HMRC does not just look at your contract. They look at how the engagement actually worked in practice. Contractors have lost IR35 cases despite having well-drafted "outside" contracts because their day-to-day working arrangements looked like employment. Evidence of your actual working practices is what protects you.
Why Evidence Matters More Than Your Contract
When HMRC investigates an IR35 case, they follow what courts call the "reality test" — looking beyond the written contract to how the engagement actually operated. In multiple tribunal cases, judges have disregarded contract wording entirely because the working reality told a different story.
A contract that gives you substitution rights means little if you attended the client's daily stand-up for two years and couldn't take a day off without client approval. Conversely, a contractor who genuinely worked on their own terms, used their own equipment, and regularly sent substitutes has a strong position even if the contract drafting wasn't perfect.
The evidence you keep during a contract is your defence. HMRC investigations can open years after a contract ends — by which point memory fades, emails get deleted, and the client has moved on. Contemporaneous records are dramatically more persuasive than reconstruction from memory.
The Outside IR35 Evidence Checklist
Signed contract with your PSC
Every version, including amendments and renewals. The substitution clause, control provisions, and MOO language are what HMRC will scrutinise first. Keep both the agency/client contract and your PSC's contract with the agency.
Contract review or IR35 opinion
A written opinion from a qualified IR35 specialist (solicitor, accountant, or specialist firm) that the contract supports an outside IR35 position. Carries significant weight with HMRC and demonstrates reasonable care was taken.
Statement of Work or deliverables specification
Documents that describe what outcomes you're contracted to deliver, rather than hours to be worked. A deliverables-based scope supports the "in business" argument — you're being paid for results, not time.
CEST tool result (if favourable)
Print and save the result page if HMRC's CEST tool gives an outside IR35 result. HMRC cannot contradict their own tool's output in a tribunal without undermining their own position — though CEST has limitations and a positive result isn't a guarantee.
Correspondence during contract negotiation
Emails where you negotiated terms, pushed back on clauses, or discussed the scope of work. Demonstrates you were dealing at arm's length as a business, not as a de facto employee accepting whatever was offered.
Working practices log (contemporaneous)
A brief weekly record of how you worked — location, equipment used, who (if anyone) directed your tasks, whether you attended client team meetings, and any instances where you exercised independence. Does not need to be lengthy; a few bullet points per week is enough. The key is that it was written at the time, not reconstructed later.
Evidence of substitution (if it happened)
If you ever sent a substitute — even once — this is some of the strongest outside IR35 evidence possible. Keep: the written agreement with your substitute, invoices your substitute sent to your PSC, and any client acknowledgement of the substitution. A substitution that actually occurred is almost irrefutable evidence of a genuine substitution right.
Records of declined work or absence without client approval
Emails or calendar records showing you were unavailable for certain days without needing to justify it to the client, or instances where you turned down additional work. Demonstrates lack of mutuality of obligation.
Evidence of working from your own premises
Records showing you regularly worked from home or your own office rather than the client site — utility bills for the period, broadband bills, or simply calendar/timesheet records. Reduces the "integration" argument.
Project-specific communications showing independence
Emails or Slack messages where you proactively proposed approaches, pushed back on client direction, or resolved issues without being told how to. Demonstrates control over the method of work — a key IR35 status test.
Invoices from your PSC to the agency or client
Every invoice for the engagement. These should be on company letterhead with your PSC's company name, registered number, and VAT number. Invoices that look like payslips — fixed amounts each month, no variation — can be a red flag. Invoices that vary by days worked and are in the PSC's name look more commercial.
Evidence of rectifying defective work at your own cost
Any instances where you fixed problems or redid work without charging extra — and where the client didn't pay for that additional time. This demonstrates financial risk, which is a key indicator of genuine self-employment.
Your own equipment purchases
Receipts or records showing you use your own laptop, software licences, or tools rather than client-provided equipment. Particularly strong if you use the same equipment across multiple clients.
Professional indemnity / liability insurance
Having your own PI insurance (rather than being covered under the client's policy) is a marker of being in business on your own account. Keep policy documents and renewal records.
Evidence of multiple clients (past and present)
A contractor who has worked for multiple clients over time — even if currently engaged with just one — is in a much stronger position than one who has had a single "client" for five years. Keep engagement letters, invoices, or contracts from other clients.
Business stationery and marketing materials
Your PSC's website (even a simple one), business cards, LinkedIn profile showing director/contractor status, or any other materials demonstrating you operate as a genuine business and market your services independently.
CPD / training investment paid by your PSC
Training courses, certifications, or professional subscriptions paid by your limited company — not the client. Genuine contractors invest in their own skills; employees are trained by their employer.
Separate business banking and VAT registration
Straightforward but worth noting — your PSC should have its own bank account, issue invoices with its VAT number, and file its own accounts. These basics are expected; their absence would be a red flag.
The Reality Test: Working Practices That Help vs. Hurt
This is what HMRC actually looks at when they investigate. Each of these comparisons has featured in real tribunal cases.
⚖️ Real Working Practice Examples
Your Working Practices Log — Copy This Template
Keep a brief weekly note during every outside IR35 contract. It takes five minutes. If HMRC ever investigates, this is the difference between reconstructing events from memory three years later and having a contemporaneous record they cannot challenge.
Week ending: [DATE] Client: [CLIENT NAME] Contract ref: [REF] Location: □ Own home/office: [DAYS] □ Client site: [DAYS] □ Other: [DAYS] Equipment used: [Own laptop / Own phone / Client equipment — specify if any client equipment used] Direction of work: □ Worked independently on agreed deliverables □ Received task direction from [NAME/ROLE] — describe: [BRIEF NOTE] Meetings attended: □ Project/delivery meetings (relevant to engagement) □ Internal client all-hands / team meetings (note if attended and why) Schedule control: □ Set own hours □ Expected to work set hours — describe: [BRIEF NOTE] Any notable events this week: [e.g. turned down additional scope outside contract; substitute arrangement discussed; worked off-site for own business development; completed deliverable ahead of schedule without client oversight] Signed: [YOUR NAME] Date completed: [DATE]
How Long to Keep Evidence
Do not respond to HMRC's initial enquiry letter yourself. If you have IR35 insurance, contact your insurer immediately — before responding to HMRC. Insurers have specialist IR35 defence teams who handle the enquiry on your behalf. Responding without professional advice is one of the most common mistakes contractors make in IR35 investigations.
Don't have IR35 insurance yet?
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