This is where Linx can support. By reviewing current agency worker arrangements, supplier processes and workforce controls, our specialist team help businesses identify potential AWR compliance gaps before they become legal, financial or reputational issues. 

Why AWR compliance becomes harder with multiple agency suppliers  

The Agency Workers Regulations (AWR) give temporary workers the right to equal treatment in certain areas after completing a 12-week qualifying period in the same role. While the legislation itself is relatively straightforward, managing compliance across large numbers of agency workers is far more challenging. 

Many organisations rely on several recruitment providers to meet workforce demands. While this approach can improve access to the right skills, it can also create complications for recruitment supplier management and agency workforce compliance. Without effective oversight, organisations can face compliance risks, inconsistent worker treatment and a lack of visibility across their workforce supply chain. 

Each supplier may operate: 

• Different recruitment systems 

• Different compliance processes to manage Day 1 and After week 12 entitlements 

• Different assignment tracking methods 

• Different approaches to data quality and reporting 

The result is often fragmented information, making it difficult to maintain consistent workforce supply chain compliance across the entire temporary workforce without central oversight. 

Key workforce data needed for AWR compliance  

Maintaining effective workforce governance requires more than simply knowing when a worker started an assignment. Organisations need access to accurate and up-to-date information across several areas. 

Comparator information 

Businesses must be able to identify appropriate comparable employees to determine whether agency workers are receiving equal treatment where required under AWR. 

Job role information 

Clear role definitions help ensure workers are classified correctly and assessed against the appropriate comparator group. 

Pay structures 

Accurate information about pay rates and remuneration arrangements is essential when equal treatment provisions apply. 

Working conditions 

Organisations should maintain records relating to working hours, annual leave entitlements and other relevant working conditions. 

Assignment records 

Comprehensive assignment histories help demonstrate compliance and support ongoing compliance assurance activities. 

When this information is spread across multiple suppliers, maintaining visibility can become extremely difficult. 

AWR compliance risks caused by fragmented supplier management 

Many compliance issues arise not because organisations intentionally fail to meet their obligations, but because information is fragmented across a complex recruitment supply chain. 

Common risks include: 

• Inconsistent worker treatment between suppliers 

• Missing or inaccurate assignment data 

• Delays in applying AWR entitlements 

• Incomplete audit trails 

• Increased exposure to non-compliance risk 

A centralised approach creates a single source of truth, enabling better decision-making and more effective supplier oversight. 

How to improve AWR compliance across multiple recruitment suppliers 

Rather than relying solely on internal teams to question suppliers, organisations can benefit from independent support to assess whether supplier responses are complete, consistent and evidence based. An advisor such as Linx can help structure the right questions, review the quality of supplier answers and identify where further scrutiny is needed. 

Businesses may know what they need assurance on, but not always how to verify supplier compliance. Linx can review supplier processes independently and challenge gaps or inconsistencies. This way supplier assurance becomes less about asking a checklist of questions and more about validating whether controls work in practice. 

• Centralised assignment tracking across all suppliers 

• Standardised compliance processes 

• Consistent worker classification methodologies 

• Accurate comparator data management 

• Regular supplier performance reviews 

• Identification of governance gaps 

• Comprehensive audit documentation 

• Recommendations for strengthening controls 

This process becomes easier to evidence when supported by independent oversight. Robust compliance is not just about having processes in place but being able to prove they are being followed. Our specialist team can assess whether processes are consistent and auditable across all suppliers. Independent review helps businesses move from assumed compliance to evidenced compliance, through transparent governance frameworks. 

For transparency, AI has been used during the generation of this article, with every care taken to verify its accuracy. 

further guidance on awr compliance 

In our AWR compliance guide, we break down the regulations in more detail. 

Read the AWR compliance guide

The post AWR compliance when managing multiple recruitment suppliers  appeared first on Linx.

Failures in agency worker compliance can expose organisations to significant legal, financial and reputational risks, making it a critical concern for senior leaders, finance teams, procurement professionals and workforce planners alike. 

As organisations continue to rely on flexible labour models to meet operational demands, understanding and managing AWR requirements has become an essential part of effective workforce compliance and risk management. 

Why Agency Worker Regulations matter across the business 

AWR was introduced to provide agency workers with certain rights and protections when working on temporary assignments. While HR often manages day-to-day workforce administration in coordination with external recruitment agencies, compliance responsibilities extend across multiple functions. 

Procurement teams are often responsible for selecting labour suppliers. Finance teams may approve rates and workforce budgets. Operational leaders control workforce planning and deployment. Each of these decisions can directly impact AWR compliance and the organisation’s exposure to risk. 

When compliance is treated solely as an HR issue, critical gaps can emerge in how agency workers are engaged, monitored and managed. 

Understanding AWR requirements 

The regulations provide agency workers with key rights designed to ensure fair treatment. 

Day 1 rights 

From the first day of an assignment, agency workers typically have the right to: 

• Access to communal workplace facilities and amenities, such as canteens, car parking and childcare facilities 

• Be informed of relevant internal job vacancies 

After Week 12 equal treatment rights 

After completing a 12-week qualifying period in the same role, agency workers may become entitled to equal treatment in relation to: 

• Basic pay 

• Working time provisions 

• Overtime arrangements 

• Certain bonuses and incentives directly linked to work performed 

• Annual pay rises 

This principle of AWR equal treatment is often one of the most complex aspects of compliance, particularly where organisations have multiple job grades, pay structures or assignment types. 

The business risks of non-compliance with AWR 

Organisations that fail to meet agency worker rights obligations may face a range of consequences. 

Employment tribunal claims 

Agency workers can bring claims where they believe their rights under the regulations have been breached. Even where claims are ultimately unsuccessful, investigations and legal proceedings can consume significant management time, cost and resources. 

Back pay liabilities 

Where agency worker pay parity has not been correctly applied after the qualifying period, organisations may face substantial back pay liabilities. These costs can escalate quickly across large contingent workforces. 

