IR35 (Off-Payroll Working Rules) – Definition for enterprise companies/businesses
In general, IR35 comes into play when a contractor provides services through an intermediary, such as a personal service company (PSC). The rules are designed to assess whether the working relationship between the contractor and the end client resembles employment. Key factors typically evaluated include the degree of control the client holds over the work, the right of substitution, mutuality of obligation, and whether the contractor operates an independent business. Status depends on the facts of each engagement. Since the 2021 reform, medium and large private-sector organizations, as those terms are defined in the Companies Act 2006, are generally responsible for producing a Status Determination Statement (SDS) for each contractor engagement.
How enterprise organizations use IR35 (Off-Payroll Working Rules) for off-payroll compliance risk in the UK
Enterprises encounter IR35 when sourcing services from individuals who work through their own intermediaries in the UK. Their contingent workforce programs may record the relevant engagement details, status determinations, and changes to working arrangements.
IR35 (Off-Payroll Working Rules) use cases
Determining tax treatment for a UK-based contractor before an engagement starts
Reassessing status when a contractor’s day-to-day working pattern changes mid-engagement
Building a documented determination process across a large volume of UK contractor engagements
How Lifted handles IR35 (Off-Payroll Working Rules)
Lifted supports contingent workforce programs with engagements in the UK by helping route each engagement to the right structure, IC, AOR, EOR, or umbrella arrangement, based on how the role actually operates, and by keeping standardized documentation for each determination. This is part of Lifted’s broader compliance operation: 20,000+ worker classifications processed per year across 180+ countries, with the UK as one of Lifted’s core EMEA markets.
Frequently asked questions
Who decides IR35 status?
Since April 2021, medium and large private-sector businesses in the UK are usually responsible for determining a contractor’s IR35 status, rather than the contractor. Public-sector clients have carried this responsibility since 2017. Small companies remain an exception, where the determination stays with the contractor’s own intermediary.
Does IR35 apply to sole traders?
The off-payroll working rules generally apply when a contractor works through an intermediary, such as a limited company. They typically don’t apply to a genuine sole trader contracting directly without an intermediary. Standard employment status rules can still apply.
What's a Status Determination Statement (SDS)?
An SDS is the documented outcome of an IR35 assessment for a specific contractor engagement, along with the reasoning behind it, which UK end clients are generally required to produce and share with the contractor and the fee-payer.
