IR35 by Sector: Where Status Risk Concentrates

Every IR35 case turns on the same employment status tests: personal service, control, mutuality of obligation and the wider question of whether the contractor is in business on their own account. Those tests were laid down in Ready Mixed Concrete (1968) and refined ever since, most recently by the Supreme Court in PGMOL (2024) on mutuality. Yet the way the tests bite depends heavily on the industry. A locum doctor, a contract developer and a freelance presenter can sign superficially similar contracts and end up with opposite outcomes, because the working reality behind each contract is so different. This guide maps the sectors where status risk concentrates and explains what an assessor actually weighs in each one.

One omission is deliberate. Construction contractors face overlapping CIS rules that interact with off-payroll working in ways that deserve their own specialist advice, so this guide does not attempt to cover them.

IT and software contracting

IT was the original IR35 battleground. The legislation arrived in 2000 largely in response to the Friday-to-Monday pattern, where an employee resigned on Friday and returned on Monday doing the same job through a personal service company. A quarter of a century later, software and infrastructure contracting remains the largest population of PSC workers and the sector where the arguments are most developed on both sides.

The strongest outside positions in IT rest on project-based statements of work. A contractor engaged to deliver a defined migration, integration or build, with acceptance criteria and a completion point, looks far more like a business supplying a service than a worker filling a seat. The weakest positions are open-ended augmentation roles: a developer embedded in a client team, picking up tickets from the same backlog as employees, attending the same stand-ups, line-managed by the same lead. The day-to-day reality of agile delivery can erode an outside position even where the contract reads well, because sprint planning, ticket allocation and code review by client staff all feed the control picture.

Practical markers that strengthen an IT contractor’s case include a genuine right of substitution that the client would honestly accept, deliverable-based milestones rather than pure time and materials, own equipment and tooling where security policy allows it, and visible business infrastructure such as insurance, a company website and concurrent or sequential clients. A contract review by a specialist is most valuable before signature, when the statement of work can still be reshaped to reflect a project engagement rather than a role.

Healthcare locums and agency clinicians

Healthcare sits almost entirely on the public sector side of the line. NHS bodies have been responsible for status determinations under Chapter 10 of Part 2 ITEPA 2003 since April 2017, four years before the private sector reform, so locum doctors, agency nurses and allied health professionals working into NHS trusts have lived with engager-led determinations longer than almost anyone else.

The structural features of clinical work make outside positions hard to sustain in a hospital setting. Clinical governance requires that locums follow trust protocols, work within rotas set by the engager, use the engager’s facilities and equipment, and submit to supervision arrangements that exist for patient safety rather than tax reasons but still evidence control. Personal service is close to absolute: a trust books a named, registered clinician and no substitute can be sent without going back through the framework. Framework agreements between trusts and staffing agencies standardise terms in ways that leave little room for individual negotiation.

That does not make every clinical engagement inside. Private hospitals and clinics below the engager-size thresholds can leave the determination with the PSC under Chapter 8, and some genuinely independent practice, such as insourcing companies delivering whole clinics or theatre lists under their own clinical leadership, supports a business-on-own-account analysis. But a clinician taking standard agency shifts into an NHS trust should expect an inside determination and plan their finances accordingly, which usually means umbrella or deemed-payment support rather than fighting a determination the trust will not revisit.

Financial services and interim management

Financial services responded to the April 2021 private sector reform more defensively than any other industry. Several large banks and insurers announced before the rules even took effect that they would no longer engage contractors through PSCs at all, requiring agency payroll or umbrella employment instead. Others kept PSC engagement open in name but adopted assessment processes so conservative that inside determinations became the default. The sector’s regulatory culture, where compliance risk is managed by removing it rather than weighing it, translated directly into blanket-determination behaviour.

For contractors this created a two-tier market. Roles at PSC-banning institutions are simply unavailable on an outside basis regardless of the working reality, and no status argument changes that, because the engager has made a commercial decision rather than a status determination. Roles at institutions that still assess case by case turn on familiar factors: whether the interim is delivering a defined change programme or covering a permanent vacancy, how much autonomy they have over method and hours, and whether they hold any position, such as approved-person responsibilities, that ties them personally into the client’s management structure.

Interim managers face a particular tension. Seniority cuts both ways: a turnaround specialist brought in to deliver a defined outcome with genuine autonomy can be solidly outside, while an interim filling a line-management chair, with direct reports and a place on the organisation chart, looks like an office holder or employee whatever the contract says. Where a determination seems to reflect policy rather than the facts, the client-led dispute process exists for a reason, and help challenging a status determination is worth taking before the engagement starts rather than after the first deemed payment.

Oil, gas and energy

Energy contracting, particularly offshore, has its own grammar. Day rates are high, engagements run on rotational patterns such as two or three weeks on followed by the same off, and the work happens on installations where the operator controls almost everything about daily life for safety reasons. Those features pull in different directions when status is assessed.

The rota and the installation environment feed the engager’s control argument. A contractor on a fixed rotation, transported by the operator’s logistics, housed in the operator’s accommodation, working shifts set by the offshore installation manager and subject to permit-to-work systems has little practical control over when and where work is done. HMRC assessors lean on this. The counterargument is that safety-critical site rules apply identically to employees, visiting engineers and genuinely independent specialists, so they say little about the relationship itself. What matters more is control over how the technical work is done: a specialist well-test engineer or subsea inspection contractor directing their own discipline, mobilised for a defined campaign and demobilised when it ends, retains a respectable outside case despite the rota.