Compensation and financial penalties 

Tribunals can award compensation where breaches are identified. Additional financial penalties may apply in cases where deliberate structures have been used to avoid compliance with the regulations. This can include both the hiring business and the agency incurring financial penalties. 

Reputational damage 

Increasingly, organisations are being scrutinised for their employment practices. Poor governance around temporary worker compliance and labour supply chain management can damage employer reputation and undermine stakeholder confidence. 

Who is responsible for AWR compliance? 

It’s a common question organisations ask. One of the biggest misconceptions is that responsibility rests entirely with the recruitment agency. 

In reality, liability can sit with both the agency and the hiring business (known as the hirer). 

The recruitment agency often relies on information supplied by the hiring organisation to determine whether equal treatment requirements apply. If inaccurate or incomplete information is provided, compliance failures can occur despite good intentions on either side. 

This shared responsibility means effective communication and clear governance processes are essential throughout the labour supply chain. As well as a need to have transparent oversight on how a company’s appointed agencies are implementing AWR. 

Common misconceptions that increase compliance risk 

Many cases of non-compliance arise because organisations underestimate the complexity of the regulations. 

“The agency handles everything” 

While agencies play an important role, hirers remain responsible for providing accurate information regarding comparable employees, pay structures and assignment details. 

“AWR only relates to pay” 

Although pay is an important element, AWR covers a much broader range of rights and entitlements. 

“Finding a comparable employee is straightforward” 

Determining appropriate comparator information is often one of the most challenging areas of the legislation. 

Organisations may have multiple employees performing similar roles under different terms and conditions. Identifying the correct comparison and calculating equivalent treatment requires careful assessment and robust documentation. 

Why large workforces face greater exposure 

As organisations scale their temporary workforce operations, compliance complexity increases significantly. 

Potential risk factors include: 

• Multiple recruitment suppliers 

• Different pay structures across sites or departments 

• High volumes of agency workers 

• Frequent changes to assignments 

• Inconsistent workforce data 

• Limited visibility of supplier processes 

Without effective controls, businesses can quickly lose oversight of qualifying periods, comparative decisions and equal treatment obligations. 

This creates substantial temporary workforce risk and can make compliance monitoring difficult. 

Warning signs your organisation may have AWR vulnerabilities 

Businesses should periodically assess whether any of the following warning signs are present: 

• Unclear ownership of AWR responsibilities 

• Inconsistent agency worker rates across similar roles 

• No documented equal rights comparative process 

• No accurate record-keeping on role changes 

• Limited assignment tracking capabilities 

• No independent compliance audits 

• No formal AWR training for line managers 

• Poor information sharing between suppliers and hiring managers 

These indicators may suggest weaknesses in broader labour supply chain compliance and recruitment processes. 

Reducing risk through proactive compliance governance 

Reducing AWR risk starts with clear governance, accurate worker data and a consistent approach to supplier oversight. For many organisations, the challenge is not recognising that compliance matters, but having the time, visibility and independent scrutiny to check whether processes are working effectively in practice. 

This is where Linx can support. By reviewing current agency worker arrangements, supplier processes and workforce controls, our specialist team helps businesses identify potential AWR compliance gaps before they become legal, financial or reputational issues. 

Support can include: 

• Reviewing AWR processes across sites, suppliers and roles 

• Assessing how qualifying periods, pay parity and comparator information are documented 

• Auditing labour supply chain governance and supplier compliance 

• Highlighting areas of legal, financial or reputational risk 

• Helping internal teams establish clearer ownership, reporting and review processes 

With an independent and objective view of workforce practices and supplier management, Linx helps organisations strengthen compliance governance, improve confidence in temporary labour arrangements and reduce the risk of issues emerging later. 

For transparency, AI has been used during the generation of this article, with every care taken to verify its accuracy. 

Further guidance on AWR compliance 

In our AWR compliance guide, we break down the regulations in more detail. 

Read the AWR compliance guide

The post AWR non-compliance puts your business at risk  appeared first on Linx.

The latest report reflects on the ways colleagues, including those working within our Linx operations, have worked together to progress social value initiatives alongside their day-to-day responsibilities. As well as the continued steps the business is taking to advance important areas such as mental health and wellbeing, diversity and inclusion. 

Supporting our communities, people and planet 

The latest report is available to read now on the NRL Group website, and covers the collective progress made to give back to our communities, people and planet in 2025. 

“It’s a privilege to have colleagues within the business that share our commitment to giving back and delivering impactful change. Our 2025 social value report reflects on this progress, and the local programmes that are helping to drive our business forward in a way we can all be proud of.” 

– David Redmayne, NRL Group CEO 

What’s included in the report? 

Within the report we reflect on the many ways colleagues are working together to make a real difference, and the advances we are making as an organisation – and you can read just some of the highlights below. 

Creating a UK best workplace 

We’re proud to have achieved several accolades in 2025 thanks to direct feedback from colleagues about their experience and opinions about working both in our Linx business and the wider NRL Group. This feedback, captured anonymously through Great Place To Work®, went on to secure us positions on a number of UK Best Workplaces™ awards – including for leading the way as an employer committed to development, wellbeing and championing women. 

Match funding charity endeavours 

In 2024 a new company match funding scheme was introduced, that gives teams access to a dedicated pot of finance to increase donations made in recognition of their charity fundraising and volunteering. By matching donations raised by colleagues and teams across the NRL Group, an additional £21,167 in company donations were made to charities that are important to our people. 

Celebrating long service and investment in training 

It’s important to Linx and the NRL Group that we take great lengths to provide training and development opportunities for colleagues, helping them to advance in their roles whilst also ensuring initiatives are in place to support them inside and outside of work. 

We’re proud to see this investment reflected when it comes to celebrating long service awards, with 34% of colleagues having been with the NRL Group for more than 10 years. Within our Linx operations, the picture is even more impressive – considering we are celebrating 10 years in business in 2026, 63% of colleagues have been with us for more than 5 years having been instrumental to how our company has evolved. 

