Spring Statement 2025: A Timely Reminder to Brush Up on IR35 Compliance

By Rick Hughes

The Spring Statement 2025 may not have delivered direct updates to the off-payroll working rules, but the message from Chancellor Rachel Reeves was loud and clear: HMRC is ramping up its compliance and enforcement efforts across the board.

With 500 additional compliance officers, 600 new debt recovery staff, financial incentives for whistle-blowers, and a 20% targeted increase in tax fraud prosecutions, the direction of travel is obvious.

For contractors and clients operating under IR35, this is as good a time as any to revisit compliance processes, check your documentation, and make sure your house is in order.

IR35 Refresher: Key Pillars of Compliance

Here are the core tests HMRC considers when determining whether a contractor is genuinely self-employed:

• Supervision, Direction & Control: Does the client control how, when, and where the contractor works?
• Substitution: Can the contractor send someone else to do the work?
• Mutuality of Obligation: Is there an expectation of ongoing work beyond the current assignment?
• Financial Risk: Does the contractor take on any commercial risk, like correcting mistakes at their own expense?
• Part & Parcel: Is the contractor integrated into the organisation like an employee?

“Contract is King”… And Still Reigns Supreme

While day-to-day working arrangements certainly matter when assessing employment status, the recent high-profile case of Phil Thompson v HMRC was a clear reminder that the written contract plays a crucial role. In this case, the contract was not robust enough to support a claim of true independence, despite the contractor’s self-employed status. The result? A £300,000 IR35 liability.

This just goes to show that a strong, well-worded contract that genuinely reflects the working relationship is a contractor’s first line of defence.

Only Small Changes Needed

In my January article, I noted that 84% of the contract requirements Corecom was instructed on in January 2025 had been assessed as outside IR35, a significant rise from 66% in the same period in 2024. This upward trend has continued into the year, suggesting a more business-friendly and pragmatic approach to contractor engagement in tech. Overall, what we’re seeing is encouraging: clients and candidates alike are showing positive intent and a willingness to engage compliantly and truly behave like customers requiring business services and suppliers carrying out those services. But there are always small behavioural or process tweaks that can further strengthen the compliance position, and that’s where good IR35 housekeeping really makes a difference.

IR35 Housekeeping Tips for Contractors and Clients

IR35 compliance isn’t just about ticking legal boxes, it’s about behaviours, perceptions, and commercial fingerprints that show whether someone is operating as a business or as a disguised employee.

FOR CONTRACTORS:

• Create a website and LinkedIn profile for your Ltd Company
• Use a business email address (not Gmail/Hotmail)
• Use a company email signature with registration/VAT details
• Send formal proposals or SoWs, not CVs
• Do briefing or discovery calls, not interviews
• Invoice based on milestones or deliverables, where possible
• Keep a project history portfolio (not a traditional CV)
• Work with multiple clients where possible
• Take out business insurance (PI, PL)
• List your business on public directories (e.g. Google, Companies House)
• Take ownership for fixing mistakes at your own cost

FOR CLIENTS:

• Avoid giving contractors job titles or org chart inclusion
• Don’t send them to appraisals or HR-led reviews
• Use SoWs, not job specs
• Refrain from inviting them to team socials or internal events
• Allow autonomy in working hours and location
• Avoid assigning line management duties over perm staff
• Avoid daily stand-ups unless clearly framed as project updates
• Ensure timesheets are used for billing verification, not time tracking
• Keep contracts under periodic review, especially if scope changes
• Use the right language: “external consultant”, not “temp” or “freelancer”

Disclaimer: These are practical suggestions for good compliance hygiene based on Corecom‘s experience in the market. They do not constitute legal advice. For formal legal guidance, we recommend consulting a qualified professional. All actions taken should reflect the true nature of the working arrangement.

How Corecom Can Help?

At Corecom, we’ve helped clients navigate IR35 since the 2021 reforms. Our UR35 Connect solution supports organisations in managing contractor engagements compliantly, without adding unnecessary risk or complexity.

• IR35 Protect An insured, online status determination platform that protects all parties in the supply chain.
• Corecom Projects A deliverables-based, Statement of Work solution managed by a Technical Engagement Manager.
• Payroll Outsourcing Outsource the payroll of your direct contractors, removing your fee-payer tax liability and improving cash flow.

Now is the time for good IR35 housekeeping. Whether you’re a contractor or a client, make sure your practices reflect your intentions – before HMRC comes knocking.