Sample briefs

Should I accept an inside IR35 contract?

Updated 7 October 2026 · Advisor: Risk Officer

This is a complete worked Executive Decision Brief for a contractor offered a role assessed inside IR35. The board's answer is not yes or no but a price: accept if the rate, after tax and employer costs come out at source, still clears what you need, and challenge the determination only if the working practices genuinely point the other way. It is decision support, not tax or legal advice: an accountant or adviser should confirm the numbers for your situation.

Cerno is a private AI boardroom that runs consequential decisions through a structured process and returns a brief like the one below. The scenario is illustrative: a contractor who has worked through their own limited company on outside IR35 roles, now offered a six-month extension-friendly role with a large client, assessed inside IR35, through a recruitment agency.

Executive Decision Brief

Should I accept a contract assessed inside IR35?

Recommendation

Accept only at a rate that matches your outside-role take-home after inside deductions, not the same day rate. Ask for the status determination statement and its reasons before signing. Compare a deemed-employment route through your company with the umbrella payslip illustration line by line, and dispute the determination only if the reasons misdescribe how the work will be done.

Recorded vote — dissent on the record

Entrepreneur — six months inside pulls the contractor away from building an outside pipeline; the brief should cap how long they stay inside before looking again.

CFO — a rate that only matches take-home ignores the pension and expense flexibility lost; aim above it, not at it.

Known facts

›Client is a large private sector company, so it decides status.
›Offer is through an agency at a day rate similar to recent outside roles.
›No status determination statement has been seen yet.

Assumptions

›The role is genuinely supervised and integrated with the client's team, as the agency describes.
›The client will move on rate if shown a take-home comparison.
›There is no comparable outside role available within a month.

Confidence

61%

Risk

Med

Vote

4–1

Next actions

BEFORE REPLYING
Ask the agency for the status determination statement and the client's reasons in writing.

THIS WEEK
Work out the day rate needed to match outside take-home and put that number to the agency.

BEFORE SIGNING
Get a payslip illustration for each payment route, and check what is deducted before gross pay.

MONTH 4
Review against the Entrepreneur's dissent: is there an outside pipeline for when this ends?

Illustrative brief · Evidence Mode on

The decision in plain terms

Inside IR35 means that, for tax purposes, the engagement is treated much like employment. The determination is about tax, and Income Tax and National Insurance are taken at source, and the structure of your own company stops doing most of the tax work it did on outside roles.

So the question is rarely "is inside IR35 bad?" It is: at this rate, through this payment route, is the take-home worth the time, compared with what else you could be doing? And separately: is the determination right?

The numbers that matter

Who decides. For public sector clients and medium or large private sector clients, the client decides your status and must give a status determination statement with its reasons. Where the client is small and outside the public sector, your own company decides. Small company size thresholds were raised for financial years beginning on or after 6 April 2025 (turnover of not more than £15 million, balance sheet of not more than £7.5 million, not more than 50 employees, two of three), but HMRC says the earliest tax year this can change a client's position is 2027 to 2028.

Disputing it. You or the deemed employer can raise a disagreement with reasons. The client must respond within 45 calendar days. If it does not, responsibility for deducting and paying the tax and National Insurance passes to the client for later payments.

Deemed employment through your company. The fee-payer deducts Income Tax and employee National Insurance before paying your company, and pays employer National Insurance itself. Your company should not tax that income a second time when it passes it to you.

Through an umbrella company. The umbrella employs you. Before your gross pay is worked out, it takes from the assignment rate its operating costs (margin), employer National Insurance, employer pension contributions, holiday pay and Apprenticeship Levy where it applies. From gross pay it then deducts Income Tax, employee National Insurance, employee pension and any student loan. From 6 April 2026, agencies, or the end client where there is no agency, are responsible for making sure PAYE is operated correctly when an umbrella company is in the chain.

The rates behind those deductions for 2026 to 2027. Employer National Insurance is 15% above a secondary threshold of £5,000 a year. Employee National Insurance is 8% between £12,570 and £50,270 and 2% above. Income Tax is 20% to £50,270, 40% to £125,140 and 45% above, after a £12,570 personal allowance that tapers away above £100,000.

