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IR35 Business Entity Tests

The business entity tests help freelance contractors self-assess the overall risk that the IR35 provisions will apply to their business.

They are made up of a series of weighted questions whose answers are allocated a plus or minus score.

The totalled score determines whether the business risk in relation to IR35 is low, medium or high.

The tests are voluntary and should be retaken if circumstances change. Contractors taking the tests should gather and retain evidence to support their answers.

However, the tests only establish the IR35 risk of the business in general. Contractors must still consider whether IR35 legislation applies to each separate contract regardless of the outcome of the business entity tests. The tests themselves cannot be used to determine whether IR35 applies to any particular engagement because:

- the risk band only indicates the likelihood of HMRC checking whether IR35 applies, and

- the tests only consider the business arrangements overall, and

- IR35 legislation must be applied to each engagement separately.

So what should you do?

Getting your contract and working practices reviewed is key. Check out our partners Qdos who provide specialist Contract Review and Working Practices Review services.


This information is for general information only. We take no responsibility for any action taken or refrained from in consequence of its contents. Always seek our professional advice specific to your circumstances before acting.