IR35 And Other Company Agreements
These IR35 And Other Company Agreements cover a range of legal and business arrangements under which various professional and other services are provided either by consultants or contractors to clients or by sub-contractors to main contractors.
These documents are designed to be used where the consultant, contractor or sub-contractor to be engaged is a company rather than an individual working as self-employed person. The company may be a personal service or consultancy company, which then provides the services of an individual professional(s) or worker(s) to the client.
There is a risk that the individual(s) engaged by the personal service or other company may be found to be an employee in law by HMRC, a court or a tribunal. The Guidance Notes help to outline that risk, and additional information is available in IR35, Employment and Self-Employment.
If the service provider is contracting as an individual, rather than using a Personal Service Company (PSC), you should instead refer to the Self Employment and Freelancer Contracts .
Whilst the use of a suitable agreement between the client and the company engaged as the consultant, contractor or subcontractor should minimise that risk, and the documents in this group are designed to do so, there is still a risk that the IR35 rules will affect any arrangement whereby a personal service or other intermediary company is used to provide services to a client or main contractor. Legal advice should therefore be taken as appropriate before use of any of these forms of agreement.
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Frequently Asked Questions
I want to engage a contractor who works through their own limited company. Which agreements are these for? +
These agreements are for engaging a consultant, contractor or subcontractor that is a company, usually a personal service company or other intermediary, rather than an individual working as a sole trader. You contract with the company and it supplies the individuals who do the work. If the person is contracting personally in their own name, use the Self Employment and Freelancer Contracts instead.
Does contracting with the worker's company instead of the person protect me from IR35? +
No. Using a company does not switch off the off-payroll working rules, often called IR35. Where an individual provides their services through their own company and would look like your employee if engaged directly, the rules can still apply. A well drafted agreement helps show a genuine business to business relationship, but the day to day reality of the engagement is what counts, so no template can guarantee the outcome.
Whose responsibility is it to decide whether IR35 applies, mine or the contractor's company? +
It depends on your size as the client. Medium and large private sector clients must assess the engagement and give a status determination statement setting out the decision and the reasons. Small clients are exempt, and the worker's own company decides its status and accounts for any tax. From 6 April 2025 a client is small unless it exceeds at least two of: turnover of £15 million, balance sheet total of £7.5 million and 50 employees.
What is the difference between these company agreements and the sole trader contracts? +
These company agreements are for when the service provider is a company, so you contract with the company and it supplies the individuals who do the work. The Self Employment and Freelancer Contracts are for when you contract personally with a self employed individual. The off-payroll rules only bite where an intermediary company sits between you and the worker, so a genuine sole trader engaged in their own name is outside IR35.
Could HMRC or a tribunal still treat the individual as my employee even though I contract with their company? +
Yes, that risk remains. Under the off-payroll rules HMRC can look at the reality of the engagement and treat the individual as employed for tax if the arrangement looks like employment. Separately, an individual can sometimes claim employment or worker rights where the relationship is really one of employment. These agreements are designed to reduce that risk by supporting a genuine business relationship, but they cannot remove it, so take advice where the position is unclear.
