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IR35: Why status determination statements will play a pivotal role

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30th Jul 2019
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The revised IR35 rules that apply from 2020/21 will require the engager to issue a status determination statement and allow contractors to challenge it.

The production of the status determination statement and what happens to it after it is issued plays a pivotal role in deciding who is liable for any IR35 tax and NIC.

What is the SDS?

Under the revised form of IR35, the engager (referred in the law to as the ‘end client’) will decide whether a worker is caught by IR35 or not. However, only engagers who are themselves not ‘small businesses’ will have to do this, as Rebecca Seeley Harris explained in her analysis of the off-payroll working rules.

The engager must notify the worker of its decision about the worker’s status in a status determination statement (SDS). The SDS must explain the reasons for the decision and the engager must take reasonable care in reaching the decision. It is clearly envisaged that the SDS will be a written document.

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Replies (55)

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Replying to dstickl:
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By IANTO
02nd Aug 2019 08:26

That's an interesting concept that I hadn't considered. I really don't know if it would have made a difference. I guess that's a question for the legal eagles here.

Thanks (0)
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By Peter Bromiley
31st Jul 2019 11:04

Once we get beyond April 2020, there are unlikely to be many SDS's on contractors.

Rather, the SDS result will be known BEFORE the contractor accepts or rejects the contract offer.
In some areas, contractors will have to accept they have to like it or lump it. But, in areas where there is a shortage of skilled contractors, end-clients will look for ways to get an outside-IR35 verdict or risk seeing the contractor go elsewhere.
I think that, after the initial panic, end-clients will start to realise there are ways around the problem, just as contractors found out after 2000.

Thanks (1)
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By sawebs
31st Jul 2019 12:28

Hopefully it won't go much further. Sajid Javid said a few years back that the "silly" IR35 should be scrapped. I know that Philip Hammond criticised it when it came in and he also said people were entitled to certainty over their tax affairs before going along happily with the retrospective loan charge... however we live in hope that sanity will prevail at some point.

Thanks (1)
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By kjevans
31st Jul 2019 13:04

No one should be taxed as an employee without receiving the benefits of employment - paid holidays, sick pay, pension etc. That would put an end to all this nonsense. You want someone to be an employee. pay the employer's NIC and the benefits

Thanks (4)
Replying to kjevans:
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By IANTO
31st Jul 2019 15:34

that's all I've been saying for the past 19 years. But there are those who refused to accept this message. Times are now changing.

Mr Webber is correct, case law has moved on, but in the direction of benefit to the worker. I contend my 2002 case might have had a different result if it were held now.

Thanks (2)

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