IR35 status determinations: a practical walkthrough

What the statement is

A status determination statement is the end client’s written conclusion about whether an engagement falls inside or outside IR35, together with the reasons for it. A conclusion without reasons is not a valid statement.

It has to be passed to the worker and to the next party in the chain. Until it is, the client keeps the PAYE responsibility it was trying to pass on.

Reasonable care

• The determination must be reached with reasonable care — a blanket decision applied to a whole category of workers is the standard example of failing that test.
• The facts used must be the facts of the actual engagement, not of the contract template.
• The reasoning must be recorded at the time, not reconstructed if it is questioned.
• A material change to how the work is done calls for a fresh determination.

The disagreement process

A worker or the fee-payer may challenge a determination. The client must respond within 45 days, either confirming the original conclusion with reasons or issuing a new statement.

Missing that deadline moves the PAYE liability back to the client, regardless of whether the original determination was right.

Doing it properly

The cost of a determination is small; the cost of a category of determinations made carelessly is not. Assess engagements individually and keep the reasoning where you can find it again.