This pro tip is for businesses that hire contractors.
Context
The off-payroll working rules (IR35) require organisations to manage disputes about status determinations from workers. A clear and well-executed disagreement process is not just a compliance requirement; it also demonstrates your organisation’s commitment to fairness and transparency.
*Pro Tip* - Establish and follow a robust disagreement process.
Here’s how to do it:
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Recognise Valid Disagreements:
- A worker’s disagreement with the conclusion made in a status determination statement is made to the client and should include representations explaining the conclusion is disputed.
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Set Up Clear Processes:
- Create a system (or use IR35 Shield) to log disagreements, including the date they are received, the supporting evidence provided, and the resolution.
- Ensure workers know how to raise disagreements, and ask them to do so in writing.
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Respond Promptly and Thoroughly:
- Review all information provided carefully, and involve relevant stakeholders like hiring managers, legal, HR, or tax advisors as needed.
- You should respond to disagreements within 45 calendar days. Leave the worker’s tax treatment unchanged during this period.
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Communicate Outcomes Clearly:
- If the original determination is upheld, explain the reasons.
- If the determination changes, withdraw the previous Status Determination Statement (SDS), issue a new one, and inform relevant parties of the change.
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Document Everything:
- Maintain detailed records of the disagreement, the information reviewed, and your reasoning, all of which helps demonstrate compliance with the legislation.
Why this matters
An effective disagreement process builds trust and ensures compliance with statutory requirements. By handling disputes transparently, you reduce the risk of escalated conflicts, maintain good relationships with workers and supply chain partners, and demonstrate your commitment to operating the rules fairly and accurately.
