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Understanding the Status Determination Statement 

The off-payroll working – commonly referred to as IR35 - rules are due to change, with all but the smallest companies engaging workers through an intermediary now required to assess the employment status of their workers for services provided on or after 6th April 2021.

Once the workers employment status has been assessed, the hiring organisation (client) must issue a Status Determination Statement to be passed along the supply chain and to the worker, who will be providing their services to the client. 

What is a Status Determination Statement?

The Status Determination Statement (SDS) is a document that must include:

  • the employment status decision that has been reached for the workers engagement; and 

  • the reasons that support the status decision

The client is responsible for issuing the SDS to the worker and the immediate party in the labour supply chain below. 

The recipient party must then pass the SDS onto the next party in the contractual chain until it reaches the fee-payer, the organisation that is responsible for paying the workers intermediary, typically their personal service company (PSC).

Failure to pass the SDS on correctly will result in the party responsible for the failure becoming liable as if they were the fee-payer.


If there are no intermediaries between the client and the workers intermediary, the client will be deemed to be the fee-payer and if there is only one agency, that agency will be deemed to be the fee-payer.

Obligations of the Fee-payer

Where the worker has been assessed as being employed for tax purposes, commonly known as “Inside IR35”, the fee-payer becomes responsible for calculating and paying the Income Tax and National Insurance contributions due on the deemed employment payment, along with employer National Insurance contributions and, if applicable, the Apprenticeship Levy. 


What happens when the worker or fee-payer disagrees with the Status Determination Statement?

In the event that the worker or fee-payer disagrees with the SDS issued by the client, there is a disagreement process to follow.

The worker or fee-payer must write to the client to provide reasons for why they disagree with the SDS.

The client must then consider the reasons provided and decide whether to maintain the original status determination and give reasons why or provide a new status determination based on a reassessment of the workers employment status.

The decision must be issued by the client within 45 days of receiving the disagreement  notice. 

If the client fails to correctly issue an SDS or respond to a disagreement notice within 45 days, the client will be treated as fee-payer and therefore responsible and liable for calculating and paying any tax and National Insurance Contributions due to HMRC. 

What to do next

If you are unsure of your obligations under the changes to off-payroll working rules from 6th April 2021, the Contractor Co-op have specialists who can help.


For further information, please contact Chris Mattingly on 020 3468 0009

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