Information requirements, status disputes and anti-avoidance
IR35 rules now require public sector business clients, and, from 6 April 2021, medium and large
(not “small”) private sector business clients, to inform the entity they
directly contract with and the freelancer or PSC of their determination
with their reasons (a “Status Determination Statement” (SDS)).
Determinations must be made on an individual, not a blanket, basis.
All intermediary recipients of the SDS in the labour chain (other than the
business client and the individual or PSC) will have to pass the SDS and the
reasons for it on to the person with whom they contract.
The IR35 rules provide that where an SDS is issued that states that the
individual is within IR35 (i.e. to be treated as if an employee), a PSC can
challenge it, and the rules provide for a “Status Disagreement Process” for
resolving such disputes. Anyone liable to determine status who does not do
so, or does so without taking the steps the rules require to ensure that
the determination is carried out with reasonable care, or if they do not
fulfil any other IR35 obligation, will be made liable for tax and NI, even
if they are not the fee payer.
Not only clients, but also the PSCs and individual workers concerned, need
to be aware of and work with these information requirements.
See the Guidance Note for further detail.