How to Use This Checklist
Click each checkbox to mark items as complete. Your progress is automatically saved to your browser. Use this checklist to verify every requirement before, during, and after creating your Consultancy Agreement.
✅ Preparing Your Consultancy Agreement
1. Before starting: Gather all relevant documentation and information before starting
2. While completing: Verify every section against all 62 compliance points
3. Before signing: Review all sections for completeness before finalising
⚠️ Key Consultancy Agreement Requirements
📋 Key Purpose: A consultancy agreement establishes the terms of engagement between a business and an independent consultant, covering scope of services, fees, IP rights, and liability.
⚖️ Legal Framework: Governed by contract law principles. IR35 legislation determines tax treatment. The agreement should clearly establish genuine self-employment status.
🚫 Critical Requirements: Written agreement essential to clarify the working relationship, especially regarding IR35 indicators such as substitution rights, control, and mutuality of obligation.
📝 Best Practice: Include clear deliverables, payment terms, IP assignment, professional indemnity insurance requirements, and robust IR35-conscious drafting throughout.
🔵 Understanding Importance Levels
🔴 Critical: Must have — legally required or essential for enforceability
🟡 Important: Should have — protects your position and prevents disputes
🔵 Recommended: Nice to have — best practice for comprehensive coverage
Client's Full Legal Name and Registered Address
Must include exact legal name (as registered at Companies House if limited company) and registered office address. Essential for enforceability.
🔴 Critical
Company Registration Number (if applicable)
For limited companies, include Companies House registration number for absolute clarity on legal entity.
🟡 Important
Consultant's Full Legal Name and Address
Must match consultant's legal trading name. If limited company, use registered company name and address, not personal details.
🔴 Critical
Clear Agreement Date
Date agreement is signed by both parties. Critical for calculating notice periods, term duration, and limitation periods.
🔴 Critical
Specified Commencement Date
Date when services begin. Can be same as agreement date or future date. Important for determining when obligations begin.
🔴 Critical
Detailed Description of Services
Specific, clear description of services with deliverables, timelines, and quality standards. Vague descriptions lead to disputes.
🔴 Critical
Work Location Specified
Whether remote, at client premises, consultant office, or hybrid. Important for insurance, health & safety, and IR35 assessment.
🟡 Important
Expected Time Commitment (if applicable)
X days per week or X hours per month. Clarifies expectations and helps demonstrate genuine self-employment for IR35.
🔵 Recommended
Standards and Quality Requirements
Services must be performed with reasonable skill and care, to professional standards, in compliance with laws.
🔴 Critical
⚠️ IR35 Critical Warning
If your agreement looks like employment (control, integration, mutuality of obligation), HMRC may demand backdated employment taxes. Your agreement MUST clearly demonstrate genuine self-employment.
Explicit Statement: Consultant is Independent Contractor
Clear statement that consultant is not employee, worker, or agent. Relationship is business-to-business, not employer-employee.
🔴 Critical
Right of Substitution
Consultant can send a substitute (subject to reasonable skill requirements). One of strongest indicators of genuine self-employment.
🔴 Critical
Consultant Responsible for Own Tax and NI
Clear statement consultant handles all tax, National Insurance, VAT liabilities. Client makes no deductions at source.
🔴 Critical
No Employee Benefits
Not entitled to holiday pay, sick pay, pension contributions, or other employment benefits. Demonstrates they're not integrated as employee.
🔴 Critical
Right to Provide Services to Others
Consultant can work for other clients simultaneously (unless reasonable non-compete for direct competitors).
🔴 Critical
Control Over How Services Are Performed
Consultant controls how they deliver work, subject to agreed outcomes. Client doesn't supervise day-to-day. Excessive client control = employment.
🔴 Critical
Consultant Uses Own Equipment
Provides own equipment, tools, software (unless client-specific systems required). Demonstrates business overhead and genuine self-employment.
🟡 Important
Financial Risk
Consultant bears financial risk—could make profit or loss. May include fixing mistakes at own cost, insurance requirements, or pricing risk.
🟡 Important
⚡
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Clear Fee Structure
Specify whether fixed, monthly retainer, daily/hourly rate, or milestone-based. Include exact amounts. Ambiguity leads to disputes.
🔴 Critical
VAT Treatment Specified
State whether fees are plus VAT, inclusive of VAT, or no VAT applies. If VAT-registered, 20% VAT must be added.