Supporting our Armed Forces 

We’re a proud advocate of the Armed Forces community and the benefits they bring to a company when looking for a new career outside of the forces. Many colleagues within Linx and the NRL Group come from a military background, and through our Employer Recognition Scheme Silver award we’re committed to supporting our Armed Forces personnel in any way we can. 

This includes our annual support for the Poppy Appeal, as Linx colleagues volunteer their time to host a stall at their local supermarket in Wigan each year. It’s the fifth year we’ve taken part in this important fundraising campaign and it’s a privilege to be able to recognise this initiative by making company donations in lieu of colleague volunteering hours. 

Progressing our carbon neutral renewal 

We understand that net zero is a collective effort, and everyone must be making proactive steps to make long-lasting changes on their environmental impact. As a business we must challenge our own carbon emissions, and we’re proud to join the NRL Group in offsetting our footprint by investing in meaningful carbon credit projects. In 2025 this included financial investment in an afforestation project in Uruguay that is helping to combat climate change whilst offsetting unavoidable emissions from our 2024 operations. This ensures we maintain our important Carbon Neutral International Standard. 

About the NRL Group 

Linx is a part of the NRL Group, with a shared mission to deliver the solutions and services organisations need to ensure they can stay ahead of the competition and drive innovation. Within our own operations we’re pleased to work side-by-side with leading companies in their sectors to manage their workforces, projects and compliance. Whilst across the wider NRL Group, businesses have delivered Recruitment, Non-Destructive Testing, Rail maintenance and Language solutions to their client base for decades. 

The post Delivering social value in 2025  appeared first on Linx.

This blog explores the key areas businesses can get wrong when managing the paperwork and compliance surrounding IR35. 

Understanding the IMPORTANCE of record keeping 

HMRC expects businesses to demonstrate reasonable care in their employment status assessments, so it’s crucial that businesses don’t underestimate the importance of storing evidence. If your IR35 status assessments are challenged, you’ll need to provide a comprehensive evidence pack showing how each challenged decision was made. Poor or incomplete records can significantly impact your ability to satisfy HRMC’s challenges, which could result in financial penalties and reputational damage. 

Before we consider where organisations may go wrong, let’s consider what best practice looks like when managing IR35 record keeping: 

• Centralise records: Use a secure, accessible system for storing all IR35-related documents. 

• Be thorough: Capture both contractual and practical evidence for each engagement. 

• Stay up-to-date: Regularly review and update your policies, procedures, and evidence packs. 

• Involve the right people: Ensure line managers and those with direct knowledge of the engagement are involved in status assessments. 

• Audit regularly: Periodically review your IR35 compliance processes and records to identify and address any gaps. 

IR35 specific policies and procedures 

Start by ensuring you have clearly defined and documented IR35 specific policies and procedures. These should be stored in a file location that is easy for stakeholders involved in the management of IR35 to access.  The documentation should outline how your business approaches employment status assessments, who is responsible for making decisions, and how you ensure ongoing compliance. Policies should cover: 

• The use of assessment tools (such as HMRC’s CEST) – with clear guidance on how colleagues should utilise them 

• The process for issuing and communicating Status Determination Statements (SDS) 

• How disagreements and disputes are handled 

• The frequency of ongoing monitoring and re-assessments 

Best practice: 

Having these policies in writing can help demonstrate to HMRC that your business takes IR35 compliance seriously and applies a consistent approach. It’s crucial though that this documentation is regularly reviewed and updated in line with periodical reviews HMRC make on the off-payroll working rules. This can be difficult to stay on top of, so it’s worth considering engaging an external advisor to support your business with this and highlight changes you need to make. 

Employment status assessments and supporting evidence 

Each contractor engagement must be assessed individually. Your record keeping should include: 

• Completed IR35 status assessments, with detailed reasoning for each decision 

• Supporting evidence such as written contracts, statements of work, and letters of engagement 

• Notes on the contractor’s actual working practices, gathered from line managers or direct supervisors 

Best practice: 

It’s not enough to rely on generic role-based assessments. HMRC expects to see that you’ve considered the specific circumstances of each engagement, referencing key employment status indicators such as control, substitution, and mutuality of obligation. 

It’s crucial that the people undertaking status determinations have a comprehensive understanding of HMRC’s IR35 guidelines, so seek an external training provider if needed. 

Written contracts and statements of work 

A written contract should be provided for every contractor assignment. If these are issued by agencies in your recruitment supply chain, ensure that they are clear, up-to-date, and accurately reflect the reality of the engagement. Include: 

• The scope of work (often detailed in a statement of work) 

• Payment terms 

• Any clauses on substitution, control, and termination 

Best practice: 

Letters of engagement can also help clarify the nature of the relationship. However, remember that HMRC will look beyond the contract to actual working practices, so your records should include evidence that these match what’s documented. If you’re unsure whether your working practices are a true representation of our contractual terms, then consider working with an external IR35 specialist to undertake an audit of your supply chain. 

Ongoing monitoring and re-assessments 

The IR35 status for each contractor cannot be a one-off decision that is never revisited. Circumstances can change – new projects, alterations to working practices, or contract amendments may all affect the contractor’s tax implications. Your IR35 specific policies and procedures should incorporate: 

• Regular reviews of ongoing engagements 

• Re-assessments when there are material changes 

• Documentation of all reviews and any resulting changes to status 

Best practice: 

Keeping a log of these activities shows HMRC that you are proactive in maintaining compliance and helps to demonstrate reasonable care has been taken. If you’re unsure when you need to reassess IR35 status determinations or want to develop an IR35 strategy that proactively mitigates non-compliance risks, then seek the support of an independent IR35 consultancy service. 

Records of training and internal communications 

Demonstrating that your staff understand IR35 is another key part of evidencing to HMRC that your business is taking off-payroll working seriously. Keep records of: 

• Training sessions attended by HR, procurement, and line managers 

• Internal communications about IR35 processes and updates 

• Guidance documents or checklists provided to staff 

Best practice: 

These records help prove that your business is taking reasonable care and that decisions are made by informed personnel. It’s crucial however that the information included in staff training is accurate, up-to-date and provides the right level of detail needed for each participant. Training requirements may differ depending on the stakeholder’s role, so partnering with an external provider can ensure multiple levels of training is developed around your internal processes. 

