Contract Review for IR35: What to Look For UK 2026

A contract review for IR35 means checking whether your contract includes the clauses that support an outside IR35 position, such as substitution, mutuality of obligation, control, and equipment use, and whether those terms match the way you actually work in practice. For UK contractors, limited company directors, and freelancers, that review matters because HMRC will look beyond the paper contract when deciding your status, and a weak or inaccurate agreement can push you inside IR35 with tax and financial consequences.

A well-drafted contract is essential for an outside IR35 position, but it is not sufficient on its own. HMRC will look at the actual working practices, not just the paper contract. That said, a contract containing the right language gives you a strong foundation and demonstrates that both parties understood the engagement to be outside IR35 from the outset. Below, we look at the key IR35 clauses to check, the contract red flags that can undermine your position, when a professional review is worth using, and why your written terms must align with the reality of the engagement.

Contracts must reflect reality

A contract claiming substitution rights that have never been used, or claiming no control when the client dictates your working hours, will not protect you. The contract must accurately reflect how the engagement actually works.

Essential clauses for an outside IR35 contract

Substitution clause

The contract should include a clear, unfettered right of substitution. Key elements:

• You (the contractor or your PSC) can provide a suitably qualified substitute

• The client cannot unreasonably refuse a substitute

• The cost of the substitute is borne by you, not the client

• Ideally, the contract specifies that substitution has occurred or is genuinely available

Mutuality of obligation

The contract should explicitly state that the client is under no obligation to offer further work beyond the current assignment, and that the contractor is under no obligation to accept it. A clause stating the relationship is project-based and ends on completion of the defined scope is helpful.

Control

Language should reflect that you determine how the work is carried out. Avoid language such as "working under the direction of" or "reporting to [named manager]" which implies supervision. Instead use "delivering the agreed outcome" or "providing services in accordance with your professional judgement".

Equipment and location

Where possible, include that you will use your own equipment and work from your own premises. IR35 also looks at financial risk, such as whether you must rectify defective work at your own cost. This is not always practical, but where it is accurate, it should be reflected, alongside integration, which is about remaining separate from the client's internal staff rather than being treated like part of the team.

Red flags in a contract

• "You must attend the office between [hours]" (indicates control over hours and location)

• "You must obtain prior approval before working for other clients" (indicates exclusivity)

• "You are required to follow the client's policies and procedures" (indicates integration)

• "You may not provide a substitute without prior written consent from the client" (restricts substitution)

• A notice period for termination on both sides without specific cause (indicates mutual obligation)

If you are caught by IR35, the income can be deemed employment income, which changes the tax treatment and can leave contractors paying standard income tax and National Insurance.

Even without a written contract, HMRC can still assess the engagement using a hypothetical contract based on the working arrangements.

Getting a professional contract review

Many IR35 specialists offer an IR35 contract review through a contract review service for a fixed fee (typically £100 to £300). They will identify risky clauses, provide a detailed report, share an expert opinion on the likely IR35 status, and include a concise list of recommended changes based on the contract. A full professional review typically takes 3-5 working days once the required documentation is received.

Responsibility for determining IR35 status depends on client size and type, and the end client is usually responsible for medium and large organisations under the off-payroll working rules. You should obtain a status determination statement from medium and large clients and use the review to assess or challenge that decision if needed. HMRC’s Check Employment Status for Tax tool can assist in assessing an engagement, but expert advice may still be needed.

This is money well spent before starting a significant engagement because it can reduce risk, including payroll tax issues and HMRC penalty risk, while strengthening the evidence behind your status position and showing you took reasonable steps. It also helps ensure your contract and actual service match in practice, which can offer extra support if HMRC reviews the engagement. Find an IR35 specialist through our directory.

Contract review vs working practices review for IR35 status

A contract review alone is insufficient. Ask your adviser for a contract and working practices review, ideally through a questionnaire that is working practices based and covers how the service is delivered on a daily basis as well as the contract terms. The combination of a well-drafted contract and consistent working practices gives the strongest outside IR35 position. Aligning the written agreement with the working arrangements can provide relevant evidence, help you fully understand your position, and support future contracts. This broader review can also strengthen your case that you are outside IR35, which generally means lower taxes, retaining more income, and reducing risk later on.