Q. A query regarding IR35 – I’m currently working in a contract outside of IR35 – if I’m offered an extension which takes my time at the company above 2 years will that mean the IR35 status changes. I know you lose the option to claim travel expenses at that point but I noticed in one of your published answers to a question that it stated that it was different for IR35. My understanding is that when you know that you are going to be at a company for more than 24 months then HMRC deem it not be a temporary work place and assumed that the IR35 status automatically changed. Is that not the case?
A. Whilst the status of the workplace changes, for the purposes of travel expenses as you have correctly identified, the IR35 status does not. Length of engagement, in itself, will not be sufficient to point towards a contract of service & is neutral.
HMRC may seek to argue that working for one client for a significant length of time makes it more likely that there exists a contract of service and the shorter the engagement the less likely, This is not down to the length of the contract itself, but because the other factors are more likely to indicate this to be the case. The Revenue’s hypothesis here is that the longer the engagement the more likely that the engager will want to, or need to, exert significant amounts of control over the worker, a significant pointer towards a contract of employment. Additionally, the worker may become integrated into the engager’s organisation in a manner that is indicative of employment. The approach to the work may also be less business-like and the personal factors are likely to be less significant.
It is therefore necessary to consider all the employment status factors, as normal, in considering whether or not your engagement falls within IR35.