IR35 and Compliance

What is an SDS?

An SDS, or Status Determination Statement, is a document recording the outcome of an IR35 status test (IR35 status assessment). The SDS is an essential document as it provides evidence of the IR35 status of the contractor. It should include details of the status determination along with reasons for reaching the conclusion.

More detail

A Status Determination Statement (SDS) is issued by the engager, the party that hires the contractor.

The SDS should explain why the contractor has (or has not) been determined to be a deemed employee for tax purposes.

To strengthen the IR35 status determination and reduce the risk of costly litigation with HMRC, it’s essential that the Status Determination Statement (SDS) be thorough, document all reasons and key data considered in the decision. This approach helps provide a clear audit trail if challenged. A further level of protection can be created by having both parties sign off the document as a true reflection of the arrangements.

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