Using the right IR35 tool for your assessment

IR35 assessment tools

Understanding IR35 doesn’t have to be a puzzle. With the right tools, it can be as straightforward as checking off a to-do list. This article is your guide to the top IR35 assessment tools in the market, designed to simplify the process of determining your employment status for tax purposes.

We’ll closely examine each tool, from the widely used Check Employment Status for Tax (CEST) tool provided by HMRC to innovative solutions like the IR35 Shield, and not forgetting the robust Kingsbridge IR35 tool. We’ll explore their features, weigh their pros and cons, and help you decide which tool best fits your needs.

Whether you’re a contractor trying to figure out your employment status, or a business looking to stay on the right side of the law, these tools are here to make life easier. So, let’s get started and find the right tool to simplify your IR35 journey.

Detailed Review of IR35 Assessment Tools

In this section, we actively explore the specifics, features, benefits, and potential limitations of each IR35 assessment tool.

HMRC’s Check Employment Status for Tax (CEST) tool

The CEST tool is a widely used online tool provided by HMRC. It’s designed to help determine a worker’s employment status for tax purposes.

  • Features: The tool asks a series of questions about the working arrangement and instantly determines whether the worker falls inside or outside IR35.
  • Benefits: It’s free to use and is supported by HMRC, which can reassure users.
  • Limitations: The tool has faced criticism for its accuracy and the fact that it doesn’t fully consider all aspects of the IR35 legislation.

IR35 Shield

IR35 Shield is a comprehensive IR35 assessment tool that uses expert assessment technology.

  • Features: It offers continuous compliance and IR35 assessments and monitors the engagement status.
  • Benefits: It alerts users if a contractor falls inside IR35, helping to ensure compliance.
  • Limitations: The tool is not free, which might be a barrier for some users.

Kingsbridge IR35 Status Tool

The Kingsbridge IR35 Status Tool is a comprehensive solution that offers an assessment of your IR35 status and provides IR35 insurance.

  • Features: The tool provides a detailed report of your IR35 status based on a series of questions about your working practices and contract terms. It also offers IR35 Protect, a market-leading insurance product that protects limited company contractors from the costs that can follow an IR35 enquiry. This includes defence costs, taxes, interest, and any penalties payable to HMRC.
  • Benefits: Known for its user-friendly interface and detailed reports, Kingsbridge stands out for its unique flexibility. The cover provided works for whichever party HMRC decides to investigate, whether that’s you, your end client, or your recruitment agency. This provides peace of mind throughout the supply chain. Kingsbridge offers an automated review process and in-house consultancy support for borderline cases, ensuring the most accurate IR35 result and guidance.
  • Limitations: The tool and its associated services are not free, and the cost might be a consideration for some users. However, considering its comprehensive coverage and peace of mind, many consider it a worthwhile investment.

Qdos Contractor’s IR35 resources

Qdos Contractor is a leading authority on IR35 legislation and offers a range of resources.

  • Features: They offer an IR35 contract assessment service that provides an overall opinion on a contractor’s contract.
  • Benefits: The service demonstrates due diligence and can be used as part of your defence if challenged by HMRC.
  • Limitations: The service is not free, and the cost might be a consideration for some users.

34square’s IR35 Status Assessment Tool

34square provides a comprehensive IR35 status assessment and compliance service.

  • Features: The tool provides a comprehensive IR35 status assessment and includes a unique component that bolsters contractors’ outside IR35 credentials.
  • Benefits: The tool provides a detailed report and is designed to help contractors demonstrate their compliance with IR35.
  • Limitations: The tool is not free, and the cost might be a consideration for some users.

Professional Services Gateway

Professional Services Gateway is a tool that helps businesses manage their contingent workforce and ensure compliance with IR35.

  • Features: The tool provides a comprehensive solution for managing contingent workers, including IR35 assessments.
  • Benefits: It offers a streamlined process for managing contractors and ensuring compliance.
  • Limitations: The tool is designed for businesses rather than individual contractors, which might limit its applicability for some users.

Contractor Calculator

Contractor Calculator is an online resource that offers a range of tools for contractors, including an IR35 assessment tool.

  • Features: The tool provides a detailed assessment of your IR35 status based on your contract terms and working practices.
  • Benefits: It’s free to use and provides instant determination.
  • Limitations: The tool may not consider all aspects of the IR35 legislation, which could impact its accuracy.


