SDS advice for private sector organisations
If you’re a private sector organisation and looking for more information about Status Determination Statements, check out the government website. They have an employment status manual that you may find really useful.
When it comes to issuing temporary workers with an SDS, organisations must take reasonable care when making IR35 assessments.
The following should be taken into account:
The government has created its own online tool that is designed to determine whether an assignment is inside or outside IR35. It’s called CEST (check employment status for tax).
There are tax status specialists who can help private sector organisations with their IR35 assessments.
New contracts, new SDS required
Every new contract role will need to have an SDS issued to the temporary worker. Each SDS must be created from scratch, and companies are advised not to overlook the assignment.
Contract and working practices
Both a written contract and the actual working practices are looked at during an IR35 investigation by HMRC. Therefore, it’s important to check that both the paperwork and the actual role are in-line, and the assessment made is accurate.
It’s a good idea for private sector businesses to continually look to improve their IR35 assessment processes – in case IR35 were to investigate in the future.
Appealing an SDS
If a contractor wants to question an SDS, they can appeal. Organisations have 45 days to issue an appropriate response.
What is the point of Status Determination Statements?
- To ensure IR35 assessments are fair.
- Provide the contractor with clarity regarding their IR35 status.
- To encourage end-hirers to understand the legislation and to take responsibility.
- To eliminate the risks of unlawful ‘blanket assessments’ that were happening when off-payroll changes were rolled out into the public sector in April 2017.
What happens if you’re fairly assessed as inside IR35?
If you’re fairly assessed by your end client as being inside IR35, there are no financial benefits to operating through your personal service. Therefore, you may decide to use an umbrella company for your payroll – because they’re generally regarded as the easiest way to get paid when inside IR35.
Find out more about umbrella companies at the following links:
Advantages of using umbrella companies
Disadvantages of using umbrella companies
What is a personal service company (PSC)?
Moving from sole trader to limited company
Limited company expenses
Advantages of limited company contracting
Disadvantages of limited company contracting
Choosing a contractor accountant
Accountancy software for small businesses
Responsibilities of running a limited company