pitfalls to Watch Out For
- One Dominant Client: If one client provides the vast majority of your income and work, even if you have a few very small, ad-hoc jobs on the side, HMRC might still scrutinise that main relationship very closely.
- Serial Contracting Disguised: Simply moving from one long-term, full-time, employment-like contract to another with different "clients" might not be enough if each individual engagement points to Inside IR35.
- Ignoring Red Flags: Don't let the fact you have other clients make you complacent about potential IR35 red flags in any specific contract.
In conclusion, while having multiple clients is a positive indicator and aligns with running a genuine business, it's not a get-out-of-jail-free card for IR35. The specifics of each contract and your working reality for that engagement are what truly count. Keep those IR35 principles in mind for every client you work with!