Handling disagreements and disputes 

If a contractor or deemed employer disagrees with an IR35 status determination, you must have a process for handling disputes. Keep records of: 

• The disagreement, including reasons and supporting evidence provided 

• Your review of the disagreement, referencing HRMC’s employment status indicators 

• The outcome and any changes made to the status determination 

Best practice: 

If a disagreement is raised without reasons, you are entitled to reject it, but you should document this decision. Where you plan to uphold the existing SDS, this brings into importance the need for clear record keeping that you can draw on to evidence that the determination was accurately created based on a clear understanding of working practices. If you have any concerns about whether your disagreement process will stand up to scrutiny, then seek the advice of an IR35 expert to mitigate potential risk to your business. 

For transparency, AI has been used during the generation of this article, with every care taken to verify its accuracy.

The post Revisiting IR35 when it goes wrong: record keeping and evidence appeared first on Linx.

Understanding Status Determination Statements

Getting IR35 compliance right is non-negotiable for businesses engaging contractors, and the Status Determination Statement (SDS) sits at the heart of this process. The SDS is the formal document that outlines a business’s IR35 decision for each contractor, and errors here can have serious legal and financial consequences.

Key areas to get right

Below, we break down the key areas of the SDS where businesses most often go wrong, and how to avoid these pitfalls. But first, let’s recap on the guidance around Status Determination Statements:

• An individual SDS is needed for each contractor, for every assignment they undertake
• Their working practices must be taken into consideration
• Where there is a material change in their engagement, a new SDS must be created
• The end client is responsible for making the SDS
• A client-led disagreement process must be in place should contractors or any parties in the chain contest the SDS

Assigning Responsibility to the Wrong Person

The SDS must reflect the true working practices between the contractor and the business, so it’s crucial the person making the determination is well informed.

Common Mistakes:

• Delegating the SDS to HR or procurement teams who lack detailed knowledge of the engagement

Delegating the Status Determination Statement (SDS) to HR or procurement teams who lack detailed knowledge of the engagement is risky because they may not fully understand the contractor’s working practices or the specifics of the contract. This can lead to inaccurate IR35 assessments, which may not meet HMRC’s requirement for reasonable care. If the SDS is flawed, the business could become liable for unpaid tax and National Insurance.

• Failing to involve line managers or direct supervisors who understand the contractor’s role and working environment

Involving line managers or direct supervisors in IR35 status determinations is crucial because they have the clearest understanding of the contractor’s day-to-day role and working environment. Without their input, key details about control, supervision, and working practices may be missed, leading to inaccurate assessments. This increases the risk of non-compliance and a hefty increase in disagreements to manage.

Best Practice:

Ensure the person responsible for the SDS is familiar with the contractor’s work, ideally a line manager or project lead, and seek additional information from other parties if needed. This helps guarantee that the information provided is accurate and defensible if HMRC reviews the determination.

Take time to review your current IR35 approach to ensure you have the right people in place who are best positioned to make accurate determinations. If needed, call on the advice of an independent IR35 specialist to assess your existing processes and identify risks of non-compliance.

Misunderstanding or misinterpreting assessment questions

Whilst companies are not mandated to use HMRC’s CEST (Check Employment Status for Tax) tool to make Status Determination Statements, if used correctly and ethically then they will stand by determinations it produces. The tool requires users provide clear, well-informed answers to questions about control, substitution, mutuality of obligation, and other key IR35 factors. Misunderstanding these questions can lead to incorrect status decisions.

Common Mistakes:

• Guessing at answers to complex compliance questions

If the person making the determination is not clear on how to respond to certain questions, they should pause the assessment and seek further clarity before proceeding. This demonstrates why it’s important that personnel such as line managers are consulted throughout the SDS process, to ensure individual working conditions are taken into account.

• Assuming knowledge instead of seeking clarification, especially when legal or technical language is used

HMRC provide comprehensive guidance on what constitutes key areas of IR35, such as substitution, direction, and mutuality of obligation, so it’s important that the person making determinations understands these and can apply them to individual circumstances.

• Providing incomplete or vague responses that don’t align with actual working practices

If an SDS is created without fully understanding the working practices, there is a high likelihood that the contractor or another party in the engagement chain will dispute its accuracy – creating additional administration when further investigation is needed.

Best Practice:

If any aspect of the SDS is unclear, seek guidance from internal experts or external advisors. Encourage a culture where staff feel comfortable asking questions rather than making assumptions. This not only improves the accuracy of the SDS but also strengthens your compliance position.

Consider whether additional staff training is needed, and the benefits of working with an independent consultant to ensure your stakeholders remain up-to-date with changes in legislation.

Inaccurate or incomplete description of working practices

The SDS should accurately reflect how the contractor actually works, not just what is stated in the contract. HMRC will look at real working practices during an investigation.

Common Mistakes:

• Overlooking differences between what’s on paper and what happens day-to-day

To create accurate Status Determination Statements, the contractual terms that are written on paper need to reflect what happens in real life. If they vary, this puts the accuracy of determinations at risk. That’s why regular review of working practices is important, to update contractual terms where needed and ensure that there isn’t a disconnect between what’s documented in the contract and how they are expected to operate in their role.

• Failing to update the SDS when working practices or responsibilities change during the contract period

If there are material changes to how the contractor is engaged, then the SDS needs to be fully reviewed, and a new one issued if needed. This includes changes to working practices and key responsibilities. For example, if a supervisor leaves towards the end of a project and it’s deemed that the engineer can complete the outstanding work without hiring a replacement, does the business expect the engineer to fulfil any new managerial responsibilities?

• Making blanket determinations or role-based assessments based on their job discipline or title, without understanding the day-to-day working practices

HMRC advises against role-based status determination statements because they don’t take into account the individual circumstances of each contractor. This blanket approach fails to meet their legal requirement of taking reasonable care under IR35, which could make the status determination invalid. Instead, each contractor’s working practices and contract terms must be assessed individually to ensure compliance.

