IR35 determinations are ultimately settled by employment tribunals and courts. Over the past two decades, several landmark cases have shaped how IR35 is interpreted. Understanding the key principles from these cases helps contractors structure their engagements more effectively.
Ready Mixed Concrete (1968)
Although predating IR35, this case established the foundational three-part test for employment status: personal service, control, and mutuality of obligation. These three tests remain the starting point for every IR35 determination today.
Dragonfly Consulting (2008)
This case reinforced the importance of looking at the actual working relationship rather than the contractual terms. The tribunal found that despite a contract containing substitution and other self-employment clauses, the reality of the working arrangement pointed to employment. The lesson: your contract must reflect how you actually work.
Atholl House (2022)
The Atholl House case involving a BBC presenter clarified how the IR35 assessment should be conducted. The Upper Tribunal confirmed that the correct approach is to construct a hypothetical contract based on actual working practices and then assess whether that hypothetical contract would be one of employment or self-employment.
Practical lessons from case law
The consistent thread through IR35 case law is that substance matters more than form. A well-drafted contract helps, but only if it accurately reflects reality. Contractors who want to strengthen their IR35 position should ensure they exercise genuine substitution rights where possible, maintain control over their working methods, work on deliverable-based projects rather than time-based arrangements, and demonstrate that they are running a genuine business with multiple clients, marketing activities, and financial risk.