Outside IR35 SDS is Invalid - Do I Care? Outside IR35 SDS is Invalid - Do I Care?
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  1. #1

    Nervous Newbie


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    Default Outside IR35 SDS is Invalid - Do I Care?

    Let's supposed I've been issued with an outside IR35 determination by my client. As far as I'm concerned, this is an accurate determination: it matches my own view and that of Qdos. However, the SDS doesn't meet the standards laid down in the draft legislation, in that it doesn't specify the reason for the determination. (HMRC: "A status determination statement issued before 6 April 2020 is valid under the new rules, if it contains the reasons for the conclusion reached.")

    So, given that the SDS is invalid, the client are now liable for all 'disguised employee' taxes (rather than the fee payer being liable). But there are no such taxes - as it's outside IR35. So, is the validity of the SDS irrelevant if an outside determination has been made?

    Or should I insist on a valid SDS being issued? If so, what is the risk of not doing so?

  2. #2

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    Question is, bearing in mind this is your livelihood and regardless of who might or might not be liable, do you really want to be buggering about with incorrect information? I'm sure some people will think they've got away with it and not pay any attention until it comes back and bites them. Bit like people working without a contract.

    Instead of looking for an answer to a poor situation you need to be making sure it's valid. If you do then happy days. If you are relying on the fact you think the client is on the hook should it go wrong then you are on a wish and a prayer and potentially facing a nasty surprise.

    Forget this question, as it's highly hypothetical and we don't really know yet, and concentrate on helping your client do it right so everyone is covered.

    I do think there is a problem growing that will pop its head up in a few years where those that haven't had a clue about IR35 pop up, get their outside determination and then forget about it again. Just because you've got a determination from a client I don't think that absolves a contractor of their responsibilities for understand IR35 and making sure their working practices stay outside.
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  3. #3

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    Do you expect to be there long? If they get in trouble for this in June, and change the determination going forward, are you happy to walk away because you were leaving in July or August anyway? Or are you on a two year project and hope to be there until December 2021?

    If the latter, you want them to get this right so it doesn't come back to bite you later and jeopardise your whole contract. Be a hero and tell them as currently worded it might leave them liable and help them get it right. If the former, well, the risk is theirs and I don't see any need to poke a sharp stick into a sleeping lion. You got what you need, go with it. No need to risk them looking more closely and changing their mind.

  4. #4

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    What does the SDS actually include? The relevant draft ESM indicates that CEST output would qualify, for example, so anything like CEST would qualify. If it’s just a single-word status then, yes, it probably isn’t compliant. In that case, it is not your responsibility to flag it, rather the Fee Payer (which may be the client) because they take the risk (in the first instance) once it does comply.

  5. #5

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    In summary, I would take what you’ve been given and forget about it.

  6. #6

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    Quote Originally Posted by WordIsBond View Post
    ...I don't see any need to poke a sharp stick into a sleeping lion. You got what you need, go with it. No need to risk them looking more closely and changing their mind.
    Quote Originally Posted by jamesbrown View Post
    In summary, I would take what you’ve been given and forget about it.
    Both reflect my thinking. So I think I'll let it lie. Thank you.

  7. #7

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    Let us know how it goes.

    Don't be surprised if an updated SDS comes through before April anyway.

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