Energy contractors should also watch the engagement chain. Many work through international agencies and consultancies, and where the client is wholly overseas with no UK presence the determination can revert to the PSC under Chapter 8 rules. Establishing where responsibility actually sits in a cross-border chain is exactly the kind of question where a specialist accountant earns their fee.

TV, media and presenters

No sector has generated more appellate IR35 case law than broadcasting. A long run of tribunal litigation against presenters’ personal service companies produced the two leading modern authorities: Atholl House in the Court of Appeal and Kickabout Productions. Together they reshaped how the third stage of the status test, the overall picture, is approached everywhere, not just in media.

Atholl House established that an engager cannot be assessed in a vacuum: where a presenter has a genuine portfolio career, with multiple clients and an established independent professional existence, that wider context must be weighed when deciding whether any single engagement amounts to employment. Kickabout pulled the other way on its facts, with the tribunal finding that an obligation on the broadcaster to offer work and the presenter to perform it, combined with significant control over output, pointed to employment. The combined lesson for media freelancers is that exclusivity and dependence are the danger signals. A presenter or producer working overwhelmingly for one broadcaster, on terms that commit both sides to ongoing work, faces real risk. One with a demonstrable spread of engagements, control over their own editorial contribution and the freedom to take competing work stands on much firmer ground.

Production companies and broadcasters now issue status determinations like any other medium or large engager, and many apply role-based matrices to crew grades. Freelancers in genuinely self-directed roles, such as editors or directors of photography supplying their own kit, should not assume a grade-level determination reflects their individual facts. The status tests behind these decisions reward engagement-specific evidence over generic role descriptions.

Engineering and defence

Defence and high-security engineering contracting comes with a feature that confuses status analysis: security clearance. Clearance is personal, takes months to obtain and cannot be transferred, which makes a practical right of substitution close to impossible on cleared programmes. Engagers and assessors sometimes treat that as decisive. It is not. Clearance is a regulatory precondition for access, like professional registration in healthcare, and the case law treats requirements imposed by law or security policy as carrying limited weight on their own. Holding clearance does not make a contractor an employee.

What does carry weight is everything that comes with working on a secure site. Cleared facilities typically prescribe working hours, prohibit remote work, require client equipment, log entry and exit, and embed contractors in client teams under client engineering management for years at a time. Long tenure on a single programme, common in defence where projects run for a decade, undermines the in-business-on-own-account picture even where the technical work is highly specialised. Site rules do not mean employment by themselves, but in combination with open-ended tasking and integration they build a control case an assessor will use.

Defence contractors with strong positions tend to share characteristics: a defined work package within the programme, an ability to refuse out-of-scope tasking, professional indemnity cover, and breaks or parallel engagements that show independence. Where the end client is a government body, remember the engagement is public sector and Chapter 10 has applied since 2017, so the determination was never the contractor’s to make.

Public sector engagements generally

Since 6 April 2017, every public authority engaging a PSC contractor has been responsible for determining status and, with the fee-payer, for operating PAYE on inside engagements. The rules sit in Chapter 10 of Part 2 of ITEPA 2003 and cover bodies within the Freedom of Information regime: government departments, the NHS, local authorities, schools and universities, the police and the BBC among others. There is no small-engager exemption in the public sector, so even a parish-scale public body must determine status.

In practice this means a public sector contractor never self-assesses. The engager must take reasonable care, issue a status determination statement with reasons, and run a dispute process responding within 45 days to a contractor’s representations. Early public sector implementation was rough, with role-based blanket assessments common, and pockets of that culture persist. The remedy is evidence: a contractor who can show engagement-specific facts on substitution, control and project scope gives the engager something concrete to weigh, and gives any later challenge a foundation. The reformed rules have now been in force in the public sector for nine years, which also means the deemed-payment mechanics, agency chains and offset rules are well worn there; the broader framework is covered in our complete IR35 guide for 2026.

Reading risk across sectors

Three patterns emerge from the sector-by-sector picture. First, the more an industry regulates the manner of work for safety or compliance reasons, as healthcare, energy and defence do, the harder a contractor must work to show that what is controlled is access and standards rather than the relationship. Second, engager behaviour matters as much as law: financial services bans and NHS framework terms close off arguments that would succeed on the facts elsewhere. Third, the contractors who do best in every sector are those who look like businesses before status is ever questioned, with defined deliverables, real substitution provision, multiple clients over time and the paperwork to prove it.

• IT and software: strongest with deliverable-based statements of work, weakest in embedded augmentation roles.
• Healthcare: NHS engagements are Chapter 10 determinations and usually inside; independent insourcing models are the main exception.
• Financial services: check whether the institution engages PSCs at all before debating status.
• Energy: separate safety-driven site control from genuine control over the work itself.
• Media: Atholl House and Kickabout make portfolio breadth and mutuality the battlegrounds.
• Defence: clearance is not employment, but long single-programme tenure erodes independence.
• Public sector: the engager determines status and has done since April 2017.

Sector knowledge changes the advice. An accountant who knows how NHS frameworks, offshore rotas or broadcast commissioning actually work will read a contract and a working pattern very differently from a generalist. We review the engagement before you sign, build the evidence file while you work, and stand behind the position if HMRC ever asks.