If your business partners with recruitment agencies to hire contingent workers, managing IR35 compliance across your supply chain is essential. The risks of non-compliance, including unexpected tax liabilities, HMRC investigations, and reputational harm, can impact your operations and bottom line. To protect your business, it’s crucial to take a proactive, risk-based approach to assessing and managing every link in your supply chain.
Audits need to confirm that Status Determination Statements (SDSs) are being issued correctly, and contract structures reflect genuine working arrangements. By examining both contractual terms and actual working practices, you can ensure employment relationships are properly classified and that all parties are meeting their responsibilities.
Our IR35 supply chain audits are tailored around how you engage recruitment agencies to provide contingent labour, and may include:
Our experienced team will work with you to devise an IR35 supply chain auditing process that will take all this into account and much more. They’ll thoroughly assess all recruitment businesses you engage with, identifying gaps in processes that may leave you at risk. Creating a picture of how the off-payroll working rule is managed within your supply chain and understanding how each company in the chain is performing in line with HMRC’s expectations. At the end of our audit, you’ll have a transparent and clear overview of how IR35 is being managed.
Navigating the complexities of IR35 compliance can be challenging, especially when multiple recruitment agencies and intermediaries are involved. Engaging an external advisor, such as Linx, brings independent expertise and a fresh perspective to your supply chain audit. External specialists are well-versed in the latest HMRC requirements, evolving case law, and best practices for risk management. They can identify gaps or weaknesses that might be overlooked internally, provide objective recommendations, and help you implement robust processes that withstand scrutiny.
With an external advisor, you gain access to proven methodologies for auditing your recruitment providers and working practices across your supply chain. Their experience ensures that your audits are thorough, impartial, and tailored to your specific business needs. Most importantly, their guidance can help you demonstrate reasonable care, minimise the risk of costly HMRC investigations, and give you confidence that your compliance measures are both effective and defensible.
HMRC takes a dim view of IR35 non-compliance, even when it occurs due to errors or oversights within a business’s supply chain. If your organisation relies on recruitment agencies or third-party suppliers to engage contingent workers, you are still expected to exercise due diligence at every stage, not just within your own processes but throughout your entire labour supply chain.
As the end client you are responsible for making status determinations and ensuring they are correctly implemented. When HMRC reviews IR35 compliance, they look for evidence that your business has robust procedures in place for status assessments, well-documented processes, and clear communication of responsibilities down the supply chain. Failure to meet these expectations can trigger a range of official actions, from initial letters requesting information to formal investigations. It’s therefore crucial to know what HMRC will look for, and our Linx team are able to help with this.
To minimise risk, businesses should be proactive: conduct regular supply chain audits, keep thorough records, and stay informed on the latest HMRC guidance. Engaging with IR35 experts provides added protection and peace of mind.
Alongside our supply chain audits, we provide a comprehensive suite of IR35 support services that help ensure your business is confident you have a robust IR35 strategy.
Ensuring IR35 compliance requires a clear understanding of how Personal Service Company (PSC) workers are engaged within your organisation.
Reinforcing compliance and minimise risk with tailored IR35 staff training, designed for your business and delivered by experienced industry professionals.
Assessing your IR35 processes to confirm they reflect HMRC best practice and provide a strong foundation for regulatory compliance.
An IR35 supply chain audit is a comprehensive review of your recruitment supply chain to assess compliance with off-payroll working rules (IR35). It helps identify risks, gaps, and liabilities that could expose your business to HMRC scrutiny or financial penalties. At Linx, we help businesses gain clarity and control over Personal Service Companies operating through their suppliers, ensuring peace of mind and legal compliance.
While standard compliance checks may focus on individual assessments to ensure they meet all required legislation, an IR35 supply chain audit takes a more comprehensive review of how the off-payroll working rules are being applied by your recruitment partners. It examines the entire supply chain to ensure that IR35 responsibilities are clearly defined and consistently managed at every level. Linx’s audits are designed to uncover hidden risks and provide actionable insights.
Medium and large businesses must determine the employment status of contingent workers operating through Personal Service Companies (PSCs). They must issue a Status Determination Statement (SDS) and take reasonable care when making that determination. Furthermore, that SDS needs to be passed down the supply chain, and failure to comply can result in financial liability for unpaid tax and National Insurance contributions. Linx helps ensure your processes meet these obligations.
Yes. With your permission, we’ll liaise directly with your recruitment agencies, umbrella companies, and other third-party suppliers to gather necessary information and clarify responsibilities. This collaborative approach ensures transparency and helps identify any gaps that need further investigation. Our team are experienced in change management and supply chain relationships and will take every care to work respectfully with your supply chain, understanding the value of the partnerships.
The duration depends on the size and complexity of your supply chain. We’ll work with you to understand what your requirements are, how your supply chain is set-up and then we’ll provide a clear timeline for completing the auditing and subsequent analysis.
Our audits are typically delivered remotely but can be delivered on-site at your request. We begin with a discovery session, before devising a process to audit your suppliers. We use custom-built technology to ensure we’re able to capture all the data required to assess each supplier, before providing tailored analytics and recommendations for remediation and ongoing compliance.
Costs vary based on the size and complexity of your supply chain. We offer transparent, fixed-fee pricing with no hidden charges. Get in touch with us for a tailored quote based on your specific needs.
While it’s possible to manage some aspects internally, IR35 legislation is complex and constantly evolving. Engaging an external specialist like Linx ensures an objective, expert-led review that identifies risks you may not be aware of and provides practical solutions to address them. HMRC also look to see if businesses have taken reasonable care when implementing IR35, so evidencing that an external advisor has been engaged to audit your supply chain demonstrates you have taken extensive steps to proactively manage compliance.
Our IR35 audits identify any gaps within your supply chain, highlights areas of potential liability, and processes that are inconsistently managed across recruitment agencies. We’ll also provide clear, actionable steps to help you improve compliance where it’s needed, drawing on our extensive industry knowledge and the latest HMRC guidance and case law.
Absolutely. It can sometimes surprise businesses who are unaware of indirect risks — such as unclear contractual chains, inconsistent SDS processes, or non-compliant suppliers. Our audit is designed to uncover these hidden vulnerabilities and help you address them before they become costly issues.
We’ll work flexibly around your schedule to minimise disruption. Most of our work is conducted remotely, and we’ll only request essential information from suppliers. Our goal is to make the process as smooth and efficient as possible.
Our approach is collaborative and transparent, we’re certainly not here to catch out your recruitment suppliers. We work with your recruitment partners to ensure everyone understands their responsibilities under IR35. In some cases, the audit can strengthen relationships by providing clarity, reducing risk, and fostering trust across the supply chain.
Our IR35 supply chain audits are ideal if you need to ensure you have the right checks and balances in place to ensure off-payroll working compliance across your operations. We’ll ensure you have the evidence ready when it comes to reassessment, by identifying any risks within your supply chain and advising you how you can address these.
If you’re struggling to understand why your Workforce Assurance audit flagged issues with your IR35 approach, then we’d also recommend asking us to perform a thorough review of your internal processes.
If you’d like to initiate a conversation about how we can support your business with IR35 compliance, then share your details below.