IR35 status is determined by the real-world nature of a working arrangement, not by what a contract says. HMRC and employment tribunals look at the substance of how work is actually performed. This checklist covers the ten most important factors — the same ones HMRC's own CEST tool and tax tribunals apply when assessing whether a contractor is truly self-employed or a disguised employee.
The three primary factors
Three factors carry the most weight in any IR35 determination:
1. Control — Does the client control how you work?
Outside IR35 indicators: You decide how, when, and where to complete the work. You use your own methods and professional judgement. The client specifies the outcome but not the process. You can work remotely and set your own hours.
Inside IR35 indicators: The client directs your working hours and location. You follow the client's processes and methods. You attend the client's daily standups and team meetings as a regular participant. You need permission to take time off.
2. Substitution — Can you send someone else to do the work?
Outside IR35 indicators: Your contract allows you to provide a substitute (and you have actually exercised this right, or could). The client cannot refuse a competent substitute without good reason. You are responsible for finding, vetting, and paying any substitute.
Inside IR35 indicators: The contract requires you personally to perform the services. The client selected you specifically and expects you to attend. The substitution clause exists only on paper and has never been and would never be used in practice.
3. Mutuality of obligation — Are you and the client obliged to keep working?
Outside IR35 indicators: The client has no obligation to offer you further work when a project ends, and you have no obligation to accept it. Each engagement is truly discrete with a clear end date and deliverable.
Inside IR35 indicators: Your contract automatically renews. The client expects you to be available continuously. You are effectively on a rolling engagement with no genuine end date. Your work is business-as-usual rather than a defined project.
Seven additional factors
4. Integration — Are you part of the organisation?
Are you listed in the company directory? Do you have a company email address, business card, or access badge identifying you as part of the client? Do you manage client employees? Integration into the client's structure is a significant inside IR35 indicator.
5. Financial risk — Do you bear genuine business risk?
Do you have to correct errors or unsatisfactory work at your own cost? Do you invoice for deliverables or for time? Can you profit from delivering efficiently — or are you simply paid for showing up? True contractors bear financial risk; employees do not.
6. Equipment — Who provides your tools?
Outside IR35 contractors typically provide their own equipment. If you use the client's laptop, phone, and software licences exclusively, this weakens an outside IR35 position — though it is not determinative on its own.
7. Exclusivity — Are you working only for this client?
Working for multiple clients simultaneously is a strong indicator of genuine self-employment. If you are contractually or practically prohibited from taking other work during the engagement, this points toward employment.
8. Length of engagement
Very long engagements — particularly those exceeding two years — attract increased HMRC scrutiny. They suggest the contractor has become embedded in the client's operations in a way more consistent with employment than self-employment.
9. The contract itself
While the written contract is not determinative, it must be consistent with the actual working arrangement. Courts will look past a contract that claims outside IR35 status if the reality of the engagement is employment. The contract should accurately reflect the genuine terms.
10. The HMRC CEST tool
HMRC's Check Employment Status for Tax (CEST) tool provides an automated assessment. It is not legally binding but reflects HMRC's thinking and provides useful documentation. HMRC has committed to stand behind CEST results provided the facts are entered accurately. Run the assessment and keep a copy of the result.
The financial impact of getting it wrong
If HMRC challenges a contract you treated as outside IR35 and wins, you face unpaid tax, employer and employee NI, interest, and potentially penalties. For large clients who make incorrect SDS determinations, the liability can run to millions. For contractors, a two-year inside IR35 engagement that was treated as outside could result in a five- or six-figure unexpected tax bill.
Use the IR35 Calculator to see the annual take-home difference between inside and outside IR35 at your day rate. Use the Day Rate Calculator to factor in the higher rate needed to compensate if you must work inside IR35.