Best Practice:

Regularly review and update the SDS to ensure it matches the current working relationship. Collect feedback from those working directly with the contractor to capture the true nature of the engagement and schedule reviews when there is a change in management.

This is an area that businesses can fall foul of, so it’s worth considering whether you would benefit from engaging an external company to undertake an independent review of your active determinations.

Neglecting ongoing review and reassessment

Where contractors are engaged on long-term contracts, working practices can change over time, and the SDS must be updated accordingly. A one-off assessment isn’t enough to ensure compliance with the off-payroll working rules.

Common Mistakes:

• Treating the SDS as a one-time exercise

Anytime there is a material change, the SDS needs to be fully reviewed to ensure it still accurately reflects the working practices. It’s not a process that can be completed once and then filed and forgotten about, it needs to remain a live document throughout the contractor’s assignment.

• Not reviewing determinations when a contractor’s role, location, or reporting lines change

A new manager may have a different way of working, or may not be as familiar with IR35 to know when they are making significant changes that should prompt a review of the contractor’s SDS. Similarly, changes in location and responsibilities should trigger an SDS review.

• Not issuing a new SDS when the contractor starts a new assignment

Under IR35 guidelines, there is no issue with rehiring a contractor to complete a second assignment for you. provided there is no mutuality of obligation – an expectation on either side that further work will be completed. If you do decide to engage the support of a contractor on additional assignments, then you will need to complete a new SDS. Whilst their working practices may not have changed, you still need to evidence that you have undertaken an appropriate assessment and issued an accurate determination.

• Overlooking the need for periodic reassessment

Regardless of whether material changes have been brought to your attention, to remain compliant it’s important to review Status Determination Statements periodically to ensure they are still accurate.

• Mismanaging status disagreements

Contractors and parties within the engagement chain, such as the recruitment agency retaining the contractor, have the right to dispute an SDS if they feel it is not accurate. HMRC states that a client-led disagreement process must be in place, and businesses must respond within 45 days. All evidence provided must be reviewed alongside HMRC’s employment status indicators, and the original SDS must remain in place whilst the dispute is being evaluated.

Best Practice:

Implement a schedule for regular review of all SDS determinations. Reassess status whenever there are changes to contracts, working practices, or project scope.

To ensure determinations are made correctly when making reassessments, we’d recommend ensuring that your stakeholders have up-to-date knowledge on any changes to the off-payroll working rules that HMRC periodically publish. Working with an external IR35 specialist can help your business stay informed.

For transparency, AI has been used during the generation of this article, with every care taken to verify its accuracy.

The post Revisiting IR35 when it goes wrong: Status Determination Statements appeared first on Linx.

A number of different people across a range of departments will likely be involved in ensuring IR35 compliance, but their training needs will widely differ, depending on their role – whether that’s making the status determinations, or passing the decision down the recruitment supply chain. 

Why IR35 training is vital 

At its core, IR35 aims to identify disguised employees, those working as external contractors but operating in the same way as an employee. The distinction is vital, as it affects how these individuals are taxed and how companies account for them. Failure to comply with IR35 can lead to severe financial penalties and reputational damage, making it a significant risk area for businesses. 

IR35 training needs to both educate participants at the level of detail and knowledge they need to perform their individual roles, as well as clearly define internal processes they are expected to follow. This variability is precisely why bespoke IR35 training is crucial. A tailored training programme can address the unique ways in which IR35 affects a business, taking into consideration its specific hiring practices and contractor engagements. 

The importance of tailored IR35 training becomes even more pronounced when we consider the varied roles within an organisation and their respective responsibilities towards IR35 compliance. 

IR35 training for Hiring Managers  

Often at the frontline of engaging contractors, they need training that equips them with the skills to identify when a role might fall inside IR35 and understand the implications of these decisions. Being able to accurately assess contract roles from the outset and use assessment tools such as HMRC’s Check Employment Status for Tax (CEST), can significantly mitigate the risk of non-compliance. 

IR35 training for Directors and senior management 

These stakeholders play a pivotal role in setting the tone and governance around IR35 compliance. Training for this group needs to underscore the financial and reputational risks associated with IR35, share relevant case law, and ensure they have the knowledge to oversee compliant practices. As well as looking at how the business can embed a culture of compliance within the organisation. 

IR35 training for HR and Talent Acquisition teams 

These departments often form the backbone of implementing IR35 compliant hiring practices. Their training should focus on the procedural aspects, including the checks and balances needed to ensure IR35 has been managed accurately ahead of onboarding. They’ll also need a clear understanding of the status disagreement process and how IR35 compliance is documented, should HMRC look for evidence that reasonable care has been taken to adhere to the legislation. 

Getting IR35 training right 

Given the complexities and evolving nature of IR35 legislation, engaging with an external IR35 specialist partner offers numerous benefits. These experts provide a depth of knowledge and experience that can be invaluable in navigating the intricacies of compliance. They can offer bespoke training, tailored specifically to the needs of your organisation and stakeholders, and ensure that your teams are up to date with the latest legislative developments. Moreover, specialist partners can provide ongoing support, helping to review contracts and working practices, thereby ensuring that your business remains compliant over time. 

Our Linx IR35 experts work with companies to identify their training needs, before creating programmes that are driven by your internal processes, combined with their in-depth knowledge of the off-payroll working legislation. They also carefully consider how that training should be delivered to best engage each audience, from online training resources to face-to-face workshops, blending the right learning techniques to ensure comprehensive training and mitigate the risk of non-compliance. 

For transparency, AI has been used during the generation of this article, with every care taken to verify its accuracy.

The post Not all IR35 training is equal  appeared first on Linx.

Understanding IR35 in the engineering sector 

For those not up to speed, IR35 is HMRC’s off-payroll working legislation that was initially rolled out to the public sector, before being extended to the private sector in recent years. 