By gaining insights into each tool’s distinct characteristics, advantages, and potential constraints, you can choose the most suitable tool for your unique requirements well.

Key Takeaways

  • Choose the right IR35 assessment tool that suits your specific needs and preferences. Consider factors such as features, user-friendliness, and cost before deciding.
  • Understanding IR35 legislation is crucial for both contractors and businesses. Compliance with the legislation ensures fair taxation and maintains your business’s or contracting services’ integrity.
  • Accurately determining employment status is of utmost importance. Incorrect determinations can lead to financial liabilities and other consequences. Utilize IR35 assessment tools to make informed decisions.
  • The Kingsbridge IR35 Status Tool offers a comprehensive assessment of your IR35 status. It provides detailed reports based on working practices and contract terms. Additionally, they offer IR35 insurance to protect contractors from potential costs incurred during IR35 investigations.
  • Remember that IR35 assessment tools are valuable resources but should not be the sole basis for determining employment status. It’s important to seek professional advice when needed and consider all relevant factors.
  • Stay updated on the latest developments in IR35 legislation and compliance. Regularly review and adjust your practices to ensure continued compliance and mitigate potential risks.

Understanding IR35

Before we delve deeper into the significance of employment status, it’s crucial to grasp the concept of IR35.

What is IR35?

IR35 is a piece of legislation that impacts contractors and businesses across both the public and private sectors. Its primary purpose is to ensure fairness in taxation.

  • Aim: The legislation is designed to ensure that workers, who would have been an employee if they were providing their services directly to the client, pay broadly the same tax and National Insurance contributions as employees. This is often referred to as being inside IR35.
  • Inside IR35 vs Outside IR35: If you’re considered to be inside IR35, it means that you’re seen as an employee for tax purposes. If you’re outside IR35, it means you’re seen as a genuine business and can be paid more tax-efficiently.
  • Who it affects: IR35 affects both contractors and the businesses that hire them. It applies to all sectors and sizes of businesses.

In the following sections, we’ll explore the importance of correctly determining employment status and the implications of IR35 legislation and compliance.

The Importance of Employment Status

Correctly determining your employment status is a critical aspect of tax compliance.

Employed vs Self-Employed

Understanding whether you’re employed or self-employed for tax purposes is crucial. The distinction significantly affects how you pay taxes and National Insurance contributions.

  • Employed: If you’re employed, your employer deducts tax and National Insurance contributions from your wages before you receive them.
  • Self-Employed: If you’re self-employed, you must pay your own tax and National Insurance contributions.

Implications of Incorrect Status Determination

Incorrectly determining your employment status can lead to significant financial liabilities. If you’re deemed to be inside IR35 when you believed you were outside, you could be liable for back taxes, interest, and penalties.

This is where IR35 assessment tools come into play. They help you accurately determine your employment status, providing clarity and peace of mind.

IR35 Legislation and Compliance

Adherence to IR35 legislation goes beyond merely avoiding penalties. It’s about promoting fair taxation and upholding your business’s or contracting services’ integrity.

The Essence of Compliance

Compliance with IR35 legislation is a fundamental aspect of conducting business in the UK. It’s not just about steering clear of penalties but also about:

  • Fair Taxation: Ensuring that all workers pay the correct amount of tax and National Insurance contributions.
  • Business Integrity: Maintaining the reputation and integrity of your business or contracting services.

The Consequences of Non-Compliance

Non-compliance with IR35 can lead to severe consequences. These can include hefty fines and potential damage to your reputation. Therefore, it’s crucial to understand the legislation and ensure compliance. IR35 assessment tools can play a key role in this, helping you navigate the complexities of the legislation.

Conclusion

With the right IR35 tool, you can simplify the process and ensure you’re on the right side of the law. Whether it’s HMRC’s CEST, IR35 Shield, Kingsbridge, Qdos Contractor’s resources, or 34square, each of these IR35 assessment tools offers unique features to help you accurately determine your employment status.

Understanding and complying with IR35 legislation is not just about avoiding penalties. It’s about ensuring fair taxation, maintaining your business’s or contracting services’ integrity, and ultimately, achieving peace of mind.

So, take the time to explore these tools, weigh their pros and cons, and choose the one that best fits your needs. After all, the right tool can make all the difference in your IR35 journey.

Thank you for joining us on this exploration of IR35 assessment tools. We hope this guide has been helpful and wish you all the best in your IR35 journey. Stay compliant, stay informed, and remember, the right tool is out there waiting for you.