This pro tip is for businesses that hire contractors
Context
When making status determinations under the off-payroll rules, organisations should not use "blanket determinations" – meaning the same determination is used across groups of workers without considering their individual roles, contracts, or working practices. Blanket determinations are a failure to take reasonable care, which could result in extended liabilities and penalties.
*Pro Tip* - Never assess contractors without considering their roles, contracts or working practices.
Here's what you should be doing:
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Understand the Difference Between Blanket and Role-Based Determinations:
- Blanket Determination: Applying the same status to all workers without assessing their specific circumstances. Example: Declaring all workers "inside IR35" regardless of differences in contracts or roles.
- Role-Based Determination: Pre-assessing a role before a worker is identified or contractually engaged to ascertain a potential status. Once the worker is identified for a specific engagement, an individual assessment should be completed.
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Take Reasonable Care in Individual Assessments:
- Review the worker’s specific contract and day-to-day working practices.
- Use a question-and-answer format to assist, but ensure any answers align with the contract and working conditions.
- Ensure hiring managers and decision-makers are trained specifically in the legislation so they can assess employment status indicators accurately.
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Document Determinations:
- For each determination, record the result, the reasoning, and any evidence used in reaching the decision – for example, the contract.
- Clearly communicate the determination through a Status Determination Statement (SDS) to the worker and other relevant parties in the supply chain.
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Regularly Reassess Determinations:
- If working conditions or contractual terms change, conduct a new determination to ensure the determination is still accurate.
Why this matters
Blanket determinations are a red flag to HMRC, signalling a lack of reasonable care and due diligence. By taking a considered case-by-case approach to determinations, you reduce the risk of disputes, penalties, and compliance issues, while also fostering trust with your workforce and supply chain.
