IR35. Two letters and two numbers that continue to cause more confusion than almost any other tax rule for contractors.
Since the off-payroll working rules rolled out across the public and private sectors, myths have multiplied about contracts, working practices, substitution clauses, and even attending work socials.
At Broadbench, we help contractors cut through the noise, from tax-efficient planning to contractor mortgages and protection policies that fit your status. So, let’s set the record straight.
Myth #1: “My contract says I’m outside IR35, so I’m safe.”
Reality: HMRC looks at how you actually work, not just what’s written on paper.
You could have the perfect “IR35-friendly” contract downloaded from the internet, but if, in reality, your client controls your hours, tasks, or requires you to be personally available, HMRC can still class you as inside IR35.
Broadbench Tip: Always ensure your contract and working practices align. And keep evidence: emails, communications, and proof of independence.
Read more: Seb Maley’s thoughts on IR35-friendly contracts
Myth #2: “If I go to team socials or the Christmas party, I’ll be inside IR35.”
Reality: It’s not that simple.
HMRC might consider whether you’re becoming “part and parcel” of the organisation; it’s not a formal test, but it does shape the bigger picture. Attending an event won’t automatically put you inside IR35, but if your working patterns mirror those of employees, it could raise flags.
What matters: Consistency between your contract and your behaviour.
Myth #3: “A substitution clause automatically keeps me outside IR35.”
Reality: Not necessarily.
Having a right of substitution in your contract is useful, but HMRC and tribunals will ask:
“Can you actually send a substitute, and would the client accept them?”
If, in practice, you’re expected to do the work personally, the clause may carry little weight.
Myth #4: “If my client agrees I’m outside IR35, HMRC can’t question it.”
Reality: HMRC can investigate any engagement at any time.
Even if you and your client both believe you’re outside IR35, HMRC might disagree if the working practices look more like employment. If they do, you could face back taxes and penalties.
Broadbench Tip: Keep documentation and review each contract individually. Mutual agreement isn’t a shield from scrutiny.
Myth #5: “If I disagree with my IR35 status, there’s nothing I can do.”
Reality: You can appeal through the client-led disagreement process.
If you believe a determination is wrong, you can raise a formal disagreement. The client then has 45 days to respond. It’s worth using this route if your working relationship clearly differs from the decision.
Learn more: Broadbench IR35 disagreement process guide
Myth #6: “Multiple clients = outside IR35.”
Reality: Having more than one client helps, but it’s not decisive.
Working with several clients suggests you’re in business on your own account, but HMRC assesses each contract individually. You could be compliant in one engagement and fail another.
It’s a helpful factor but not a guarantee.
Myth #7: “Blanket inside determinations are safer for clients.”
Reality: They’re not.
Some end clients classify all contractors as inside IR35 to “play it safe”, but this approach can backfire.
- It risks alienating contractors, driving them to competitors.
- It may breach HMRC guidelines, which require each role to be assessed with reasonable care.
Individual assessment is the only compliant approach.
Myth #8: “CEST gives definitive IR35 answers.”
Reality: CEST (Check Employment Status for Tax) can help, but it’s far from perfect.
HMRC’s own tool has failed to reach a verdict over 233,000 times (2019–2021), and the tax office has even disregarded CEST outcomes in disputes.
Experts also say some questions are ambiguous, and the tool places too much weight on substitution.
What to use instead: Professional advice, independent IR35 reviews, and real-world evidence of working practices.
Myth #9: “Short contracts are automatically outside IR35.”
Reality: Contract length isn’t the deciding factor.
Even a one-month contract can be inside IR35 if you’re working under control, direction, and supervision. Conversely, a longer contract can be outside if you maintain independence.
Myth #10: “Two years with one client = inside IR35.”
Reality: Longevity alone doesn’t determine status.
What matters is how you work, not how long. If you maintain autonomy and operate like a business, time won’t automatically change your status.
Myth #11: “Other contractors at my client are outside IR35, so I must be too.”
Reality: Each case is unique.
HMRC assesses each engagement based on specific circumstances, so never assume safety because your peers have a different outcome.
What Contractors Should Do in 2025
- Review each contract individually — don’t copy-paste assumptions.
- Align contracts with working practices — and gather evidence.
- Budget smartly — account for potential IR35 tax liabilities.
- Protect your income — with income protection, life cover, and critical illness insurance.
- Plan ahead — whether you’re inside or outside IR35, Broadbench can help structure your finances.
Bonus: General Contractor Myths — Busted
- “Contractors can’t get mortgages.”
False. Specialist lenders and Broadbench help contractors secure mortgages even with fluctuating income. - “You can’t buy protection like employees.”
Wrong again. Income, life, and critical illness cover can be tailored to contractor earnings and IR35 status. - “Being your own boss is stress-free.”
It’s freedom, yes, but with responsibility. Financial planning keeps that freedom secure.
Final Thoughts
Contracting in 2025 still offers freedom, flexibility, and financial opportunity, but IR35 isn’t going anywhere.
Understanding the myths vs reality helps you stay compliant and confident. And when it comes to financial protection from mortgages to insurance Broadbench is here to make sure IR35 doesn’t stand in your way.
Contact Broadbench to secure your future with the right advice, protection, and financial planning for contractors.
