IR35 and off-payroll working rules affect agencies in two ways: as a business engaging contractors, and as a founder who may themselves be contracting. We cover both perspectives, including how to stay compliant, how to structure contractor relationships, and how to assess status correctly.
If you operate your agency through a limited company and provide services to a medium or large end client, the off-payroll working rules (Chapter 10, ITEPA 2003) may apply. The client is responsible for assessing your employment status using CEST (Check Employment Status for Tax) or an equivalent process and issuing a Status Determination Statement. If caught inside IR35, your company must treat the relevant income as employment income and deduct PAYE and NIC. For agency founders serving multiple clients with genuine business risk and substitution rights, outside IR35 is often defensible, but it must be documented.
Many agencies use a mix of employees and freelancers. When your agency engages freelancers through their own limited companies, you are the fee-payer and potentially the end client. If your agency is a medium or large business (two of: turnover over £10.2m, balance sheet over £5.1m, over 50 employees), you must carry out employment status determinations for contractors you engage. Small agencies (below these thresholds) are exempt, but the contractor's personal service company must still self-assess. Misclassification risk, treating employees as self-employed freelancers, is a separate, older issue that HMRC also investigates actively.
The key IR35 tests are: substitution (can the individual send someone else to do the work?), control (who controls how, when and where the work is done?), and mutuality of obligation (is there an obligation to offer and accept ongoing work?). Agencies can strengthen outside-IR35 positions by using proper contracts with substitution clauses, avoiding exclusive working arrangements, ensuring freelancers can work for multiple clients, and not treating contractors like employees day-to-day. Status arguments are undermined by integrated working practices that mirror employment regardless of what the contract says.
A practical guide for agency founders to audit their contractor engagements for IR35 compliance before HMRC comes knocking. Covers SDS review, CEST tool limitations, and the documentation you need to survive a compliance check.
HMRC's CEST tool is designed for straightforward employment status checks, but creative agency contractor engagements are anything but straightforward. Here's why CEST regularly misclassifies designers, developers, and strategists, and what you should do instead.
If your agency engages contractors who operate through their own limited company, you are responsible for determining their IR35 status. Here is exactly how to do that, what HMRC expects, and where most agency founders get it wrong.
A practical compliance guide for agency founders engaging freelancers. Learn how IR35 applies to your agency, when you need to issue a Status Determination Statement, and what happens if you get it wrong.
Putting a contractor on a fixed-fee retainer to serve multiple clients through your agency can look like disguised employment to HMRC. We explain the specific IR35 risks, how the retainer model differs from a typical contractor engagement, and what you need to change in your working practices to stay outside IR35.
Fractional CTOs sit in a grey area for IR35. Their contracts need specific clauses around control, substitution, and mutuality of obligation to pass a status determination. Here is what to include and what to avoid.
Hiring a freelance copywriter for a client project sounds straightforward. But if that writer works under your direction, on your client's brief, with no right of substitution, IR35 can apply. Here is what agency founders need to check before day one.
A practical guide for agency founders on writing a compliant Status Determination Statement when engaging a freelance designer. Covers creative control, substitution rights, and how portfolio-based work affects the IR35 assessment.
The difference between inside and outside IR35 determines who pays the tax, how much the contractor takes home, and what liability your agency carries. This guide walks through the rules, the tests, and the practical steps for agency founders engaging contractors in 2025/26.
Determining whether a freelance copywriter is inside or outside IR35 comes down to three tests: substitution, control, and mutuality of obligation. Here is how to apply them to your agency's specific engagement.
IR35 rules changed in 2021, putting the responsibility on your agency to determine contractor status. Get it wrong and you face HMRC bills, penalties, and reputational damage. Here’s what you need to know.
A fixed-fee retainer for a contractor who works across multiple clients sounds like a clean arrangement. But HMRC may see it differently. Here's how to structure it without triggering IR35.
If you use contractors who work through their own limited company, you carry IR35 risk. Get the status determination wrong and HMRC can come after you for unpaid tax, NI, and penalties. Here's what every agency founder needs to know.
Hiring contractors through an umbrella company is common in UK agencies, but it doesn’t automatically mean you’re IR35 compliant. This guide explains the real risks, the documentation you need, and how to protect your agency from HMRC penalties.
When your agency hires contractors through a recruitment firm, the off-payroll rules still apply, but the liability can shift depending on who pays the contractor’s intermediary. We explain how the fee-payer rules work, what happens when the agency is deemed the end-client, and how to structure engagements to avoid an unexpected tax bill.
The off-payroll working rules (IR35) place significant compliance obligations on recruitment agencies. This guide explains your responsibilities for Status Determination Statements, deemed employment, and fee-payer status. Practical steps to avoid HMRC penalties.
A practical guide for UK agency founders on issuing a compliant status determination statement for web developer engagements. Covers the key IR35 tests, the SDS format, and what to do if the contractor disagrees.
If your agency engages contractors, you must issue a Status Determination Statement (SDS) before their first day. Here is exactly what HMRC expects to see, the four key employment tests, and a practical template you can adapt.
Hiring an accountant who doesn't understand IR35 is a risk you can't afford. This guide gives you the specific questions to ask, the documents to request, and the red flags to watch for when vetting an accountant's IR35 expertise for your agency.
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