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IR35: A Status Test Cannot Be Passed With A Contract Alone

ended 04. August 2026

The off-payroll working rules, still universally called IR35, ask a single question. Strip away the limited company in the middle and look at the relationship between the worker and the end client: would that relationship, on its own terms, look like employment? The answer is not found in the wording of the contract. It is found in what actually happens week to week, and the courts have been consistent about that for decades.

Three things carry most of the weight. Control, meaning how far the client directs what is done, and how, and when, and where. Personal service, meaning whether the worker must do the job themselves or can genuinely send a substitute. And mutuality of obligation, meaning whether the client is bound to offer work and the worker bound to accept it. A contract that grants an unrestricted right of substitution is worth very little if everyone knows the client would never accept one. This is where contractors get caught, and it is also why a template contract bought online is not protection. The rules also split responsibility by who the client is: for many private-sector engagements a small client leaves the determination with the worker's own company, while medium and large clients make it themselves, which means two contractors doing identical work can carry the risk in different places.

Is a status test that turns on day-to-day working practice workable for small businesses and contractors, or does it leave both sides guessing?

Where does the real risk sit now, and how often do you see a contract that says one thing while the working arrangement says another?

What should a contractor or an engager check first, and do you have a case where the paperwork and the practice had drifted apart? If so, please give as much colour and detail as possible.

2 responses from the Newspage community

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Editor
Harvey Dhillon
Founder & CEO at Zmartly
The test is workable. The way most people try to pass it is not. Must you turn up yourself? Who decides how the work gets done? Does the rest of the deal read like employment? Courts have used those conditions since 1968 and again in 2024. HMRC tells its staff to check practice against the contract. The contract is written once. The job keeps moving. They drift apart on most files I see. A small private-sector client leaves the call and risk with your company. A larger one decides itself. Paying you direct, it carries the risk whatever care it took. Through an agency the risk moves down the chain only if that client took reasonable care and gave you and the agency the decision, with reasons. Same job, bigger client, someone else liable. Hard to defend. No client's file goes in print. Year one contract, year three desk. Check substitution first, not whether you ever sent someone. Ask what happens if you send someone else on Monday. A no every time may mean that clause is decoration.
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Editor
Nouran Moustafa
Practice Principal & IFA at Roxton Wealth
IR35 is difficult because businesses must turn messy human behaviour into a binary tax answer. The contract matters, but it cannot rescue an arrangement that operates like employment. For medium and large private-sector clients, and the public sector, the client normally makes the status decision; with a small private-sector client, responsibility generally remains with the contractor’s company.

The first check should be reality: who controls the work, whether substitution would genuinely be accepted, whether the contractor can refuse work and whether they carry real financial risk. Then compare that reality with the contract.

A classic drift is a consultant hired for a defined project who gradually becomes embedded: fixed hours, manager approval for leave, internal meetings, company equipment and no realistic substitute. The paperwork still says “independent contractor”, but the relationship has become employee-like. Regular status reviews matter more than a clever template.