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.