Put simply, it was devised to tackle tax avoidance practices, providing clear differentiation on what constitutes off-payroll working through a Personal Service Company (PSC), and what indicates deemed employment. Deemed employment is HMRC’s term for a contingent worker operating through a PSC who’s working practices are too similar to directly-hired personnel, deeming them employed for the purpose of tax and National Insurance deductions. Those contingent workers who fall out of scope of IR35, are responsible for managing their own tax implications through their PSC. 

What does this mean for engineering companies? 

When IR35 was first extended to the private sector there was lots of talk of reducing the talent pool, because it would deter candidates from opting to work as external contractors.  

There are several key things to remember however: 

• IR35 only applies to contingent workers engaged through Personal Service Companies, Pay As You Earn and Umbrella contractors are not required to adhere to IR35 

• IR35 assessments, known as Status Determination Statements, need to be completed for each assignment, to determine if the off-payroll working rules apply – not all assignment may be in scope 

• Where Status Determination Statements indicate the assignment is in scope, the contingent worker can still operate through their PSC by opting for deemed payments to manage their tax and National Insurance implications 

• The working practices and remit the contingent worker will have to complete the work, will play a significant factor in their IR35 status determination 

What’s clear to see since the private sector implementation is that where niche and specialist skills are required that engineering companies do not have in-house, the engagement of PSC contingent workers is still paramount to project delivery. However, their working practices need to evidence that they are working externally to the client they are delivering the work to, and they must be given the responsibility and remit to complete the work without unnecessary direction, supervision or control. Without a detailed understanding of how IR35 is assessed, engineering companies risk losing access to the crucial specialist skills they need. 

Managing the risks of IR35 non-compliance 

Done correctly, engineering companies shouldn’t see IR35 as an administrative burden, provided they have the right support in place to help them manage compliance. 

Internal audits can help to identify any high-risk areas, as well as undertaking a review of contractual arrangements with agencies to ensure processes remain in line with your company’s IR35 strategy. Evaluation of existing IR35 training for staff can also help to identify any areas of concern that need to be addressed, whilst checking training follows the latest IR35 insight from HMRC. 

Our experts have extensive knowledge of IR35 in the engineering sector, teamed with insight on how best to manage the off-payroll working rules in large organisations with multiple recruitment suppliers. They operate as the single point of contact to manage IR35 compliance, reviewing internal processes to ensure they will stand up to scrutiny, whilst ensuring adequate training is given to key stakeholders involved in status determinations. How adept the recruitment supply chain is when managing in and out of scope decisions also plays a crucial role in IR35 compliance, which is why our team extends their support to suppliers as well as internal stakeholders. 

Retaining access to specialist skills 

A company’s approach to IR35 needs to carefully balance the need to adhere to HMRC’s off-payroll working rules and mitigate risk, whilst ensuring access to the skills needed to win and deliver engineering projects. 

When HMRC first announced that IR35 would be extended to the private sector, some businesses took a blanket decision to stop using Personal Services Companies. It was a stance that removed the risk of non-compliance but also drastically reduced their access to skills and specialist talent.  

Our Linx team works with companies to understand their contracting requirements, to ensure the best engagement solution is put in place to secure the right talent needed. This includes the use of Statement of Work models to secure skills on a project deliverables basis, with a clear contract in place to indicate milestones and payments. 

For transparency, AI has been used during the generation of this article, with every care taken to verify its accuracy.

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Here are the seven main ways you can reduce the IR35 administration load, and how Linx can support you every step of the way. 

Implement a centralised IR35 process 

One of the biggest challenges businesses face is inconsistency. When different departments or hiring managers approach IR35 status determination assessments in different ways, mistakes are inevitable, whilst also increasing the likelihood of disagreement challenges. A centralised IR35 process ensures everyone follows the same procedure – using standard tools, templates, and documentation methods. 

How Linx helps: We can design, implement and operate your central IR35 process, ensuring robust governance and a consistent compliance approach across your organisation. For companies with multiple divisions or business units, the need to have a central process is even more crucial. 

Appoint IR35 governance 

IR35 compliance is not something that can be tackled ad hoc, it requires dedicated oversight. Appointing an IR35 lead or small governance team ensures the business has clear accountability for policy, process management, and issue resolution. Those colleagues making Status Determination Statement assessments will also have a clear point of escalation if they need further support. 

How Linx helps: If you don’t have the resource in-house, Linx can act as your outsourced IR35 governance partner – managing compliance on your behalf, monitoring updates, and ensuring best practice is upheld. 

Train hiring managers and internal teams 

Many of the risks around IR35 arise from misunderstandings or lack of awareness — especially among hiring managers. Without proper training, they may inadvertently create contracts or working conditions that contradict a status determination. Where their knowledge of IR35 is not up to speed, companies also carry the risk that in and out of scope IR35 determinations may not be accurate. 

How Linx helps: We deliver tailored IR35 training for hiring teams, procurement, HR, and talent acquisition stakeholders – helping them understand their responsibilities and reduce risk through everyday actions. 

Regularly review and refresh determinations 

IR35 isn’t a one-off box-ticking exercise. Contractors’ roles, responsibilities, and working practices often change over time. If determinations aren’t periodically reviewed and updated, businesses risk non-compliance – even with well-intentioned processes in place. 

How Linx helps: We maintain regular touchpoints to review and refresh status determinations, keeping your compliance up to date and removing the burden of constant monitoring from your internal teams. 

Maintain well-documented audit trails 

HMRC expects businesses to provide clear, accurate records of their IR35 assessments and decisions to demonstrate they have taken reasonable care. That means securely storing contracts, status determinations, communication trails, and the rationale behind each decision. Add in a recruitment supply chain who engage the PSC contingent workers on your behalf, and the task becomes even more complex. 

How Linx helps: Linx work with organisations to devise supply chain compliance audits, to ensure status determinations have been accurately passed down and all the necessary paperwork is in place to satisfy HMRC’s reporting requirements – making it easy to evidence compliance if challenged. 

Stay informed on legal and HMRC updates 

IR35 is a moving target. With legal cases setting new precedents and HMRC periodically adjusting guidance, it’s crucial that businesses stay updated. But monitoring policy changes and adapting processes accordingly adds another layer of administration. 

