Project Manager IR35 Agreement Template UK
Operating as a project manager through a Personal Service Company exposes you to significant IR35 risk if your contracts don't accurately reflect your working arrangements. Without a properly drafted IR35 agreement, HMRC may deem your engagement 'inside IR35' under Chapter 10 of the Income Tax (Earnings and Pensions) Act 2003, resulting in unexpected tax liabilities and National Insurance contributions. A well-structured project manager IR35 contract demonstrates genuine business-to-business engagement by evidencing substitution rights, lack of mutuality of obligation, and financial risk — the three pillars HMRC scrutinises most closely. This template is designed specifically for UK project managers contracting through a PSC, helping you evidence outside-IR35 status with legally sound, HMRC-aligned contract language. Generate your tailored project manager IR35 agreement now and contract with confidence.
Generate your IR35 Agreement free →Key clauses in a IR35 Agreement
Substitution Rights Clause
This clause grants the contractor's Personal Service Company the right to send a suitably qualified substitute to fulfil the engagement, rather than the named individual personally. HMRC's IR35 assessment under Chapter 10 ITEPA 2003 treats a genuine, unfettered right of substitution as a strong indicator of self-employment, significantly reducing the risk of a deemed employment determination.
Mutuality of Obligation Waiver
This clause explicitly states that the client has no obligation to offer further work and the contractor has no obligation to accept it, negating the mutuality of obligation that characterises employment relationships. HMRC guidance and case law, including Autoclenz Ltd v Belcher [2011], confirm that mutuality of obligation is a fundamental test in determining employment status under IR35.
Financial Risk and Control
This clause establishes that the contractor bears financial risk, including responsibility for correcting defective work at their own cost and operating without client supervision or direction over how deliverables are achieved. Demonstrating financial risk and the absence of control are critical factors in HMRC's Check Employment Status for Tax (CEST) tool and IR35 case law, evidencing a genuine business-to-business relationship.
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Generate free →Frequently asked questions
Does having an IR35 contract guarantee I am outside IR35 as a project manager?
No — HMRC looks at the actual working practices of an engagement, not just the written contract. Under Chapter 10 ITEPA 2003, if the day-to-day reality differs from what the contract states, HMRC can disregard the contract terms entirely. Your written IR35 agreement must accurately reflect how the project management engagement operates in practice to carry any evidential weight.
Who is responsible for IR35 determination when I contract with a large private sector client?
Since the off-payroll working reforms introduced in April 2021, the responsibility for making an IR35 status determination shifted to medium and large private sector clients under Chapter 10 ITEPA 2003. The client must provide you with a Status Determination Statement (SDS), and if they fail to do so, the liability for unpaid tax falls on them rather than your PSC. Small companies are exempt, meaning IR35 self-assessment remains your responsibility in those engagements.
Can I use HMRC's CEST tool to check my project manager contract's IR35 status?
Yes — HMRC's Check Employment Status for Tax (CEST) tool is the recommended starting point for assessing whether an engagement falls inside or outside IR35. HMRC has stated it will stand by CEST results provided the information entered is accurate and the tool is used in good faith. However, CEST has been criticised in cases such as R (on the application of RALC Consulting Ltd) for not adequately addressing mutuality of obligation, so it should be used alongside professional advice for complex project management engagements.
The information on this page is for general informational purposes only and does not constitute legal advice. Contracto generates AI-assisted contract templates — they are not a substitute for advice from a qualified solicitor. For high-value or complex engagements, always seek independent legal review.