23rd June 2025

Navigating IR35: The Do’s and Don’ts for Contractors and Businesses

Since the IR35 reform came into force in the private sector in 2021, both contractors and businesses have had to navigate a more complex compliance environment. With HMRC placing greater responsibility on end clients to assess the employment status of contractors, the stakes have never been higher.

Whether you’re a contractor working through a limited company or a business engaging flexible talent, understanding what you should – and shouldn’t – do is key to staying compliant and avoiding penalties.

Why IR35 Still Matters

IR35 (off-payroll working rules) exists to ensure that individuals working like employees, but operating through a personal service company (PSC), pay broadly the same tax and National Insurance as employees. Since the reforms, businesses are now responsible for determining whether a contractor falls inside or outside IR35.

Non-compliance can result in:

Unexpected tax liabilities
Fines and interest from HMRC
Reputational damage
Disputes with contractors and suppliers

And with HMRC continuing to investigate and audit hiring practices, keeping IR35 compliance front of mind is essential.

For Businesses: The Do’s and Don’ts

DO:

Conduct clear, role-specific IR35 assessments for each contractor
Use qualified experts or tools to support determinations
Provide a Status Determination Statement (SDS) with reasoning
Keep audit trails and documentation up to date
Regularly review working practices to ensure they match the contract

DON’T:

Use blanket assessments
Assume contractors are automatically outside IR35
Overlook changes in role or scope mid-engagement
Neglect to inform your supply chain of IR35 decisions
Ignore legislation changes, things change!

For Contractors: The Do’s and Don’ts

DO:

Understand how your role is classified and request an SDS
Work in line with your contract terms
Maintain accurate records and required insurances
Seek professional advice if unsure

DON’T:

Ignore your employment status
Accept contracts without understanding the role status
Mix employed and contract work without clarity

How Owen Daniels Helps Keep You Compliant

At Owen Daniels, we support businesses across engineering, manufacturing, and technical sectors with end-to-end compliance solutions – including IR35 assessment and contractor management. Whether you're scaling your contract workforce or navigating a complex supply chain, we help ensure your processes are fully compliant and auditable.

Our support includes:

IR35 role assessments and documentation
Status Determination Statement management
Ongoing working practice reviews
Transparent payroll and umbrella vetting

Confidence in Compliance

IR35 isn’t going away – but with the right support, navigating it doesn’t need to be a headache. Whether you're engaging one contractor or a whole contingent workforce, taking a proactive approach will protect your business and your reputation.