🔴 Critical
Payment Terms (Days After Invoice)
Number of days after invoice (typically 30 days in UK). Clear terms are legally enforceable and allow statutory interest on late payments.
🔴 Critical
Late Payment Interest
Specify interest rate on late payments (typically 8% above Bank of England base rate). Legal right under Late Payment of Commercial Debts Act.
🟡 Important
Right to Suspend for Non-Payment
Consultant can suspend services if undisputed invoices aren't paid. Protects consultant from continuing work without payment.
🔵 Recommended
Expense Reimbursement Policy
Whether expenses are reimbursed, require pre-approval, and any threshold amounts. Include requirement for receipts.
🟡 Important
Clear IP Ownership Terms
Specify who owns IP created during engagement. Typically client owns all new IP, but must be explicitly stated as consultants don't automatically transfer IP.
🔴 Critical
Assignment of Future IP Rights
If client owns IP, include assignment of future rights (by way of present assignment). Transfers IP automatically upon creation.
🔴 Critical
Further Assurance Clause
Consultant agrees to execute all documents necessary to vest IP rights in client. Ensures IP can be properly registered and enforced.
🟡 Important
Pre-Existing IP Treatment
Address consultant's pre-existing tools, methods, IP. Typically consultant retains ownership but grants client license to use.
🟡 Important
Warranty of Originality
Consultant warrants work is original and doesn't infringe third-party IP. Protects client from liability if consultant uses others' copyrighted material.
🟡 Important
Mutual Confidentiality Obligations
Both parties must keep confidential information secret. Consultant learns about client's business, but client may also see consultant's methods.
🔴 Critical
Definition of Confidential Information
Clear definition: business information, trade secrets, know-how, customer lists, financial data. Without definition, unclear what's protected.
🔴 Critical
Standard Exceptions to Confidentiality
Standard carve-outs: information that's public, already known, independently developed, or legally required to be disclosed.
🟡 Important
Post-Termination Duration
How long confidentiality survives termination (typically 3-5 years for general info, indefinite for trade secrets). Must be reasonable to be enforceable.
🟡 Important
Return of Confidential Materials
Obligation to return or destroy all confidential information on termination. Prevents consultant retaining sensitive client data.
🟡 Important
⚠️ GDPR Warning
If consultant processes personal data without proper GDPR provisions, you're both at risk of ICO enforcement action up to £17.5 million. Data processor agreements are legally required under UK GDPR Article 28.
Data Controller/Processor Roles Defined
Specify who is controller and who is processor (if applicable). Usually client is controller, consultant is processor if handling personal data on client's instructions.
🔴 Critical
Processing Only on Documented Instructions
If consultant is processor, they can only process personal data as instructed by client. Can't use for own purposes. Required by UK GDPR Article 28.
🔴 Critical
Appropriate Security Measures
Consultant must implement technical and organizational measures to protect personal data (encryption, access controls, secure deletion). Required by UK GDPR Article 32.
🔴 Critical
Assistance with Data Subject Rights
Consultant must help client respond to data subject access requests, erasure requests, etc. Without this, client can't fulfill GDPR obligations.
🔴 Critical
Data Breach Notification
Consultant must notify client without undue delay of any personal data breach. Client needs to know within 72 hours to report to ICO if required.
🔴 Critical
Deletion or Return at End of Service
Consultant must delete or return all personal data when services end (unless legally required to retain). Prevents unnecessary data retention.
🔴 Critical
Sub-Processor Authorization Requirements
Consultant can't engage sub-processors without client approval. Ensures client knows who has access to their personal data and can assess risks.
🟡 Important
⚡
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Complete consultancy agreement template – all clauses included, professionally drafted.
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→
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Professional Indemnity Insurance Requirement
Specify if consultant must maintain PI insurance and minimum cover amount (£1-10M typical). Protects both parties if something goes wrong.
🟡 Important
Liability Cap
Maximum amount consultant is liable for (often capped at fees paid or insurance amount). Without cap, consultant faces unlimited exposure.
🔴 Critical
Exceptions to Liability Cap
Carve-outs where liability can't be limited: death/personal injury, fraud, breaches that can't be limited by law. Legally required—you can't cap these.
🔴 Critical
Exclusion of Consequential Loss
Neither party liable for indirect losses (lost profits, business, reputation). Standard and reasonable—only direct losses can be claimed.
