IR35 Case Law and Real Examples

Why IR35 Case Law Matters More Than HMRC Guidance

If IR35 were decided purely by guidance notes, life would be simpler.

But IR35 isn’t ultimately decided by checklists or tools. It’s decided by courts and tribunals, using real facts from real working arrangements. That’s why case law matters so much.

HMRC guidance shows how the tax authority thinks. Case law shows how IR35 is actually interpreted. And the two don’t always align.

What Case Law Does (and Doesn’t) Do

IR35 case law doesn’t create a single rule contractors can follow forever.

Instead, it:

• Interprets employment status principles

• Applies them to specific facts

• Shows how evidence is weighed

Each case turns on its own facts, but patterns emerge. Those patterns are what contractors can learn from.

The Central Theme Across IR35 Cases

Across decades of decisions, one theme dominates:

Working practices outweigh paperwork.

Tribunals repeatedly say the same thing:

• Contracts matter

• But reality matters more

Cases are rarely lost because a clause was missing. They’re lost because day-to-day behaviour contradicted the business narrative.

Control: How Courts Actually View It

In IR35 cases, control is rarely absolute.

Courts accept that:

• Clients specify outcomes

• Projects have constraints

• Standards must be met

What they examine is method control.

Key questions tribunals often ask:

• Could the contractor decide how to approach the task?

• Were they told what to do, or what needed doing?

• Did they need permission to change approach?

Where contractors retained discretion over how work was delivered, cases often leaned away from employment.

Substitution: Why It’s Powerful but Not Magical

Substitution has helped contractors, but only when it’s real.

Cases show that tribunals look for:

• A genuine right to substitute

• No unreasonable client veto

• Practical possibility, not theory

Where substitution existed only on paper, courts discounted it entirely.

Where substitution was credible, even if never exercised, it often carried real weight.

Mutuality of Obligation: Courts vs HMRC

This is where tribunals and HMRC often part company.

Courts consistently distinguish between:

• Ongoing obligation (employment)

• Task-based obligation (contracting)

Many successful contractor cases hinge on the absence of obligation beyond the agreed scope.

If:

• Work ended when tasks ended

• No expectation of further work existed

• Either party could walk away cleanly

…courts were less likely to find employment.

Financial Risk: Small Signals, Big Impact

Courts don’t expect contractors to gamble their livelihoods.

But they do look for:

• Responsibility for fixing defects

• Exposure to wasted effort

• Payment linked to delivery, not attendance

Even modest financial risk has helped tip cases away from employment.

It’s not about dramatic losses. It’s about commercial exposure.

Integration: Where Many Cases Turn

Integration is often decisive.

Tribunals ask:

• Was the contractor part of “the organisation”?

• Or were they clearly external?

Warning signs in case law include:

• Managing permanent staff

• Appearing in internal directories

• Representing the company externally

• Receiving staff benefits

Contractors who remained visibly separate tended to fare better.

Why Some Contractors Lose Despite “Good” Contracts

Case law shows a recurring pattern:

• Contracts drafted well

• Working practices drifted over time

• Evidence contradicted clauses

Tribunals place little sympathy on:

• “That’s not how the contract was meant to work”

• “That clause was never enforced”

What matters is what happened, not what was intended.

Why High-Profile IR35 Cases Distort Perception

Many contractors form opinions based on a handful of famous cases.

That’s misleading.

High-profile cases often involve:

• Very long engagements

• Deep integration

• Complex corporate structures

Most contractor engagements are simpler and assessed accordingly.

Everyday cases rarely make headlines, but they shape precedent quietly.

What Contractors Should Actually Learn from Case Law

Instead of memorising cases, contractors should learn principles:

• Evidence beats intention

• Independence must be visible

• Consistency matters more than clever clauses

• Business logic must exist

Case law rewards commercial coherence, not technical gymnastics.

Case Law and Modern IR35 Reforms

Despite reforms shifting responsibility, case law remains relevant.

Why?

• Employment status principles haven’t changed

• Tribunals still apply the same tests

• SDS decisions can be challenged using precedent

Understanding case law strengthens challenges and discourages weak determinations.

A Practical Way to Use Case Law

Instead of asking “Which case matches me?”, ask:

Would a neutral third party recognise this as a business arrangement?

If the answer is yes and you can evidence it, case law tends to support you.