If you run an agency that uses contractors, you already know IR35 is not a theoretical risk. It is a real financial one. HMRC can land you with a tax bill for tens of thousands of pounds if they decide your contractors should have been treated as employees. And your accountant is your first line of defence against that.

But not all accountants understand IR35. Many general practice firms treat it as a side topic. They read a few HMRC guides and assume they know enough. For an agency founder, that assumption can be catastrophic.

So how do you actually vet an accountant's IR35 experience before you hire them? You need specific questions, not generic ones. You need to see evidence, not hear promises. And you need to know what a competent answer sounds like versus a confident but empty one.

This guide is for agency founders who want to choose an accountant for agency work who genuinely understands IR35, not just one who claims to. We'll cover the exact questions to ask, the documents to request, and the red flags that tell you to walk away.

Why IR35 Knowledge Matters More for Agencies Than Other Businesses

Agencies are structurally different from most businesses on IR35. You are not hiring one or two contractors. You are likely running a hybrid workforce of employees, freelancers, and limited company contractors on multiple client sites simultaneously.

Every contractor engagement is a potential IR35 investigation trigger. HMRC looks at agencies specifically because the contractor model is so embedded in how agencies operate. They know that agencies often blur the line between employee and contractor out of operational necessity.

Your accountant needs to understand not just the legislation, but how it applies to the specific dynamics of an agency. That means understanding retainer work versus project work. It means knowing how substitution clauses work in practice. It means being able to spot when a contractor relationship has drifted into employment territory without anyone realising it.

If your accountant cannot do that, you are running blind.

Question 1: "How Many Agency Clients Have You Advised on IR35 Status Determination Statements?"

This is your opening question. It is specific. It cannot be answered with a vague "we deal with IR35 regularly." You want a number and a context.

A good answer sounds like: "We have around 15 agency clients, and we've issued over 40 Status Determination Statements (SDS) in the last 12 months. We use a combination of the CEST tool and our own professional judgement, and we document every determination in writing."

A bad answer sounds like: "We handle IR35 for a few clients. It's something we're familiar with." That is not good enough. You need someone who has done this repeatedly, for agencies specifically, and who can show you the process they follow.

The SDS is the formal document that confirms whether a contractor is inside or outside IR35. If HMRC investigates, this document is your evidence that you made a reasonable determination. An accountant who has never written one cannot help you if HMRC comes knocking.

Question 2: "What Is Your Process for Reviewing a New Contractor Engagement?"

You want to hear a step-by-step process, not a general statement. A competent accountant should be able to walk you through their workflow without hesitation.

Look for answers that include:

  • A review of the contract terms, not just the headline rate
  • An assessment of the working practices, not just the written agreement
  • A discussion about substitution, control, and mutuality of obligation
  • A documented decision, signed off by someone senior
  • A plan for periodic review, because contractor relationships change over time

If the accountant says "we use the CEST tool and that's usually enough," that is a red flag. The CEST tool is directional at best. HMRC themselves say it is not definitive. A good accountant uses it as one input, not the final answer.

If the accountant says "we send the contract to our IR35 specialist," ask who that specialist is and whether they have experience with agency contractors specifically. A tax specialist who works with construction companies may not understand the nuances of a creative agency engagement.

Question 3: "Can You Show Me an Example of a Status Determination Statement You Have Prepared?"

This is where you separate the practitioners from the theorists. Any accountant can talk about IR35. Far fewer can show you a real document they have produced.

Ask for a redacted example. They should be able to provide one with the client name and contractor details removed. Look at the level of detail. Does it reference specific clauses from the contract? Does it explain the reasoning behind each determination? Does it include a risk rating?

A good SDS is not a one-page tick-box exercise. It is a multi-page document that shows HMRC that you took reasonable care. If the accountant cannot produce one, or if the example they show you is thin, that tells you everything you need to know.

This is also a good test of their willingness to be transparent. An accountant who is reluctant to share examples may be hiding a lack of depth. An accountant who confidently shares a detailed, well-structured SDS is showing you their competence.

Question 4: "What Happens When HMRC Opens an IR35 Enquiry Against One of Your Clients?"

You want to hear a calm, specific answer. Not "it's never happened to us" (which may be true but tells you nothing) and not "we handle it" (which is too vague).

A good answer includes:

  • The steps they take immediately upon receiving an enquiry letter
  • How they gather evidence, including contracts, timesheets, and working practice records
  • Whether they handle the correspondence directly or bring in a tax disputes specialist
  • An estimate of how long a typical enquiry takes and what it costs
  • A realistic assessment of the likely outcomes

If the accountant has never dealt with an HMRC enquiry, that is not necessarily a dealbreaker. But they should be honest about it and explain how they would handle one. If they brush it off with "we'd deal with it if it happens," that is not good enough.

