Is a SDS required for a role / contractor working via Umbrella (beyond April)? Is a SDS required for a role / contractor working via Umbrella (beyond April)?
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  1. #1

    Nervous Newbie


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    Jan 2020
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    Default Is a SDS required for a role / contractor working via Umbrella (beyond April)?

    Hi all

    Just wanted to clarify something about contract roles via Umbrella's and whether an SDS has to be provided for that role (or any individual contractor).

    If a client (post April 6th) decides to engage a contractor via an Umbrella (I'm not saying they necessarily have chosen a complete blanket ban on PSCs) then do they ever need to do a SDS for that contractor/role? As IR35 doesn't apply to Umbrellas. However, could HMRC come along and ask for a SDS for that role/contractor? (is an SDS specific to a role, or a contractor, or can it be either?)

    What if they had a role "ABC Specialist" and had some contractors currently that they extend and decide to do an SDS for, and determine that it's 'inside'. Some decide that the risk of HMRC investigation for previous tax liability is too high, object and leave, and some take the risk and stay. The client employs a couple of replacement contractors, who knowing that the role of the existing contractors was determined 'inside' IR35, decide to operate via an Umbrella. Have these new contractors ever therefore been deemed 'inside' and/or could they be in the future (not that it really matters as they're following the rules anyway). Or does the previous 'inside' SDS for the role "ABC Specialist" kind of 'stick' to that role? If they were engaged via Umbrella for a new role "ABC Technician" then no IR35 status has been determined for that... again, can HMRC ask for a SDS to be done by the client, or would they just say "no it's not relevant, the only ABC Technician's we have are engaged via an Umbrella so it's not relevant"?

    Let's assume that no SDS is done for the "ABC Technician" role.

    Then... one of the contractors that left returns (regardless of whether there's been other contract work he/she has done in between, or how long it's been - let's not complicate the question with those extra 'debatable' points - although I admit all of this may be debatable and open to interpretation!) and comes back via an Umbrella, and takes the new role of "ABC Technician". Meanwhile they've also closed their Ltd company. There may be a 'red flag' to HMRC if they've come back via the same agency and they see the same name/NI number suddenly paying more, but surely they have no grounds for an IR35 investigation if they are working in a new role that only has Umbrella staff working for it, and when they were working there previously via a PSC, it was for a different role? The client has never said that role was 'inside'... only the old "ABC Specialist" role.

    Thanks
    Ross

  2. #2

    Contractor Among Contractors


    Join Date
    Jul 2019
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    1,675

    Default

    IR35 only applies where there is an intermediary (ie. PSC). No intermediary, no IR35, no SDS (required).

    Any SDS in such a scenario is just a client opinion - not meaningless, however - I'm sure HMRC would want to use it should they ever investigate you, so I'd want to avoid the client creating something they might call an SDS.
    Last edited by Paralytic; 2nd March 2020 at 14:13.

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