How Linx helps: We stay on top of every IR35 development, so you don’t have to. Our team ensures your approach is always aligned with the latest legal and regulatory expectations and we maintain regular communication with our clients to notify them of any changes. 

Engage an IR35 expert 

The simplest way to reduce the administrative burden of IR35? Hand it over to the experts. Managing compliance internally requires time, legal understanding, and resourcing that many businesses simply don’t have. It also requires colleagues to become IR35 experts, whilst continuing to perform their other responsibilities. 

How Linx helps: We work with organisations across the UK to support them with IR35. From managing assessments, to auditing their supply chain and identifying non-compliance risks in internal processes, we’re able to share the latest IR35 insight to help your business manage IR35. Our team are committed to ensuring your organisation has the right information to make informed decisions on IR35.  

For transparency, AI has been used during the generation of this article, with every care taken to verify its accuracy.

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In our latest blog we take a more detailed look into status determinations. 

What is an IR35 determination? 

In short, it’s the process organisations are required to go through to determine the tax status of workers who are engaged through a Personal Service Company (PSC). 

HMRC first introduced the need to perform IR35 determination checks on off-payroll workers in the public sector, before extending the legislation to the private sector. Its purpose many agree was to manage tax avoidance practices and make clear differentiations between those workers who are operating independently as an external PSC worker. As opposed to those who are operating too similarly to directly engaged permanent workers. The biggest difference between them is how HMRC collect tax on their earnings. 

What is a determination status? 

The determination status, derived through a Status Determination Statement (SDS), is the document that details each worker’s employment status for their assignment. An SDS should detail one of two outcomes: in scope of IR35 or out of scope. 

In scope means that IR35 does apply to the worker’s assignment, so tax and National Insurance Contributions need to be deducted from their earnings, known as Deemed Payment. Out of scope on the other hand indicates that the worker is operating outside of the off-payroll working legislation, so IR35 does not apply, and they are responsible for meeting their tax implications through their Personal Service Company. 

Who is responsible for IR35 determinations? 

The End Client is responsible for making the IR35 determination, by issuing an SDS to all parties involved in the contingent worker’s engagement. 

For organisations who partner with recruitment agencies to supply contingent workers, it’s critical that IR35 determinations are still made by the End Client, the company which the worker is delivering the work to. Whilst agencies might be able to help share insight into working practices, businesses need transparent processes in place to demonstrate that reasonable care has been taking to ensure the accuracy of status determinations, which may need to be evidenced should HMRC wish to open an investigation. 

The End Client should have a formal disagreement process in place, should the worker or any stakeholders in their engagement chain wish to challenge the determination. Companies have 45 days to respond to the dispute, detailing their reasoning behind the outcome. The original status must remain in place during the investigation period, and if the review determines a different outcome and new SDS must be created and shared with all parties. 

Is there an IR35 determination calculator? 

HMRC developed a digital tool, Check Employment Status For Tax (CEST), which is free for organisations to use to make status determinations. Users answer a series of questions around how the worker is engaged, before the tool outputs it’s determination: in scope, out of scope or unable to determine. Where the tool is unable to determine a clear IR35 status, further review of working practices will be required to identify areas that may be unclear. 

Other tools are available in the market and HMRC do not mandate the use of CEST, however they say they will stand by its outcomes provided the tool has been used correctly and honestly. 

What are the three key tests for IR35? 

Tools like CEST assess a range of areas to determine whether HMRC believe IR35 applies to the worker, including three key areas. 

Substitution 

The concept refers to the structure and nature of a working relationship between an off-payroll worker and their End Client. The right to substitution is one of the key tests in determining an IR35 status. It refers to whether a PSC worker has the genuine right to send someone else to do their work in their place. If the worker is free to provide a substitute with similar skills and technical knowledge, and the client would accept this without restriction, it indicates a level of independence typical of self-employment. Alternatively, if the client requires the contractor to personally carry out the work, this may point towards an employment relationship – potentially bringing the engagement inside IR35. Right to substitution helps determine whether the worker is genuinely self-employed or effectively operating as an employee in disguise, a practice known as Disguised Employment. 

Control 

Control is a fundamental test in determining whether the PSC worker falls inside or outside IR35. It looks at how much direction the client has over what work is done, how it’s done, and when or where it’s carried out. If the client exercises a high level of control and supervision, like they would an employee, it suggests the worker is not truly independent. Genuine PSC workers typically have autonomy over their work, which can help support an outside IR35 status. Therefore, assessing control is crucial in identifying the true nature of the working relationship. 

Mutuality of obligation 

Mutuality of obligation (often referred to as MOO) is another key factor in determining the IR35 status of an off-payroll worker. It refers to whether the client is obliged to offer work and whether the worker is obliged to accept it. In a typical employment relationship, there is an ongoing expectation of work and payment. However, a genuine contractor relationship should lack this mutual obligation – work is agreed on a project-by-project basis, with no guarantee of future engagement from both parties. Crucially as well, the worker should not feel they are obligated to accept additional work the client requests. The presence or absence of MOO helps distinguish between employment and self-employment, making it a crucial part of any IR35 assessment. 

What are the red flags for iR35? 

Fundamentally, HMRC’s legislation is designed to identify those workers who are acting in the same way as an employee of the business but work through their own PSC and as such do not pay tax and National Insurance Contributions in the same way as Pay As You Earn employees do. 

As a business it’s crucial that the engagement terms of your off-payroll workers, and their working practices have clear differentiation between how employees and PSC workers are engaged. 

Income reliance from one client 

Red flags can include workers who obtain a large percentage of their income from one client, potentially indicating that there is an agreement, whether that be formal or informal, that they will be secured to work back-to-back on projects. Whilst this might be due to the specialist services the worker provides and not because there is mutuality of obligation, none the less it’s important to have clear processes in place for repeat assignments, and an individual SDS for each. 

