When does IR35 apply?
To decide whether IR35 applies when a PSC is used involves considering the underlying nature of an individual worker’s relationship with a client, in particular examining whether the individual would in law have been an employee if they had not been engaged by the client via the PSC. In other words, one has to decide whether the individual would have been an employee if they had contracted directly with the client to carry out the particular work concerned personally. This “disguised employment” test is not an easy test to apply. Each case depends on its own particular facts. Other tests must also be met to see whether IR35 applies but they are easier to apply in practice. If all relevant tests are met, IR35 will apply. There is some case law on the subject of how to determine whether IR35 applies, but because each case depends on its own facts, the case law is of limited assistance.
As to how a right of a worker to substitute someone else to do any of the work for their business client is relevant to deciding whether IR35 applies to a case, please see the Guidance Note.
Whether you work through a PSC or you are a business engaging a PSC, you need to consider whether IR35 applies to you.