Status determination statements for IR35: dos and don'ts


Producing status determination statements is one of the trickiest aspects of compliance with the new IR35 rules (which come into force in April 2021). This obligation applies to medium and large businesses which engage contractors via intermediary businesses (usually, but not always, a personal service company). 

The client must assess whether the contractor would be deemed to be its employee if it had engaged him or her directly, rather than through the intermediary.  It must issue a written Status Determination Statement (SDS) to the contractor explaining the reasons for its decision.  It should also provide this to the intermediary and any other parties in the chain of contracts (for example, the client may contract with an agency which contracts with the intermediary).  

The client must take reasonable care when assessing the consultant's status and preparing the Status Determination Statement.   Failing to do so will result in the client being liable for any tax and NI  (as well as any Apprenticeship Levy) which HMRC deems is due.  There are some key dos and don'ts for clients, based on HMRC's guidance, in order to demonstrate that they have taken reasonable care. 


  • make sure the person responsible for the SDS understands the applicable law and guidance.  Even if a client outsources this, it remains the client's responsibility; 
  • apply usual employment status principles and HMRC guidance on employment status;
  • make individual determinations rather than applying a blanket rule to all contractors;
  • use HMRC’s Check Employment Status for Tax (CEST) tool  (ensuring the information you give is correct);
  • seek professional advice where needed;
  • check any existing SDSs to make sure they are still accurate; and
  • regularly review SDSs, particularly where the contract or working arrangements have changed.


  • allocate this task to someone who doesn't have appropriate knowledge and training;
  • input incorrect information into CEST;
  • fail to take account of relevant evidence;
  • make blanket determinations for all contractors or groups of contractors - it must be on an individual basis except where contractors have the same contractual terms and working arrangements; or 
  • fail to update the SDS when the contract or working arrangements change. 

Businesses which engage contractors via intermediaries will need to ensure that their contracts give them the right to obtain the information and documentation they will need in order to produce the SDS.  They should also consider who will produce the SDS (whether internally or externally), what quality control mechanisms they will put in place and whether they need professional legal or accountancy advice to assist with this.  

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