Misclassification risk is not a checklist. It is a weighted judgement across multiple factors, any one of which can override a favourable picture elsewhere. The Worker Classification Risk Auditor applies the relevant jurisdiction’s statutory test to your specific engagement. Below is a full sample output for a common UK scenario: a software developer engaged through a personal service company under rolling contract.
What Does This Tool Do?
The auditor asks a structured set of questions about the working relationship: control, substitution rights, financial risk, integration, and mutuality of obligation, then scores each factor against the jurisdiction’s legal test. It surfaces an overall risk rating (Low / Medium / High) and flags which factors are driving the risk, so you know where the exposure sits before an HMRC enquiry does.
What Does the Sample Scenario Cover for a UK Software Developer on a 2-Year Rolling Engagement?
Engagement profile entered into the tool:
- Jurisdiction: United Kingdom
- Engagement type: Personal Service Company (PSC)
- Role: Senior Software Developer
- Duration: 24 months, continuous rolling contract
- Working pattern: Monday–Friday, 9–5, at client’s office or client-specified remote setup
- Substitution: Client has right of veto over any substitute
- Other clients: None in the past 18 months
- Equipment: Client-provided laptop and tools
- Line management: Developer manages two junior client employees
- Client email: Yes, developer uses client’s email domain
What Does the Factor-by-Factor Sample Output Show?
| Factor | Finding | Risk signal |
|---|---|---|
| Personal service | Client has veto over substitutes — right of substitution is not genuine or unfettered | High risk |
| Control | Client specifies hours, location, and method. Developer follows client’s technical standards and sprint cadence | High risk |
| Mutuality of obligation | 24 months of continuous engagement; client always offers work, developer always accepts. No gap periods | High risk |
| Financial risk | No financial exposure beyond own labour cost. Client-supplied equipment. No liability for defective work beyond rectification time | High risk |
| Integration | Client email domain, line management of client staff, attendance at internal all-hands meetings — deeply integrated into client’s organisational structure | High risk |
| IR35 / Off-Payroll Working | If the client is a medium or large business, they bear the determination responsibility since April 2021. Indicators point to deemed employment | High risk |
Why Is the Overall Result High Risk?
All five primary UK classification factors point toward deemed employment. Under the Off-Payroll Working (IR35) rules, if the client is a medium or large business (defined as meeting two of: >50 employees, >£10.2m turnover, >£5.1m balance sheet), the client must issue a Status Determination Statement (SDS) and, if the determination is “inside IR35,” deduct income tax and NICs through PAYE on the fees paid to the PSC.
Typical consequences of a High risk determination
| Consequence | Who bears it |
|---|---|
| PAYE income tax on deemed salary | Deducted by client from PSC fees |
| Employee NICs | Deducted from deemed salary |
| Employer NICs (15%) | Client pays on top of fees |
| Apprenticeship Levy (if applicable) | Client pays |
| HMRC back-tax exposure (up to 6 years) | Client + contractor, jointly and severally |
Factors that could reduce the risk in this scenario
- Introducing a genuine, unfettered right of substitution (documented and tested, the Deliveroo Supreme Court case shows courts look at substance, not contract wording)
- Reducing the engagement length or introducing meaningful gaps between contracts
- Removing client-supplied equipment and replacing with contractor’s own tools
- Ending line management responsibilities over client staff
- Removing client email domain access
Use the live auditor to test your specific engagement profile. It covers 40 countries with jurisdiction-specific factor weighting. The test in Germany (Economic Dependency test under §611a BGB) and the Netherlands (Deliveroo/WebCam criteria) applies different weights than the UK multi-factorial approach shown above.
UK classification framework: HMRC Employment Status Manual ESM0500; Off-Payroll Working rules effective April 2021. Case reference: IWGB v CAC [2023] UKSC 43 (Deliveroo, substitution test).