How to Check IR35 Substitution, Control, and Mutuality Before You Sign

A one-person PSC is about to sign a client SOW that sales calls standard outside IR35. The Independent Contractor heading is not the status — HMRC reads paper and Monday practice. Fill a one-page keep / narrow / walk log before you sign: who pays a deputy, who directs the how, whether this SOW ends, and whether an SDS exists. Then keep, narrow, or walk.

On 3 September 2026, Dario — a one-person UK PSC — has a six-month platform SOW. Clause 8 lets him send a suitably qualified substitute subject to the Client’s prior written approval, which the Client may withhold at its sole discretion. The SOW names him, sets core hours on site two days a week, and auto-extends on 30 days’ notice. Procurement says they don’t issue SDS for outside roles. Kickoff is Monday. The hidden risk: HMRC builds a notional contract from paper and practice, and that veto is the unlimited fetter that can refuse a substitute for any reason.

Disclaimer: Checkory provides AI support, not legal advice. Consult a qualified lawyer for binding decisions.

How do you read paper versus practice before HMRC does?

Freeze the packet — the SOW plus any MSA — a master services agreement, the frame this SOW hangs on — or agency chain. Write two columns: what the sentence says, and what Monday will look like. HMRC does not simply import the PSC wording. Search substitute, consent, hours, location, and SDS before you treat the heading as status.

ESM8560 says HMRC constructs a notional worker–client contract; the client’s view is particularly important — would they permit a deputy, who pays them, did it happen. Autoclenz Ltd v Belcher [2011] UKSC 41 (England and Wales) lets a tribunal discard written terms that are not the true agreement. GOV.UK off-payroll working still decides from terms and working practices. Don’t start with CEST and answer the hoped-for clause. If the same PDF also has revisions, Net 90, or IP, that walk is the freelance clauses guide — then return to this triad. Typical mistake: treating Independent Contractor as the status.

What does an unconditional substitution right look like versus a client-veto?

Write who pays the deputy, who can refuse them, and on what grounds. A genuine right sits with the PSC: the company may send a suitably skilled person, pays them, and stays liable. The client may object only on defined grounds — skills or security — not taste.

Dario’s sentence is the unlimited fetter. ESM8565 tells officers not to accept a right where the engager could refuse a substitute for any reason. Prior approval is not automatically that fetter. ESM0535 treats an unqualified, genuine right as a strong pointer; unused is not fatal if the right is real. A clause the end client never accepted is the sham risk in ESM0530 and Express & Echo v Tanton (England and Wales). For example, agency paper the client never saw does not become the notional contract. Don’t treat “we have a substitution clause” as the pause sentence if they can refuse anyone. Personal services / you must perform is a High flag — a high-severity line a human must open. Unused plus a veto plus a named individual is a pause.

How do you log control — hours, place, and who directs the how?

Write who decides method versus deliverable. Control is the right to direct what, how, when, and where — not whether a manager hovered yesterday. The client may set what is due and when a milestone lands. They should not direct how he builds it.

ESM11060 lists those four areas; the right matters even if unused. Outcome plus professional method supports a contractor picture. Core hours, a named desk two days a week, follow the squad’s ceremonies, and a staff handbook as if he were on payroll are High. Don’t treat remote work as an automatic win. In practice the two-day desk plus core hours is the pressure point — verify who owns the how before kickoff.

What does mutuality require after this SOW?

Lock a defined end date or a defined deliverable. Neither side should be obliged to offer or accept further work after this SOW. Any extension is a new offer — and may need a new SDS. A no-ongoing-obligation sentence is colour, not a wipe.

ESM0543 says basic mutuality exists while the worker is working. HMRC v PGMOL [2024] UKSC 29 (United Kingdom; not an IR35 or PSC case) held that minimum mutuality can exist on a single match. Auto-extend until notice is the open-ended colour. If the same PDF also buries deliverable counts, use the statement of work checklist, then return to the end date. Don’t treat a “no mutuality” line as a standalone win. Day-rate versus fixed fee does not decide the case.

When to request an SDS — or a 45-day size confirmation?

Ask for a valid Status Determination Statement, or send a written size confirmation and wait 45 days. Public-sector and medium or large private clients must issue an SDS: conclusion (would he be an employee if engaged directly), reasons, and reasonable care. Advertising outside IR35 is not an SDS.

ESM10013 and GfC4 part 9 set those three tests. Pass the SDS to the worker and the contractual party on or before payment. Example 3: a large client that concludes “not caught” but issues no SDS keeps the PAYE risk. “We don’t issue SDS for outside roles” is that hole. CEST can be a valid SDS if answers match practice. ESM10011A gives 45 days to confirm size. Small non-public → Chapter 8, and he still runs this triad. Don’t invent a 6 April 2026 size flip — ESM10006A puts the earliest usual impact of the £15m / £7.5m rise in 2027/28. He cannot know the client’s size from a blog; he can ask.

Checklist before you start the engagement

You are done when the one-page log is filled and you can point to one sentence that would pause signature. That is the success bar: paper versus practice, who pays / who vetoes, how / hours / place, mutuality after this SOW, then SDS or a 45-day size confirm. Then keep, narrow, or walk.

Workflow: packet → paper vs practice notes → substitution (who pays / who vetoes) → control (how / hours / place) → mutuality after this SOW → SDS or 45-day size confirm → keep / narrow / walk. After the log, upload the same PDF to Checkory document analysis for a first-pass — a first machine scan that highlights headings before you read every page. A human still opens every High gap. If the tax is material, send the file to counsel — a qualified tax or employment lawyer. Escalate when a medium or large client refuses both an SDS and a size letter.