How does a client-led dispute process work?

Dave Chaplin, CEO of IR35 Shield talks about how a client-led dispute process works.

Under the legislation in section 61T of the updated Off-payroll legislation from April 2021, contractors who are given determinations are able to dispute the conclusion and can do so at any point before the last payment made to them for the engagement.

The contractor can make representations that the conclusion made within the status determination statement was incorrect.

The client must then consider the representations, and either agree and re-issue the status or state that they have considered the representations made but that the original determination is correct.

If the client fails to meet their obligations within 45 days then they remain the fee-payer, which means that the agency cannot make deductions from the contractors fees.

The desired behavioural effect HMRC are seeking here is for clients or hirers to make accurate and fair determinations in the first place, but also to avoid themselves having the workload of handling all these appeals. There is no statutory route to independent arbitration or a tax tribunal.

The likelihood is that clients will rarely change their conclusions, and ultimately contractors will choose to take the contract or not and quote different contract rates depending on the status.

From a practical perspective, clients and contractors should try to agree status and terms before the engagement is started.

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