Are Office Christmas Parties IR35 Friendly?

As a specialist IR35 accountant, we receive many queries related to office Christmas parties. With talks of Secret Santa, corporate festivities, and the office Christmas party getting more and more frequent in the workplace, it gets very hard for contractors to distance themselves from a client’s internal activities. Despite Christmas being the season to be merry, anyone contracting via a Ltd Company must understand the potential IR35 implications of joining in on the Christmas spirit with their end client.

Contractors and Christmas Parties

Although it is highly doubtful that HMRC will open an IR35 case into a Ltd Company as a result of attending an office Christmas party, it is important to understand the risks that affiliating yourself with your end client’s organisation can have.

One of the factors that HMRC investigate when looking into a contractor’s working practises is whether they act as ‘part and parcel’ of a client’s in-house staff. There is an argument to be made that a contractor, who is not employed by the company that has engaged them, who attends a work party paid for and organised by a client is, in turn, integrating themselves within the client’s workforce. This could be viewed by the Revenue as the contractor acting ‘part and parcel’ of a client’s employees. Although this is not a major factor when considering IR35, it is advised that a contractor considers the way in which they always engage with their client, especially when it could impact their IR35 status.

In isolation, being considered ‘Part and Parcel’ is not a decisive indication of acting inside of IR35. However, contractors must be mindful that subtle ways in which they engage with their client could be flagged against them in the event of an IR35 case.

Further IR35 Factors to Consider

There are many minor factors that can affect a contractor’s IR35 status that should be considered when operating on a contract. Staff discounts, gym memberships, training courses, and any other subsidised event should be carefully considered or even avoided. Wearing ID badges and having business cards that reflect the end client’s organisation are also considered as unsuitable for anyone operating via a PSC, and even having email addresses and email signatures that reflect the end client’s company details or logo can be considered a ‘red flag’.

Attending the office Christmas party is certainly not enough for HMRC to launch an enquiry over alone, but every contractor should be making sure that they have put the correct steps in place should they ever be investigated. If they were ever under HMRC’s microscope, then a contractor must be confident that they have a strong case that they are a business in their own account and are not operating as a disguised employee.

If you require advice on IR35 and Christmas Parties or any related accounting services, please read our other guides and articles. As always if you have any questions, please contact our team by calling 01162437868 or emailing us at enquiries@qaccounting.com.