If your client has determined you as inside IR35 either from the start of your contract or partway through, it can feel like a done deal.  But this isn’t always the case – whether your client got it wrong, something’s changed in your working arrangements, or you’ve just been handed an “update” that moves you inside with no explanation, you have the right to appeal an IR35 decision.

This guide explains your options and how to build a strong case.

Who can appeal an IR35 decision?

If you’re a contractor working through your own limited company, and your client is either public sector or medium or large-sized private sector, they are responsible for determining your IR35 status under the Off-Payroll Working rules. You should receive a Status Determination Statement (SDS) at the start of the contract, setting out the IR35 decision and the reasons for it.

By law, the client must have a status disagreement process in place, which requires them to consider your representations and provide a reasoned response if you disagree with their determination. You can appeal an IR35 decision if:

• You were told it was inside at the outset, but you’ve started the work and believe it should be outside.
• Your status has changed midway through without proper justification.
• Your SDS is based on incorrect facts or doesn’t reflect how you actually work.
• You’ve been moved from outside to inside IR35 purely due to a risk-averse policy or blanket decision.

Grounds to appeal an IR35 decision

To appeal an IR35 decision successfully, you need to present evidence that negates your client’s reasoning and demonstrates that you meet the key indicators of being outside IR35. 

You’ll need to be equipped with evidence to support your day-to-day working practices, and a clear understanding of what your written contract actually says. 

Here’s what to focus on:

Control

• Do you have the freedom to determine how the work is carried out, using your own professional judgment and methods?
• Is the client unable to move you around or change your scope of work?
• Do you decide your own hours and working location?
• Are you exempt from client policies and procedures that apply to their staff?

Substitution

• Do you have a genuine right of substitution, with the client only able to refuse if the substitute is not sufficiently qualified to do the work?
• Have you ever used one, otherwise is it practical and plausible in reality?

Mutuality of Obligation (MOO)

• Does the contract state there are no obligations to offer and accept ongoing work?
• Can either party terminate the contract immediately for any reason?
• Are you only paid for periods where you are performing services?

Financial Risk and Independence

• Are you funding any significant costs which are not reimbursed by the client?
• Do you provide your own equipment, tools etc?
• Are you required to fix defective work unpaid in your own time?
• Are you required to carry business insurances to cover negligence?

Independence

• Are you clearly operating as a genuine business and not part & parcel of your client’s internal structure?
• Do you work for other clients concurrently?

You will need to include contracts, evidence of working practices, any written correspondence, and real-life examples to support your case.

Once you’ve submitted your formal appeal, your client is required to respond within 45 days – either by confirming their original IR35 determination or issuing a new SDS with a revised outcome. There are no limits on the number of times you can appeal, but the client is only required to consider new representations.   

What if you’re working through an umbrella company?

If you have been working through an umbrella from the outset as a condition of the engagement, there is no official appeal process in that situation because IR35 doesn’t technically apply.  

Why? Because you’re classed as an employee of the umbrella company. In this situation, the client has no obligation to consider your IR35 status under the Off-Payroll Working rules, or issue an SDS.

But all may not be lost, and you should still check:

• Were you forced to move to an umbrella part-way through a contract due to a change in the client’s position?
• Were you ever in receipt of an SDS confirming the client had determined the engagement as inside IR35 which is what prompted the umbrella route?

If you have answered yes to the above, then there may be scope to revisit how the rules were applied and you could still be covered by the formal IR35 status disagreement process.

In many cases, our IR35 SOS Appeal Service has helped contractors challenge poor processes and even return to limited company working where justified.

Need help to appeal an IR35 decision?

We can help clarify where you stand – our IR35 SOS Appeal Service is designed specifically for contractors who believe they’ve been wrongly placed inside IR35 and we have successfully challenged hundreds of determinations since the Off-Payroll Working rules came into effect for the private sector in 2021. 

Whether it’s supporting you in making your first appeal or in challenging a decision further if a previous appeal has been unsuccessful, you don’t have to go it alone.

 Browse our full range of services for contractors here.