One of the key amendments to the off-payroll working rules (applicable to both private and public sectors) as of April 2021, is the introduction of the status determination statement.
The ‘status determination statement’ could be in the form of a document, or an email but should be in writing and must provide both:
The hiring organisation must also provide this statement to both the contractor being engaged, and the next party in the supply chain. In most cases, there is only one intermediary (a recruitment agency) which will also be the fee-payer. However, in longer supply chains, this may not be the case and so the next party in the chain will be responsible to pass the statement up the chain until it reaches the fee-payer.
Until such time as the client completes the above, they will be considered the fee-payer and therefore liable for any taxes due.
In order to assist organisations with this requirement, we have put together a suitable template which you can use. Fill in the form below to download.
Undertaking status determination statements can be challenging. In order to maintain fair and valid determinations, you need a thorough process in place. This is not a job that should be taken lightly.
When considering IR35 in general, you should always ensure that your knowledge of the legislation is up to date and that you are always considering both the major and minor status tests that indicate IR35 status. Examples of the major tests for IR35 status are that of substitution, control and mutuality of obligation.
IR35 is determined on a case by case basis. To have a thorough understanding of how the legislation works in practice, you will need an appreciation of historical case law. When it comes to education around anything IR35, we at Qdos can help with bespoke training.
If you would rather focus on putting in place a process that takes all the admin and worry off your hands, you might consider Qdos Status Review. We have designed a comprehensive assessment service for your IR35 status determination statements. With the help of our expert IR35 team, we can carry out your IR35 status determinations and minimise the legwork, making completing status determination statements simple and accessible for every party of the contractual chain.
Download your free template for issuing Status Determination Statements to contractors.
The off-payroll working rules require that ‘reasonable care’ is taken when determining IR35 status.
Because of this, reasonable care is considered a necessary part of any status determination statement and it should therefore be at the forefront of your mind when conducting IR35 assessments.
“Reasonable care means clients should act in a way that would be expected of a prudent and reasonable person in the client’s position. HMRC recognises that the circumstances of clients completing a SDS will vary greatly.”
If any party of the contractual chain disagrees with the SDS outcome, they have the right to appeal. The client must respond to this appeal within 45 days. If the client neglects to respond to the appeal within 45 days, this may result in the client being liable for IR35. As a result, the client becomes the fee-payer (if they weren’t already).
If the original status determination still stands then the client must provide the contractor with the reasons as to why this is the case.
If the initial SDS is determined to be incorrect, then the client must issue an entirely new SDS taking into account the amended outcome.
Helping you understand exactly what reasonable care is and how it could affect IR35 status. Click here to read.
Find out about the Statement of Work (SoW), what it is and how it should be used when discussing strategies in response to IR35 reform, as explained by our experts.
In this article, we will take a look at contracted-out services, also known as outsourced services.