Reply to: CEST Outcome Sufficient as SDS?

[Lance]

To give you an example, the statement I received is almost a copy paste from the CEST, with a statement, reasons listed in CEST and acknowledgement from client and contractor. All bundled up in nice headed paper. Looks something like this:

We believe this engagement falls Outside IR35 and the contractor is therefore Self-
Employed for tax purposes, due to the following reasons:

About the contract

Blah blah reason 1

Personal Service

Blah blah reason 1
Blah blah reason 2
Blah blah reason 3

End client control

Blah blah reason 1
Blah blah reason 2
Blah blah reason 3

Part and Parcel & Business on Own Account

Blah blah reason 1
Blah blah reason 2
Blah blah reason 3

Mutuality of Obligation (MOO)

Blah blah reason 1
Blah blah reason 2

Acknowledgement

The following people have been asked to acknowledge this document:
Name: Contractor
Status: Pending
Role: LTD Director

Name: Client Contact
Status: Pending
Role: Client Director of Services

is that from the agency? Reads like it.

As long as it has a genuine responsible person at the client accepting it (not status pending) I'd be happy with that as an SDS.
As others have said there is no formal template, and IMO in a court a judge would see the intent of this as providing that SDS.

[Bodger]

To give you an example, the statement I received is almost a copy paste from the CEST, with a statement, reasons listed in CEST and acknowledgement from client and contractor. All bundled up in nice headed paper. Looks something like this:

We believe this engagement falls Outside IR35 and the contractor is therefore Self-
Employed for tax purposes, due to the following reasons:

About the contract

Blah blah reason 1

Personal Service

Blah blah reason 1
Blah blah reason 2
Blah blah reason 3

End client control

Blah blah reason 1
Blah blah reason 2
Blah blah reason 3

Part and Parcel & Business on Own Account

Blah blah reason 1
Blah blah reason 2
Blah blah reason 3

Mutuality of Obligation (MOO)

Blah blah reason 1
Blah blah reason 2

Acknowledgement

The following people have been asked to acknowledge this document:
Name: Contractor
Status: Pending
Role: LTD Director

Name: Client Contact
Status: Pending
Role: Client Director of Services

[eek]

One problem with SDS determinations is that the BEIS / the Government never designed a document for companies to use

[l35kee]

Sounds like your email covers these in a roundabout way but a nice laid out document covering these explicitly wouldn't be a bad thing.

Yeah, I've requested a more formal document laid out properly and explicitly. Thanks all ?

[northernladuk]

"this is an outside IR35 engagement,

And there is your statement so you are covered. Personally I would have wanted a bit more fluff around it mentioning that this is the official SDS. My current one covers it in a whole paragraph stating it's the SDS and mentioning the legislation. This SDS for this role is x in accordance with Y legislation'. It mentions reaonable care and I believe it also mentions the dispute process <for a giggle>so it's absolutely clear but if it did go south I think it's reasonable to say that's a statement of the role and you are covered.

https://sjdaccountancy.com/resources...ion-statement/

According to government guidance, an SDS needs to meet three requirements:

1. It must clearly state the IR35 status of the assignment, clearly stating if the end-client believes your engagement falls inside or outside the scope of IR35
2. The reasons they have arrived at this decision, such as levels of Control, Mutuality of Obligation and the requirement for Personal Service
3. The end hirer must have taken reasonable care when arriving at their determination

Sounds like your email covers these in a roundabout way but a nice laid out document covering these explicitly wouldn't be a bad thing.

And not to bang on about it, but you filling it in. It sounds like the bottom three bullet points have been paid lipservice by you filling it in and them having a casual glance at it. That's not reasonable care in my book but maybe I'm being overly pedantic.

What counts as ‘reasonable care’?


Up until recently reasonable care was open to interpretation and had no clear definition, but having received criticism from industry experts, the government detailed ways it can be shown by end-clients.

This includes:

• Seeking the advice of a qualified professional advisor
• Reassessing the engagement if there are changes to a worker’s contract or working practices
• Accurately completing HMRC’s CEST tool
• Applying HMRC guidance

[l35kee]

Where is the statement in an email confirming anything?

Their email says "this is an outside IR35 engagement, find attached the CEST determination with justification for this determination". And the CEST document says "Off-payroll working rules (IR35) do not apply" with the justification in the "Why you are getting this result" section.

Again, and we've explained this to you numerous times now, It's a STATEMENT. THey have to provide one. You've posted above that it declares deemed employement status. So lets sum this up for you again. A STATEMENT that DECLARES STATUS. Does an email confirming CEST give you that? No.

This is the bit I'm struggling with I guess, it appears they have done this? Unless it's to do with the legal definition of a statement that I may not understand..?

[northernladuk]

Hey, sorry I may have not been clear in the original post. I'm fine with the previous gig where I filled out the QDOS questionnaire and the client approved (and the actual working practices did align to this).

But that's where I get nervous. Do they? You never invoked the RoS so you don't really know and that's been a problem from IR35 day 1. The Sub clause in most contracts is a sham and by you saying you can sub and the client not bothering to check their requirements means it still is.

This thread was more around the new gig, and the SDS from them effectively being an email confirming the gig is outside, with their own completed CEST survey attached as the justification for their determination.

