Glossary · UK
What is IR35 Status Determination Statement (SDS)?
A written document that medium and large UK private sector businesses (and all public sector bodies) must provide to contractors and their agencies, determining whether IR35 applies to each engagement.
Full Definition
The Status Determination Statement (SDS) was introduced by the off-payroll working rules reform (Chapter 10 ITEPA 2003) for public sector bodies from April 2017 and medium/large private sector from April 2021. The hirer (end client) is responsible for determining the employment status of each engagement using reasonable care. The SDS must: state whether the engagement falls inside or outside IR35, give reasons for the determination, and be passed down the supply chain to the worker and their intermediary (PSC or agency). Workers have a statutory right to challenge an SDS they disagree with -- the hirer has 45 days to respond to a disagreement. If the hirer fails to take reasonable care in making the determination, the liability for unpaid PAYE/NI shifts to the hirer. Small companies (two of: turnover below GBP 10.2m, balance sheet below GBP 5.1m, under 50 employees) are exempt -- the contractor's PSC remains responsible. HMRC's Check Employment Status for Tax (CEST) tool can be used to assess status but is not always binding.