IR35 compliance software for recruitment agencies

Where the risk sits

Under the off-payroll working rules, when a contractor supplies services through their own company, someone must decide whether the engagement would be employment if the company were not in the way. Who decides, and who pays if the decision is wrong, depends on the end client.

Where the end client is small under the Companies Act section 382 thresholds ITEPA Ch. 8, the worker’s own company keeps the assessment, as it did before 2021. Where the client is not small, the client must issue a Status Determination Statement and pass it down the chain, and the fee-payer, which is very often the agency actually paying the contractor’s company, carries the tax risk.

What has to be recorded

• The client’s size standing. Small or not small decides who owns the determination. Unknown is a real answer, but it must be visibly unknown, not silently assumed.
• The determination against the placement. An SDS filed somewhere is not compliance; an SDS tied to the specific placement it governs is.
• The chain around it. If HMRC asks, the answer is never one document. It is the placement, its weeks, its invoices and the determination, telling one consistent story.

What the software has to do

Spreadsheets fail here for one structural reason: the facts live in different files owned by different people, and the join between them is a person’s memory. Software built for this holds the client’s standing on the client record, the determination against the placement, and every downstream artefact, timesheets, invoices, key information documents, on the same spine, with an audit trail that cannot be quietly edited.