Are Status Detetmination Statements Still Valid?
Do Status Determination Statements Issued to Contractors in Preparation for the IR35 Reforms Still Apply?
Now that the reforms have been put back as a result of Coronavirus, many end hirers, agencies, and contractors are questioning the validity of their Status Determination Statements which were issued in preparation for the original deadline (April 6th).
“However, it would be imprudent for either end hirers, agencies or contractors to discount SDSs because the criteria for IR35 assessment against which they were made is still applicable. Contractors who were issued with ‘inside IR35’ SDSs will still need to make sure they are working compliantly, especially if working through their own limited company/PSC.” Chris James, Director of Accountancy Services, JSA and Chairman of the FCSA.
- Discuss compliance with PSC contractors whose SDS showed they were ‘inside IR35’ – it’s in everyone’s interests that compliance rules are adhered to.
- Properly review what proportion of your contractor workforce would be ‘inside IR35’ in 2021, conducting individual assessments where necessary to ensure that any assessments made previously are correct and rescinding blanket bans where applicable.
- Alter working arrangements so that PSC contractors can be retained compliantly, where appropriate.
- Decide how you wish to work with ‘inside IR35’ contractors ie. take them onto your payroll, use an outsourced employment (PEO) solution, or request that they work via an Umbrella partner.
- Determine when and how you will transition these contractors, and who you can partner with to make sure this is a success.
- Assess any budgetary impact ie. whether you need to increase the gross rate of pay to affected contractors in order to retain skills (as they will have more tax to pay).
- Review whether you have the correct status assessment procedures in place to issue accurate SDSs. If your assessment tool does not provide insurable results with guaranteed compliance, consider switching to one that does.
- Talk to your end hirer if you disagree with their previous assessment and potentially appeal your SDS result.
- Review your working practices to bring them into line with the compliance rules for operating ‘outside IR35’ if you want to continue to work via your PSC.
- Work with your end hirer or agency to review alternative options. These could include becoming an employee of your end hirer, going onto the PAYE payroll of your end hirer or employment agency, or switching to an Umbrella company. You will need to look at the financial implications of each option, we can provide you with detailed pay illustrations to help you decide.
- Understand more thoroughly the IR35 assessment process so that you can work compliantly and enjoy the benefits of being a contractor without having to worry about HMRC.
How can we help?
- Provides a firm judgment in borderline cases, with results that can be insured for complete peace of mind.
- Easy to complete assessments that provide instant Status Determination Statements (SDS).
- Complete transparency and control throughout the supply chain, from end hirer to payment solution.
- Can be white-labelled for agency use with end clients.
- Provides feedback on the reasons for a determination, so that if possible, changes can be made before April 2021.
- Meets HMRC’s requirements for valid SDS.
Please get in touch for more information.