Contractors look for IR35 accountants at two moments: a new contract is about to start and you want to know where it sits, or a client has issued a determination you think is wrong. From our office in Finchley we review engagements for London contractors in both situations, and the review is the same core exercise.

• The contract and schedule of work — whether a genuine right of substitution exists, who controls how and when the work is done, and whether either side must offer or accept further work
• The working practices — how the engagement actually runs day to day, which outweighs the wording where the two differ
• The agency chain — upper contracts whose terms contradict your own
• Your business profile — other clients, your own equipment, financial risk, and how you win work
• The evidence — what to keep now in case the position is ever questioned

The result is a written view of the risk, not a guarantee. Where an engagement is finely balanced we say so, and we point to the specific terms or working arrangements that would move it — changes that only help if they reflect what really happens.

When the end client is medium or large, it decides your status and must give you a Status Determination Statement with its reasons. Before you accept an engagement, ask for the SDS in writing and check two things: that it relates to your actual role rather than a blanket decision covering every contractor, and that it considered how the work is done, not only the job title.

If you disagree, use the client’s formal disagreement process and put your reasons in writing, with evidence from the working arrangements. We prepare those representations. The client has to consider them and reply, either confirming or changing the determination — and knowing its reasoning helps you decide whether to take the contract on those terms.

If the end client is small — judged broadly on turnover, balance sheet and headcount, and applied to the client rather than the agency — the older IR35 rules apply and your own company decides status. Nobody sends you a determination. Where a contract falls inside, the company has to calculate a deemed employment payment for the tax year and account for PAYE and National Insurance on it. Write the decision and the evidence down at the start of each contract, and revisit it when the role changes.

• Outside IR35 through your limited company: the client pays your invoice in full, the company pays corporation tax — 19% on profits up to £50,000, 25% over £250,000, with marginal relief in between — and you draw salary and dividends
• Inside IR35 through your company, medium or large client: the fee payer, usually the agency, operates PAYE and employer’s National Insurance before paying your company; those earnings are not taxed again in the company, but most expenses no longer reduce the bill
• Inside IR35 through an umbrella: you are the umbrella’s employee, paid through PAYE, with no company accounts to file but no flexibility over how and when you are paid
• Mixed work: each engagement follows its own determination, so one company can hold both inside and outside contracts

• Limited company accountant, North London
• Off-payroll working and personal service companies
• Payroll services
• Accountants in Finchley

Status turns on how the engagement works in practice, not on what the contract says. The three things tribunals keep returning to are control — who decides what, how and when the work is done; substitution — whether you could genuinely send someone else; and mutuality of obligation — whether the client must offer work and you must accept it. A well-drafted contract that does not match reality is worth very little.

For engagements with medium and large private-sector clients, and all public-sector ones, the client determines status and issues a Status Determination Statement. You can dispute it, and the client has to respond. For small clients the responsibility stays with your company — which means the risk does too.

The usual structure is a modest salary — enough to keep the National Insurance record intact without triggering much liability — with the balance as dividends. The right level shifts with each year's thresholds and with corporation tax marginal rates, so it is a decision to revisit annually rather than set once. Where a spouse genuinely works in the business, paying them for that work is legitimate; giving them shares purely to use their allowances invites the settlements legislation.

• Salary set against the current NIC thresholds
• Dividends planned across the tax year, not declared in a rush in March
• Pension contributions from the company — often the most efficient route left
• Directors' loan accounts kept out of overdraft, to avoid the s455 charge

If you take a permanent role or retire, the company has to be closed properly. Where reserves are modest, striking off is quick and cheap. Above around £25,000 of reserves, a members' voluntary liquidation usually gets the money out as capital rather than income, which can be a substantial difference — but it carries a liquidator's fee and anti-avoidance rules apply if you start contracting again within two years. We will tell you which route is worth it on your numbers.

The off-payroll rules moved the decision. Where the end client is medium or large, the client decides whether the engagement is inside or outside IR35, issues a determination, and carries the liability if it is wrong. Where the end client is small, the decision stays with your own company — and so does the risk.

So the first question about any contract is not "am I outside" but "who is making that call". A determination you disagree with can be challenged, and the client has to respond with reasons — a right very few contractors use.

Inside-IR35 work through your own company leaves you with a company that is doing very little, and for some people an umbrella is genuinely simpler. But the comparison is often presented badly.

An umbrella rate has to cover employer's National Insurance, the apprenticeship levy, holiday pay and the umbrella's margin, all of which come out of the assignment rate before you are paid. A quoted umbrella rate and a quoted limited-company rate are not the same number and cannot be compared directly.

If you have a mix of inside and outside work, keeping the company usually wins. If everything is inside for the foreseeable future, it often does not. It is worth reviewing annually rather than deciding once.

• CIS and construction subcontractors
• Limited company accountant, North London
• Accountants in Crouch End

If you work inside IR35 through an umbrella company, the payslip is the document people find hardest to interpret — and the confusion is structural rather than a matter of arithmetic. It arises because two different numbers both get called your rate.

The assignment rate is not your gross pay

The rate agreed with the agency is what the agency pays the umbrella. Out of it, the umbrella must fund employer’s National Insurance, the apprenticeship levy where it applies, employer pension contributions and its own margin. What is left becomes your gross pay, and only then is income tax and employee’s National Insurance deducted. So the figure you were quoted was never a figure you could take home, and a comparison against a day rate outside IR35 that ignores this is comparing two different things.

Holiday pay is your money either way

Holiday pay is funded from the same assignment rate. It is either rolled up and paid with each payment, or retained and paid when you take leave. Both are legitimate; what is not is retaining it and never paying it out. If your payslip shows holiday pay accruing, check that you are actually receiving it — unclaimed accrued holiday pay has been a persistent problem in the sector.

Read the reconciliation, every time

A compliant umbrella gives you a reconciliation showing the assignment rate at the top and every deduction between it and your gross pay. If you cannot see that breakdown, ask for it. Arrangements that will not show you the whole chain, or that promise a take-home percentage well above what the arithmetic allows, are the ones that later turn out to have been something other than they appeared — and the tax consequences of those fall on the worker, not the promoter.

The services we provide for contractors include year-end accounts and corporation tax, personal tax and self-assessment and bookkeeping. Each has its own page with what is included and how we work.