A self employed person works under a ‘contract for services’ and an employee under a ‘contract of service’.
The contract does not need to be in writing – an oral or implied contract is legally binding if the parties intend it. The terms of the contract can be collected from the circumstances surrounding the engagement.
Where there is a written contract, HMRC may look through the contract to find the facts of the case. While often important in deciding an individual’s status, the terms of the contract are not a conclusive element.
This is seen as a ‘tie breaker’ issue – if a contractor’s status is unclear after consideration of the other issues surrounding IR35, the intended relationship of the parties can be used determine the outcome of an enquiry.
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