IR35 Blanket Determinations: Are They Legal? Contractor Rights 2026/27

What a blanket determination looks like in practice

Since the off-payroll working rules (commonly known as IR35) were extended to medium and large private-sector clients, every relevant contractor engagement requires the end client to assess whether the contractor would, if directly employed, be an employee for tax purposes — and issue a formal conclusion. A blanket determination is a shortcut some organisations took (and some still take) to avoid the administrative burden of assessing each contractor individually: simply declaring that an entire category of contractors — for example, "all contractors engaged through personal service companies" or "everyone in this specific team" — falls inside IR35, without looking at each person's actual contract terms and working practices.

This might sound efficient, but it is generally not compliant with the law's requirement for clients to take reasonable care.

Why genuine blanket approaches usually fail the "reasonable care" test

The legislation requires the client making the determination to take reasonable care in reaching it. An unreasoned, blanket policy — applied purely because it is simpler to administer, without any assessment of the specific contractual terms, degree of control, right of substitution, or mutuality of obligation for each individual — is widely regarded as failing this standard, because it does not genuinely engage with the actual circumstances of each engagement.

Importantly, this does not mean a client can never reach the same conclusion for many contractors doing similar work. If a client genuinely assesses a group of contractors performing near-identical roles under near-identical contract terms, and reasonably concludes they are all inside (or all outside) IR35 based on that assessment, this can be compliant — the problem is specifically the absence of genuine assessment, not the fact that multiple contractors end up with the same result.

The Status Determination Statement

Whatever conclusion is reached, the client must issue a Status Determination Statement (SDS) to both the contractor and the party paying the contractor's fees (often an agency), setting out the status decision and the reasons behind it. Contractors are entitled to see this statement, and a statement that simply says "inside IR35 because this is our blanket policy for all contractors," with no reference to the specific contract or working practices, is a red flag that reasonable care may not have been taken.

Challenging a determination: the disagreement process

Clients are legally required to operate a client-led status disagreement process, allowing a contractor (or the fee-payer) who disagrees with a determination to raise that disagreement directly with the client. Once a disagreement is raised:

• The client must consider the representations made.
• The client must respond within 45 days of receiving the disagreement.
• The response must either confirm the original determination (with reasons why the disagreement was not accepted) or provide a new determination, in either case with a new SDS if the conclusion changes.

If the client fails to respond within the 45-day window, they can lose the ability to rely on their original determination, and liability considerations can shift as a result.

Why this matters financially for clients as well as contractors

Beyond fairness to contractors, there is a strong financial incentive for clients to avoid genuine blanket approaches: if a client is found not to have taken reasonable care, HMRC can transfer liability for any resulting unpaid Income Tax and National Insurance back to the client, rather than it staying with the fee-payer or agency in the contractual chain. This risk has pushed many larger organisations away from outright blanket bans on contracting through personal service companies, towards more individualised (though sometimes still fairly generic) assessment processes, precisely to avoid this liability exposure.

Practical steps for contractors facing a blanket determination

• Request a copy of the Status Determination Statement and check whether it references your specific contract terms and working practices, or reads as a generic policy statement.
• Use the client-led disagreement process formally, in writing, setting out clearly why the individual circumstances differ from a blanket assumption.
• Keep clear records of actual working practices — degree of control, ability to send a substitute, and how integrated you are into the client's organisation — since these are the factors a genuine assessment should consider.
• Seek professional or legal advice if a large contract's tax treatment is at stake and the client is unresponsive to a reasonable disagreement.