Existing contract with no SDS?

[yorkshirespud]

Would like to cement my understanding about an existing (pre-April 6 2021) that is ongoing with no mention of Chapter 10 IR35 and SDSs.

if the client provides an SDS stating in or
out that is straightforward.

However, if the client fails to produce any SDS at all - that effectively makes the client responsible for any unpaid tax? (Direct, no agency)

[jamesbrown]

Yes, absent fraud (by YourCo), which is highly unlikely, and assuming that the client has a UK connection (if they have an office here, then they have a Permanent Establishment here and that is a UK connection) and the client is not a "small company" according to the Companies Act.

[northernladuk]

Would like to cement my understanding about an existing (pre-April 6 2021) that is ongoing with no mention of Chapter 10 IR35 and SDSs.

You need an SDS from the client before Apr 6th period. Make sure you have one or walk.

if the client provides an SDS stating in or
out that is straightforward.

Unless your client is going ban the use of PSC's across the board you need an SDS before you start work Apr 6th onwards and possible a new a contract, particularly if you are deemed inside.

However, if the client fails to produce any SDS at all - that effectively makes the client responsible for any unpaid tax? (Direct, no agency)

They are breaking the law and leaving you in a very precarious situation. Do not let this happen. By not doing it leaves everyone in a state of limbo and no assumptions about who is responsible for what are not safe.

If you didn't read it first time, DO NOT LET THIS HAPPEN. Tell your client you won't be turning up on Apr6 unless you have an SDS. They are breaking the law and leaving you exposed.

To be fair if you are having to ask this now you are far far too late. If they come back inside you have to leave before the 6th and, somehow, get your money paid before the 6th.

Time to pull your socks up sharpish.

[yorkshirespud]

Unless your client is going ban the use of PSC's across the board you need an SDS before you start work Apr 6th onwards and possible a new a contract, particularly if you are deemed inside.

They are breaking the law and leaving you in a very precarious situation. Do not let this happen. By not doing it leaves everyone in a state of limbo and no assumptions about who is responsible for what are not safe.

It would appear that if an end-client fails to produce an SDS at all - then the end-client assumes the fee-payer responsibilities. In the case of a direct contract this was the case anyway.

As this Caunce O'Hara blog https://www.caunceohara.co.uk/ir35/g...l-2021-part-3/ states:

A Status Determination Statement MUST be issued by the end client, irrespective of whether the engagement is inside or outside IR35.

Failure by the end client to issue an SDS to the relevant parties would result in the end client having the status of fee payer and HMRC collecting the tax due from the end client – even if the correct tax has been deducted by the entity lower in the contractual chain which was responsible for paying the PSC.

No SDS from (a clueless) client removes any liability from the contractor by default. Of course their get out clause is then to issue an SDS to remedy that. I'm making sure I understand all the implications of the permutations possible.


My client has agreed outside verbally and informally previously, but it now starting to wobble. I'll be invoicing on Wednesday for March, and the client has pushed back and pushed back a discussion about their position - was originally a rubber stamp confirmation to be last week, then was tomorrow, now Wednesay.


Be assured - if the right answer isn't resolved on Wednesday morning, then I absolutely will bill for March and then immediately walk.

[northernladuk]

It would appear that if an end-client fails to produce an SDS at all - then the end-client assumes the fee-payer responsibilities. In the case of a direct contract this was the case anyway.

As this Caunce O'Hara blog https://www.caunceohara.co.uk/ir35/g...l-2021-part-3/ states:

This might be so but what an utterly awful situation that anyone really doesn't need to be in. Open a dialog up with your client and help them if you are in this situation. Sitting there and just sailing in to this situation is really poor. You've got to be inside for just being so tulip at what you do IMO.

No SDS from (a clueless) client removes any liability from the contractor by default. Of course their get out clause is then to issue an SDS to remedy that. I'm making sure I understand all the implications of the permutations possible.

My client has agreed outside verbally and informally previously, but it now starting to wobble. I'll be invoicing on Wednesday for March, and the client has pushed back and pushed back a discussion about their position - was originally a rubber stamp confirmation to be last week, then was tomorrow, now Wednesay.

Be assured - if the right answer isn't resolved on Wednesday morning, then I absolutely will bill for March and then immediately walk.

There is no excuse to be in that situation. You should have put this pressure on your client weeks/months ago. It's your job to get this sorted to protect your own income even if the client isn't stepping up to their responsibilities.

Isn't invoicing end march too late though? You'll get paid in April so you are caught and will appear on all the wrong lists?