You are not hiring an accountant for a perfect world. You are hiring them for the world where HMRC sends you a letter asking for three years of contractor records. You need someone who has been through that process before.

Question 5: "How Do You Handle IR35 for Contractors Working on Multiple Client Sites?"

This is a common scenario in agencies. A contractor works for you three days a week and for another agency two days a week. Each engagement may have a different IR35 status.

A good accountant will explain that IR35 is determined per engagement, not per contractor. They will talk about the need for separate contracts, separate working practices, and separate SDS documents for each engagement. They will understand that a contractor who is outside IR35 for one client may be inside IR35 for another.

If the accountant seems confused by the question or suggests that one determination covers everything, that is a major red flag. It suggests they do not understand the fundamentals of how IR35 applies in a multi-client environment.

Question 6: "What Records Should We Keep to Defend an IR35 Investigation?"

This question tests whether the accountant thinks proactively or reactively. A reactive accountant will tell you to keep contracts and timesheets. A proactive accountant will give you a detailed list.

Look for answers that include:

  • Signed contracts for every contractor engagement
  • Status Determination Statements with reasoning
  • Timesheets or other evidence of actual working practices
  • Records of any substitution clauses that were actually used
  • Evidence that the contractor was genuinely in business on their own account (own website, multiple clients, own insurance, etc.)
  • Correspondence about any changes to the working relationship

If the accountant cannot give you a clear record-keeping framework, they are not thinking about defence. They are thinking about compliance at the most basic level. That is not enough for an agency that uses contractors as a core part of its operating model.

Question 7: "How Do You Stay Current with IR35 Changes?"

IR35 is not static. HMRC updates its guidance. Case law changes the interpretation. The off-payroll working rules have been through multiple iterations. An accountant who learned IR35 five years ago and has not updated their knowledge since is dangerous.

Look for specific answers: "We subscribe to HMRC's agent updates, we attend ICAEW IR35 seminars twice a year, and we have a monthly internal review of recent tribunal decisions." Vague answers like "we keep up to date" or "we read the professional press" are not sufficient.

You want an accountant who treats IR35 as a living area of tax law, not a set of rules they learned once and never revisited.

Red Flags to Watch For

Beyond the specific questions, watch for these warning signs during your conversations:

They use the term "IR35 proof." There is no such thing. IR35 is about the reality of the working relationship, not the wording of a contract. Any accountant who promises to make you "IR35 proof" is selling you a false sense of security.

They dismiss IR35 as a minor issue. If an accountant says "IR35 is overhyped" or "most agencies don't have problems," they are not taking the risk seriously. HMRC collected over £1 billion in additional tax from IR35 enquiries in recent years. Agencies are a target.

They recommend a blanket approach. Some accountants suggest putting all contractors inside IR35 to avoid the hassle. That may work for some businesses, but it is not a strategy. It is an abdication of responsibility. It also makes you less attractive to top-tier contractors who want to work outside IR35.

They cannot name a recent IR35 tribunal case. You do not need them to recite case law from memory. But if they cannot mention a single recent case that affected how they advise clients, they are not engaged with the topic.

They have no agency-specific experience. IR35 for a marketing agency is different from IR35 for a construction company or a IT consultancy. If the accountant has never worked with an agency before, they will not understand the specific dynamics that create risk.

What a Competent IR35 Accountant Looks Like in Practice

You are looking for an accountant who treats IR35 as a core part of their service, not an add-on. They should be able to demonstrate:

  • A documented process for every new contractor engagement
  • A template for Status Determination Statements that is detailed and defensible
  • A record-keeping framework that you can implement from day one
  • A willingness to have difficult conversations about contractor relationships that have drifted into employment territory
  • A network of specialists they can bring in if an enquiry escalates

When you choose an accountant for agency work, you are not just hiring someone to file your tax return. You are hiring someone to protect your business from one of the most common and most expensive HMRC risks that agencies face. IR35 competence is not optional. It is a core requirement.

Next Steps: What to Do Before You Sign

Before you engage any accountant, ask for a 30-minute call focused entirely on IR35. Do not let it be bundled into a general "let's talk about your business" conversation. Make it the agenda.

Take notes during the call. Compare their answers against the framework above. If they score well on most questions, you have found a strong candidate. If they stumble on multiple questions, move on.

And if you are already working with an accountant and you are not sure about their IR35 competence, ask them these same questions. A good accountant will welcome the scrutiny. A bad one will get defensive. That reaction tells you everything.

At Agency Founder Finance, we are ICAEW qualified accountants who work exclusively with agency founders. IR35 is not a side topic for us. It is a central part of how we advise our clients. If you want to discuss how we approach IR35 for the agencies we work with, get in touch. We are happy to show you our process, share examples, and answer your specific questions.

Your agency's IR35 exposure is too important to leave to chance. Vet your accountant properly. Ask the hard questions. And if the answers are not good enough, keep looking.