🟡 Important
Warranties from Both Parties
Both parties warrant they have authority to enter agreement, consultant warrants work will be skillful and original. Your remedies if something goes wrong.
🟡 Important
Agreement Duration Specified
Fixed-term (3, 6, 12 months) or open-ended? Fixed-term ends automatically; open-ended continues until terminated. Clarity prevents disputes.
🔴 Critical
Notice Period for Regular Termination
How much notice either party must give (7, 14, 30+ days typical). For IR35, consultant having right to terminate with notice supports self-employment.
🔴 Critical
Immediate Termination Rights
Circumstances for immediate termination: material breach, insolvency, gross negligence. Protects both parties when relationship has broken down.
🟡 Important
Post-Termination Obligations
What happens on termination: return materials, payment for work completed, survival of confidentiality/IP clauses. Prevents confusion about obligations.
🟡 Important
Payment for Work Completed
Client must pay for all work performed up to termination date. Protects consultant from doing work without payment if contract ends early.
🔴 Critical
Non-Competition Clause (if required)
Whether consultant can work for competitors during/after engagement. Must be reasonable (max 6-12 months post, specific geography/sector) to be enforceable.
🔵 Recommended
Non-Solicitation of Clients
Consultant can't solicit client's customers for period after termination (typically 6-12 months). Protects client relationships but must be reasonable.
🔵 Recommended
Non-Solicitation of Employees
Consultant can't hire client's employees for period after termination. Prevents poaching. Must be reasonable (6-12 months, limited to employees worked with).
🔵 Recommended
Assignment and Subcontracting Terms
Whether consultant can delegate work or assign contract. Usually requires client approval. For IR35, some ability to subcontract supports self-employment.
🟡 Important
Entire Agreement Clause
This agreement supersedes all prior negotiations. Prevents parties claiming "but you said..." based on pre-contract discussions. Legally important for certainty.
🔴 Critical
Governing Law and Jurisdiction
Which country's laws apply (England & Wales, Scotland, Northern Ireland) and which courts have jurisdiction. For UK parties, English law and courts is standard.
🔴 Critical
Notices Provisions
How formal notices must be given (email, recorded delivery, to which addresses). Important for termination notices, breach notifications. Without this, notices may be invalid.
🟡 Important
Severability Clause
If one provision is invalid/unenforceable, rest of agreement survives. Prevents entire contract failing if one clause is problematic.
🟡 Important
Variation Clause
Changes must be in writing and signed by both parties. Prevents informal variations and "he said/she said" disputes about changes.
🟡 Important
Force Majeure
Neither party liable for failures due to circumstances beyond reasonable control (pandemic, natural disaster, war). Standard protection for unforeseen events.
🔵 Recommended
No Third Party Rights
No one except parties can enforce this agreement (Contracts (Rights of Third Parties) Act 1999). Prevents unexpected third parties claiming rights under your contract.
🔵 Recommended
Signatures and Execution
Proper signature blocks for both parties with name, position (for companies), and date. Agreement isn't binding until properly executed by both parties.
🔴 Critical
⚡
Instant Download
You've Done the Research. Now Finish It.
Complete consultancy agreement template – all clauses included, professionally drafted.
Fill in your details in minutes and you're done.
£20 – Own It Forever
Create Your Consultancy Agreement Now
→
✅ 30-day money-back guarantee*
Preview before you buy • Lifetime updates • No subscription
Next Steps
Now that you've reviewed the compliance checklist, you have three options:
✅ Use Our Ready-Made Template
Save hours of research and drafting. Our professionally-crafted Consultancy Agreement template covers all 62 compliance points with IR35-conscious drafting, comprehensive scope of services, payment terms, IP assignment, and liability provisions. Structured following UK contract law requirements. Available in both Smart Interview (guided) and Classic Editor (direct editing) modes for just £20.
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📝 Draft Your Own Consultancy Agreement
Use this checklist as your guide, but remember: a poorly drafted consultancy agreement can lead to IR35 issues and significant tax liability. The most common mistakes are: missing substitution clauses, unclear deliverables, and inadequate IR35 protections.
Disclaimer: This checklist is for general informational purposes only and does not constitute legal advice. While we strive to keep information accurate and up to date, the law is complex and subject to change. Every situation is unique. This checklist applies to consultancy agreements in England and Wales. Last updated: May 2026.
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