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Why one in scope IR35 determination doesn't mean it's game over for your limited company

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Why one in scope IR35 determination doesn't mean it's game over for your limited company

  • Publish Date: Posted almost 3 years ago
  • Author: IR35 Team

​As a limited company contractor, the introduction of IR35 in the Private Sector signalled a change. Those who had opted to move away from Public Sector projects when IR35 was implemented in 2017, felt like they’d hit a wall. There was now no avoiding IR35.

Any contractor receiving an in scope determination on their first assignment post 6th April, will have no doubt considered whether it was time to wind up their limited company.

One assignment however, won’t necessarily mean it’s time to throw in the towel when it comes to running your own company.

Think about the projects you'll be involved with

It’s important to remember that an individual IR35 status determination statement (SDS) is required for each assignment you undertake. Your end client will also need to review and issue a new SDS if there is any material change to how you are engaged. It’s also best practice on longer contracts, for them to review your SDS periodically - to ensure it still accurately reflects how you are operating.

Depending on the types of contracts you usually undertake, and how long each one will likely last, you may find you’ll secure a mix of in and out of scope assignments. For anyone wanting to continue to work through their limited company, deemed payments can be arranged to manage any deductions required.

Undertake a year-end review

Come April 2022, It’s a good idea to look at the assignments you’ve completed within the tax year. Which were in scope and which were outside of IR35? Despite paying the necessary deductions for in scope assignments, did the financial year still bring in the money you’d planned to generate?

Where contractors expect to see a mix of in and out of scope assignments, it’s not always cost beneficial to close their limited companies and switch to umbrella or PAYE payment models.

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