An IR35 glossary to break through the IR35 jargon

With just over a month to go until the new IR35 legislation kicks in on 6th April 2020, our key…

Author Photo by Martin Baxter

With just over a month to go until the new IR35 legislation kicks in on 6th April 2020, our key words are preparation, preparation and preparation.

A big part of being prepared for IR35 is understanding IR35. This may sound obvious, but the fact is there is so much jargon involved in the legislation that simply understanding what it all means can be a minefield in itself – especially for those newer to contracting. We’ve put together this glossary of the most-used key terms around IR35 so that you have a go-to guide should you find yourself wondering, “Mutuality of Obligation”…. What on Earth does that mean?


  • The organisation through which the contract is arranged. In many circumstances, they are often also the fee payer.

Blanket decision/determination

  • This is when an end client applies a status to all of its contractors, rather than assessing them as individuals, e.g. saying all contractors are inside IR35 regardless of working practices. Note, this does not mean where a client has implemented a NO PSC policy


  • CEST stands for Check Employment Status for Tax. This is HMRC’s tool that allows you to check whether they think you are an employee or self-employed.

Disguised employee

  • An individual being paid as a contractor who if not for the intermediary they are working through (most often a limited company), would be considered an employee within the organisation. Therefore, HMRC would deem they are not paying the appropriate tax and NICs.

End client

  • The organisation that the contractor is delivering a service for. They may be the fee payer, or they may have engaged an agency/recruiter to manage contractors on their behalf. They are responsible for providing a Status Determination Statement.

Fee payer

  • The organisation that pays the PSC contractor. This is usually the agency/recruiter but can also be the end client. They are the ones who take on the liability under the new reforms.

Inside IR35

  • This is the term used when HMRC see a contractor as a disguised employee and therefore are liable to have their tax and NICs deducted at source.

IR35 assessment

  • An assessment to determine whether or not a contractor is inside IR35 or outside IR35. We recommend contractors have their own assessments carried out so that they can make informed decisions regarding Status Determination Statements.

IR35 insurance

  • Cover to ensure contractors are protected in the case of IR35 enquiries from HMRC. There are different levels of Kingsbridge insurance and you can view.

Mutuality of Obligation (MOO)

  • This term refers to whether there is any obligation on the end client to offer work or the contractor to accept work. If this were the case, a contractor could be seen as inside IR35.


  • The acronym for National Insurance Contributions.

Outside IR35

  • This is the term used for any contractors not seen as employees and therefore are considered genuine self-employed contractors.

PSC Contractor/Personal Services Company Contractor

  • A contractor who operates using a Limited Company. The end client or agency/recruiter engages the company rather than the individual.

Right of substitution

  • This means that the contractor is able to send a suitable alternative to carry out work in their place.

Status Determination Statement (SDS)

  • This is the IR35 assessment provided by the end client declaring a contractor’s employment status for the duration of the assignment.

There are many more terms that you may come across so, check out the IR35 section of our blog for information.

Related topics

Contractors IR35