IR35 continues to be one of the biggest compliance challenges for contractors in the UK. With HMRC increasing enforcement and sharpening its assessment methods, even experienced contractors can make mistakes during an IR35 check. These errors can lead to penalties, unexpected tax bills, and stress that could have been completely avoided with the right preparation. Understanding how IR35 works—and what HMRC looks for—gives contractors a much stronger position when an enquiry begins.

In this guide, contractors will find the most common mistakes made during IR35 check  and practical steps to avoid them. Professional payroll and compliance support, such as that provided by The Infinity Group, can play a key role in reducing risk and helping contractors remain compliant.

Misunderstanding the Importance of the Contract

One of the most common IR35 mistakes is treating the written contract as a formality rather than a crucial compliance tool. HMRC places significant weight on what the contract states about working practices, substitution rights, mutuality of obligation, and control.

A poorly written contract can misrepresent the true working relationship. For example, wording that suggests employment-style control or a lack of substitution options can push a contractor inside IR35, even if, in practice, the work is performed more independently.

To avoid this, contractors must ensure every contract they sign accurately reflects their actual day-to-day working conditions. If there are clauses that resemble permanent employment, they should be corrected before any work begins. The Infinity Group helps contractors review contracts to ensure they match HMRC expectations and reduce the risk of compliance issues.

Ignoring Actual Working Practices

Another major mistake is assuming that HMRC only checks written agreements. In reality, the tax office often focuses more on how the work is carried out in practice. A contract may say the contractor has control over how and when work is completed, but if the client dictates schedules, methods, or procedures, HMRC will treat the role as inside IR35.

Working practices must always align with the contract. If conditions change over time, contractors should request contract updates or written confirmations from clients. Regular reviews ensure the paperwork matches reality, which is critical during an IR35 check.

Failing to Keep Evidence of Independence

HMRC investigations often involve reviewing proof of business independence. Many contractors make the mistake of not keeping adequate records, which weakens their IR35 position. Evidence that supports genuine self-employment includes:

Business insurance
Invoices and payment records
Marketing activity such as a website or LinkedIn profile
Professional equipment owned by the contractor
Multiple clients or attempts to find new clients
Project-based work plans

Without supporting documentation, HMRC may assume the working arrangement resembles employment.

To avoid this, contractors should keep organised records showing they operate as a legitimate business. The Infinity Group often advises contractors on maintaining proper documentation to support an outside IR35 position.

Overlooking the Importance of Substitution

One of the strongest indicators of being outside IR35 is the right of substitution. However, many contractors misunderstand this requirement. Simply having a substitution clause in the contract is not enough; it must be a genuine right that could realistically be exercised.

If a client insists on approving substitutes or makes replacement impossible, HMRC may view the clause as meaningless. Contractors must ensure substitution rights are clear, practical, and consistent with working practices.

In cases where substitutes have been used in the past, contractors should keep records, as this greatly strengthens their position during an IR35 check.

Using Tools or Equipment Provided by the Client

While not the single determining factor, equipment ownership plays a role in IR35 assessments. Contractors who rely on client-provided laptops, software, or tools may appear more like employees than self-employed professionals.

Wherever possible, contractors should use their own equipment. This demonstrates independence and helps support an outside IR35 status.

Not Understanding the Role of Control

Control is central to IR35. A contractor who is controlled by the client regarding how, when, or where work must be done is at higher risk of being classed as inside IR35.

Mistakes often include:

Accepting fixed working hours
Allowing the client to direct tasks in detail
Following employee-style procedures without questioning them

A contractor should maintain autonomy over how work is completed, including the right to decide methods, deliverables, and working times, provided the project is delivered.

Not Preparing for an IR35 Check in Advance

Many contractors only think about IR35 when HMRC begins an inquiry. By then, it may be too late to correct issues with contracts or working practices.

Being prepared is the best defence. Contractors should regularly assess their IR35 status, review documentation, and ensure all business practices align with self-employment. Professional payroll and compliance support from organisations like The Infinity Group can help contractors remain ready for potential checks.

Assuming the Client Is Responsible for Everything

Although medium and large clients are required to conduct their own IR35 assessments under the off-payroll working rules, many contractors mistakenly believe this removes all personal responsibility.

Contractors can still be affected if the client makes an incorrect status determination. Disputing a determination, asking for clarification, and keeping personal evidence remain essential.

Contractors working with small clients must continue to assess their own IR35 status, which requires an even deeper understanding of the rules.

Choosing Non-Compliant Payroll Options

Some contractors unknowingly work with non-compliant payroll schemes that appear attractive but put them at risk of IR35 issues and HMRC penalties. These schemes may promise unusually high take-home pay or use aggressive tax avoidance structures.

To avoid these risks, contractors should only work with compliant payroll providers. The Infinity Group offers fully compliant CIS, construction payroll, and umbrella payroll solutions designed to meet HMRC standards and reduce exposure to IR35 problems.

How Contractors Can Avoid IR35 Mistakes

Avoiding mistakes during an IR35 check is a combination of preparation, documentation, and working with the right professionals. Contractors should:

Review contracts regularly
Ensure working practices match written agreements
Keep consistent evidence of business independence
Understand the importance of control and substitution
Avoid high-risk payroll schemes
Seek expert advice when needed

Contractors who use reliable payroll and compliance services, such as those provided by The Infinity Group, are better protected against IR35 issues and can operate with confidence.

Conclusion

IR35 compliance is a long-term responsibility, not something to consider only when HMRC conducts a check. Contractors who understand the rules, maintain proper documentation, and avoid common mistakes have a far stronger chance of successfully passing an IR35 assessment. With increasing government focus on tax compliance, this preparation is more important than ever.

Working with a trusted provider like The Infinity Group helps contractors navigate IR35 confidently, ensuring their payroll, contracts, and compliance procedures meet HMRC requirements. This reduces risk, protects income, and allows contractors to focus on delivering quality work without worrying about unexpected tax challenges.