IR35 continues to be one of the most challenging areas for consultants working in the UK. The off-payroll working rules determine whether a consultant is genuinely self-employed or should be taxed as an employee for a specific engagement. Since the reforms applied to the private sector, both consultants and clients face increased scrutiny from HMRC. Even experienced professionals can make mistakes that put them at risk of failing an IR35 assessment. Understanding these mistakes is essential for maintaining compliance and avoiding unexpected tax liabilities. Many consultants choose to work with compliance-focused payroll providers such as The Infinity Group to reduce risks and ensure their working arrangements remain clear and compliant.

Relying Only on the Written Contract

One of the most common mistakes Consultancy ir35 make is assuming that the written contract is enough to prove they are outside IR35. While a well-written contract is important, HMRC focuses heavily on the actual working practices rather than the agreement alone. If day-to-day working behaviours reflect employment rather than self-employment, the contract carries less weight.

To avoid this mistake, consultants need to ensure their working practices match what is stated in the contract. This includes demonstrating independence, avoiding employee-like behaviour, and maintaining professional distance. Regular reviews of both contracts and working arrangements help ensure consistency.

Not Understanding Control and Supervision

Control is one of the key tests used by HMRC to determine IR35 status. A consultant who is under direct supervision, direction, or control of the client is more likely to be viewed as an employee. Many consultants unknowingly accept instructions or submit to oversight that resembles an employment relationship.

To stay compliant, consultants should maintain control over how they deliver their services. The client can specify project outcomes, but the consultant should retain autonomy over the methods and approach. The Infinity Group often advises consultants on keeping clear boundaries that reflect genuine contractor status.

Accepting Mutuality of Obligation Without Realising

Mutuality of obligation refers to the expectation that the client must provide work and the consultant must accept it. This type of ongoing obligation is characteristic of employment and can push engagements inside IR35. Some consultants do not recognise when mutuality exists in their projects.

Consultants should ensure their contracts clearly show that each project or task is separate and that the client is not obliged to provide ongoing work. They should also avoid agreements that make them appear part of the client’s permanent workforce.

Using Company Equipment or Being Treated Like Staff

Another mistake consultants make is accepting treatment similar to employees. If a consultant uses client equipment, attends staff meetings, receives benefits, or is integrated into internal teams, HMRC may view them as an employee for tax purposes.

To stay outside IR35, consultants should use their own equipment whenever possible, avoid perks or benefits, and maintain professional separation. They should be treated as external specialists rather than internal staff.

Not Demonstrating the Right of Substitution

The right of substitution is a key indicator of self-employment. If a consultant is personally required to carry out the work and cannot send someone else, HMRC may consider the relationship to be one of employment. Many consultants fail to protect this right in their contracts or working practices.

Even if a substitution is unlikely to happen, the contract should clearly allow it. Consultants should demonstrate they are responsible for resourcing the work they deliver. A valid substitution clause supported by real working practices strengthens an outside IR35 position.

Failing to Keep Evidence of Working Practices

Some consultants fail to collect evidence of their independent working arrangements. This makes it harder to defend an IR35 investigation, which may look back several years. Evidence can include correspondence, project scope documents, invoices, and proof that the consultant controlled their work.

Keeping a clear audit trail of how work is delivered is essential. Professional payroll and compliance services like those provided by The Infinity Group help consultants maintain accurate documentation.

Misunderstanding IR35 Status Determination Statements

Since the IR35 reforms, medium and large private sector clients are responsible for issuing a Status Determination Statement. Many consultants make the mistake of accepting an inaccurate SDS without challenging it, even when they believe it does not reflect the true working practices.

Consultants have the right to ask for clarification or challenge an incorrect determination. Engaging in a professional and well-supported review process helps protect the consultant’s status and reduces the risk of incorrect tax assessments.

Failing to Review Each Contract Separately

Consultants often assume that once they are considered outside IR35 for one role, the same status applies to all future roles. This is incorrect. IR35 status is determined on a contract-by-contract basis. Different clients, roles, and projects may require different assessments.

Consultants should review every new contract and working arrangement individually. Even small changes in responsibility, location, supervision, or project scope can affect IR35 status.

Not Seeking Expert Support

IR35 legislation is complex, and HMRC guidance evolves over time. One of the biggest mistakes consultants make is navigating the rules alone without seeking professional advice. Misinterpreting criteria or making assumptions can lead to costly errors.

Working with specialists who understand IR35 can help reduce risk and ensure compliance. The Infinity Group provides payroll and compliance support designed to help consultants operate confidently, with clear guidance on IR35 and HMRC rules.

Choosing the Wrong Working Structure

Some consultants operate through a limited company without fully understanding their IR35 obligations. Others switch to umbrella companies without checking whether the provider is compliant. Using non-compliant payroll structures can expose consultants to significant tax risks.

Consultants should carefully select a working structure that matches their circumstances and risk tolerance. Umbrella solutions, for example, offer a simple way to avoid IR35 issues altogether while remaining fully compliant. The Infinity Group supports consultants by offering compliant payroll solutions that align with HMRC rules.

Conclusion

With increasing scrutiny from HMRC, consultants must take IR35 seriously and avoid common mistakes that could place them inside the legislation. Errors related to control, mutuality of obligation, substitution, record-keeping, and contract reviews can all lead to compliance problems. Understanding these risks and maintaining clear, independent working practices is essential. By seeking expert support and regularly reviewing contracts and working arrangements, consultants can protect themselves from unexpected tax liabilities. The Infinity Group continues to support consultants with reliable payroll solutions and compliance guidance, helping them navigate IR35 and operate with confidence in the UK contracting landscape.