A status determination statement is a document, which can be digital, that is produced by the client stating whether the conditions in 61M(d) are met or not.
Or, in plain English, it says whether the relationship is “inside IR35” or “outside IR35”.
But, the SDS must also be “valid” - which means it must also satisfy two more conditions:
The first one is that it must contain reasons for the conclusion, which will obviously need to reflect the underlying status law.
The second condition is that the determination was made using reasonable care - which again, will undoubtedly mean that the client has done a proper determination based on the case law. I’ll talk about reasonable care in more depth in another video.
If the SDS is NOT valid then the agency is not allowed to make tax deductions, because they will not have become what is termed the “fee-payer”, who will still be the client.
Also, if the SDS says “outside IR35” and reasonable care has not been taken, then the client will still remain the “fee-payer” meaning they have not passed the tax risk onto the agency either.
It is very much in the interests of all parties for clients to take reasonable care, and make accurate and fair assessments.
If you need help with your assessment regime then please book a demo of IR35 Shield