IR35 Understanding SDS (status determination statement)


Private Sector IR35 reform is set for 6th April 2020 when the public sector rules will be applied to the private sector. Contractors in the private sector will have to determine themselves if they are inside IR35 or not.

The new legislation also introduces the need to provide a Status Determination Statement (SDS). A 'Status Determination Statement' (SDS) is a comprehensive statement from the client which: Declares a contractor's deemed employment status following an IR35 assessment and provides reasons for reaching this conclusion. It is relevant for both contractors and for large organisations who engage the services of independent contractors.

According to the new IR35 rules, an SDS notification can be challenged by either the worker or the deemed employer. After a challenge, the engager has 45 days to either confirm, with reasons, why it either upholds the SDS. Alternatively, it can withdraw the notice and replace it with a revised decision. If the engager fails to act inside the timescales, they then become liable for the cost.

IR35 is already a very complex area and these changes will initially make things more difficult for engagers and suppliers.