An illustrative way to compare. Do not compare day rates. Take one outside offer and one inside offer and, for each, write down the take-home after every deduction for a typical month, plus anything you lose, such as company pension contributions you could previously make or expenses you could previously claim. The inside rate you need is the one where those two columns meet. The umbrella payslip illustration and the agency's deemed-employment calculation are the evidence; a headline rate is not.

What the board weighed

Price, not principle. The CFO framed it simply: an inside role is a different product from an outside one, and should be priced as such. The same day rate inside and outside is a pay cut. The board's recommendation turns that into a number to negotiate with, and the CFO's dissent pushes the target above break-even because of what is lost on pensions and expenses.

Is the determination right? The Risk Officer's view was that a disagreement should be about facts, not preference. If the reasons in the statement describe supervision, control and integration that match how the work will actually be done, a dispute will not change much. If they describe a role that does not match the contract or the reality, raise it with reasons, early, and keep a copy. The 45-day duty gives the process teeth.

Route matters. Deemed employment through your own company and an umbrella company can produce different take-home on the same rate, because of what is deducted before gross pay. The board treated the payslip illustration as the decision document.

The cost of time. The Entrepreneur's dissent was not about tax at all: six months in an inside role is six months not building outside clients. The brief records it and sets a month-four review.

When the answer flips

If you can get an outside role at a similar rate within a reasonable time, the board would usually prefer it, unless the inside role offers something else you value, such as stability, a strong client name or skills.

If the client will not move on rate and the inside take-home is well below what you need, decline or treat it as a short bridge with a firm end date.

If the determination reasons are plainly wrong, the decision becomes a dispute first and an acceptance second. Raise it with reasons before you sign.

If you mostly work inside IR35 now, revisit whether running your own company still earns its keep. The brief on sole trader or limited company covers that question.

Common mistakes

›Comparing day rates instead of take-home. The difference is the whole decision.
›Signing before seeing the status determination statement. You are entitled to the reasons, and they tell you whether a dispute is worth raising.
›Accepting a payslip without reading the deductions above gross pay. Margin, employer National Insurance and holiday pay come out of the assignment rate with an umbrella.
›Disputing on preference. A disagreement needs reasons tied to how the work is done, not a wish to be outside.
›Taxing the same income twice. Under deemed employment, your company should not deduct tax again when it pays you.

Offered an inside IR35 role? Put the rate, the route and your alternatives through the boardroom and get a brief like this one.

Run this decision in Cerno

Sources

Figures checked on 7 October 2026.

Frequently asked

Who decides whether my contract is inside IR35?

If you work through your own company for a public sector client or a medium or large private sector client, the client decides and must give you a status determination statement with its reasons. If the client is small and outside the public sector, your own company decides.

Can I challenge an inside IR35 determination?

Yes. You, or the deemed employer, can tell the client you disagree and give your reasons. The client must consider them and respond within 45 calendar days. If it fails to respond, responsibility for the tax and National Insurance passes to the client for later payments until it does.

What is the difference between an umbrella company and deemed employment?

With an umbrella company, the umbrella employs you and pays you through PAYE, taking its costs, employer National Insurance and other employer costs out of the assignment rate before your gross pay. With deemed employment, you keep your own company but the fee-payer deducts Income Tax and employee National Insurance before paying it, and pays employer National Insurance itself.

Should I ask for a higher rate on an inside role?

It is reasonable to compare offers on take-home, not day rate. Inside a role, employer costs and tax at source mean the same day rate produces less in your pocket than an outside role. Work out the rate you would need to match your outside take-home and negotiate from that number.

Does HMRC's CEST tool settle the question?

HMRC says it will stand by the result of its Check Employment Status for Tax tool as long as the information you give is accurate and in line with its guidance. The outcome still depends on the real working arrangements, so make sure the answers reflect how the work is actually done.

Cerno is a decision-support aid, not legal, financial or medical advice. Where a decision turns on specialist ground, seek a qualified professional.

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