Part and parcel 

Part and parcel is a key measure for HMRC’s determination of IR35 status, where it looks for evidence that the PSC worker has become integrated into the business. Factor such as whether they have their own desk, security pass and access to subsidised canteen facilities need to be considered. Together with indicators such as the worker using a company email address or being asked to manage directly engaged permanent staff. Access levels to areas of the building or computer databases also needs to be considered, would a company grant permission for external parties to access confidential information without supervision? 

Financial Risk 

How much risk financially the worker takes on may be a red flag, in particular where they carry very little risk. If they are providing their skills to the company through their PSC company, this should indicate a contract of service not employment. As such it’s expected that the PSC company will carry some financial risk, such as being paid a fixed price for the work they deliver – regardless of how long it takes them. If it takes them longer to complete the work, this would not automatically allow them to bill the client more. Similarly, in stances where the work standard is not adequate, the PSC company would typically be expected to rectify this at their own cost, indicating the financial risk they have taken on. 

How long does an IR35 status determination last? 

The expiry length of an IR35 status determination can be a grey area. Whilst it is intended for the length of the engagement, longer assignments may require additional scrutiny. 

The SDS provides a snapshot of what the engagement looks like ahead of the assignment starting. Once the contingent worker commences, working practices may defer to those expected, even where the assessment has been made in good faith. Another factor that may indicate that further review is needed, is when the remit of the worker changes in line with the needs of the project. That’s not unusual, but it will require a new SDS to be created where there are material changes to how the worker is engaged. 

It’s also best practice to reissue Status Determination Statements when assignments have been active for 12 months or more. Undertaking reassessments ensure that key measures such as part and parcel haven’t become difficult to clearly evaluate over time. Where the new SDS indicates a change in their determination, this needs to be passed to the worker and down the chain of engagement. 

For organisations who engage hundreds of off-payroll workers this need to reevaluate status determinations can be highly administrative and time-consuming. That’s why Linx’s IR35 team works with clients to manage this process on their behalf, ensuring the correct checks and measures are in place to provide them with meaningful insight to make informed changes and future decisions around IR35. 

How can businesses ensure their status determinations are robust? 

We’d always recommend partnering with an external consultancy to provide independent and impartial oversight into your IR35 processes, including how you perform status determinations. 

This includes reviewing the staff training your business provides, to ensure those involved in making status determinations have the right level of knowledge about IR35. How IR35 is managed within your recruitment supply chain is also a key area of concern for our experienced team, who’ll work with you to develop tailored supply chain audits if needed to actively manage the risk of non-compliance. 

For transparency, AI has been used during the generation of this article, with every care taken to verify its accuracy.

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Understanding the changes to CEST

Once the changes to CEST had been released, the industry opinion was that any updates were only cosmetic, with no fundamental change to the technical principles and underlying logic that determines the in or out of scope outcome.

One of the most recognisable updates is that the language has been simplified, designed to improve user experience and make answering the questions much easier.

The questions the CEST digital tool asks were originally designed to help End Clients determine the tax status of their off-payroll workers, and that’s certainly not changed with these minor updates.

CEST and Mutuality of Obligation

The biggest noticeable change to the questions, is around mutuality of obligation, posing the question ‘Do you have, or will there be, a contract in place?’. It’s an important addition however, as HMRC’s digital tool will not let you continue if you enter a no response. This, they say, is because there must be a contract in place between two parties in order to consider whether it is a self-employed or employed engagement. They detail that their definition of whether a contract is in existence is through one of two measures:

• The company engaging the workers has an obligation to pay then a wage or similar renumeration
• The worker is obliged to undertake their own work or skills.

HMRC guidance published on this topic, in their Employment Status Manual ESM11036, states that answering yes to the question will not impact the IR35 status determination.

The importance of CEST

HMRC has not mandated the compulsory use of CEST to make status determinations on the workers, however it has made it clear that it recommends its use. In the newly updated disclaimer at the start of the digital tool, it reconfirms that HMRC will stand by in and out of scope determinations the tool outputs, provided it has been used honestly.

Below we look at instances where HMRC will not uphold CEST outcomes:

• Actions that are deliberately intended to provide a certain result, what they call ‘contrived arrangements’
• Falsely answering questions about engagement terms, intentionally knowing they have been answered in a way that is not correct

When investigated, these would be used as evidence of deliberately attempting to misuse the tool, indicating non-compliance – something they say can attract higher penalties.

Using CEST to manage IR35 compliance

When we’re working with clients, we strongly recommend integrating HMRC’s CEST tool into status determination processes. Using CEST not only demonstrates that your business is taking reasonable care in assessing employment status, but it also provides a clear, auditable record of each determination.

Being able to evidence IR35 compliance through steps such as using HMRC’s digital tool is crucial for protecting your business and proactively managing risk.

There are several benefits to using the CEST tool:

• Shows that your IR35 decisions are based on HMRC’s own guidance, strengthening your compliance position.
• You can save and document each assessment, providing evidence of due diligence and responsible practice.
• You can leverage HMRC’s commitment to stand by CEST results, provided the tool is used honestly and accurately.

Making CEST a core part of your IR35 compliance strategy helps minimise risk and safeguard your business from potential penalties.

Managing the administrative burden that comes with IR35

From understanding the engagement terms of individual workers, to reviewing service agreements and the standard processes workers follow such as their working practices, IR35 can be difficult to manage. Add to that the additional complexity of managing your recruitment supply chain to ensure processes are being followed and deemed payments are in place for in scope workers, and it creates a heavy administrative burden for HR and talent acquisition teams.

To remain compliant with IR35 off-payroll working legislation however, regular check and measures need to be in place to ensure your current IR35 strategy is still correct. Key areas such as staff training also need to be reviewed to ensure those people making Status Determination Statements have adequate knowledge to accurately do so. Whilst periodical supply chain audits can help to identify areas of concern that need further development to protect your business from potential IR35 non-compliance.

These are all services our experienced IR35 team provide to our clients, and we’re always happy to chat to your business to discuss how we can support you.

For transparency, AI has been used during the generation of this article, with every care taken to verify its accuracy.

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