The most common and most likely answer to this crossword clue is the 5 plus 7 letter word SHEEP SHEARER
I've seen this crossword clue in The Daily Telegraph
S
H
E
E
P
S
H
E
A
R
E
R
Buddy explains!
The straight part
We know that "He cuts inside the fold" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case he cuts inside the fold = sheep shearer.The cryptic/wordplay part
In cryptic crossword there's often an wordplay/cryptic part as well.This part involves a more complex hint, such as an anagram, homophone, hidden word, etc.
Sadly, We don't have an explanation for this specific crossword clue yet.