It's in the name of the document. SDS. Status Determination STATEMENT

Where is the statement in an email confirming anything?

The following is declared in that link:

• Declares a contractor’s deemed employment status following an IR35 assessment
• Provides reasons for reaching this conclusion.

Which they seem to have done, via the email confirmation and the attachment of their CEST survey. I was wondering if there was a view on an SDS being something more formal than this or not.

Again, and we've explained this to you numerous times now, It's a STATEMENT. THey have to provide one. You've posted above that it declares deemed employement status. So lets sum this up for you again. A STATEMENT that DECLARES STATUS. Does an email confirming CEST give you that? No.

And as I said, instead of asking us the same question for the 4th time running you need to go away and learn about this. The answer would then be clear.

Here is another link if you don't want to go do it yourself.

https://www.warnergoodman.co.uk/site...ement-for-IR35

A Status Determination Statement (SDS) is a written statement prepared by a business which states the employment status of a contractor whom they engage.

Gotta be smarter than this going forward.

[malvolio]

Hey, sorry I may have not been clear in the original post. I'm fine with the previous gig where I filled out the QDOS questionnaire and the client approved (and the actual working practices did align to this).

This thread was more around the new gig, and the SDS from them effectively being an email confirming the gig is outside, with their own completed CEST survey attached as the justification for their determination.



The following is declared in that link:

• Declares a contractor’s deemed employment status following an IR35 assessment
• Provides reasons for reaching this conclusion.

Which they seem to have done, via the email confirmation and the attachment of their CEST survey. I was wondering if there was a view on an SDS being something more formal than this or not.

One fairly significant problem is that HMRC can ignore (and have ignored) CEST outputs and so will disregard them. On that basis, they are no real use as a justification for anything. The SDS is something created by the client and signed off by them as accurate. Since only they really know how they aim to treat you wrt IR35 (as opposed to telling you you're outside so they can get your services without any fuss), anybody else's input on its content is irrelevant. The QDOS review service is done with the client, not the contractor or the agency, for example.

[l35kee]

We had to jump through hoops to cover ourselves in the old days and nothing has changed just because the client makes the determination. Even more so in your case as you've filled it in and they've approved. I'll bet every penny I have if they had filled it in it wouldn't look like yours. I do despise this method as it makes no sense to me and I can envisage this falling appart at the seams should their ever be an investigation. Will the client understand and agree with the RoS you put in? Do you understand RoS? I'll bet at least one of those answer is no and boom, you've got a false determination. No offence to the OP but some contractors knowledge of IR35 and what they do as a job has a lot to be desired so to leave the IR35 decision up to the contractor is flakey at best.

Hey, sorry I may have not been clear in the original post. I'm fine with the previous gig where I filled out the QDOS questionnaire and the client approved (and the actual working practices did align to this).

This thread was more around the new gig, and the SDS from them effectively being an email confirming the gig is outside, with their own completed CEST survey attached as the justification for their determination.

A quick google would have answered this question and might also have added extra learning you maybe didn't know. The first result I got for IR35 SDS says the following in the first paragraph.

The following is declared in that link:

• Declares a contractor’s deemed employment status following an IR35 assessment
• Provides reasons for reaching this conclusion.

Which they seem to have done, via the email confirmation and the attachment of their CEST survey. I was wondering if there was a view on an SDS being something more formal than this or not.

[northernladuk]

Actually, sorry to ramble on, but this presents the perfect example where asking a simple question does not replace knowledge.

So we have answered your question that a CEST is not enough and and SDS must be provided.

What you will not know from this question is that you could fall in to a horrible trap here. The client does not have to produce an SDS until the first pay cycle. I forget the exact wording so this is where you need to go learn what your job is. That means you can start a gig with no SDS and the client can have you working for up to a month, possible more if you are in arrears and then drop and inside SDS on you. It's happened to a number of people on here and I bet more that we do not know about.

You need to know this because you could be in for a horrible surprise. Time to go read up on the new process and the pitfalls and understand it end to end.

[Lance]

Yeah I understand that, CEST is effectively a tool to help hem make the determination (ignoring the issues of CEST). My question is, is there a formal SDS document (I can't see there is), so is the client sending me and outside confirmation with CEST output as their reasoning sufficient?

Until the client have paid their first bill it's all in the air as they can change the determination at any stage till that point.
If I had an email saying "this CEST output is good is good enough for us" that would set my mind at ease though. but until that first bill paid by the client (do you even know when that is?) it's always in doubt.

[northernladuk]

Yeah I understand that, CEST is effectively a tool to help hem make the determination (ignoring the issues of CEST). My question is, is there a formal SDS document (I can't see there is), so is the client sending me and outside confirmation with CEST output as their reasoning sufficient?

What is not clear about CEST != SDS?

[northernladuk]

So I've been given the result of a CEST questtionate from my future client suggesting the gig is outside IR35. Does this constitute them giving me an SDS? Previously ??I've been asked to go through the QDOS assesssment myself, which is then "approved" by the client.

Just checking if SDS is a thing in itself, or literally just any formal confirmation of the status (so CEST determination would suffice)

Lance has nailed it but you do need to be a bit more clued up on this particularly with the fact you filled in the questionaire. This is basic diligence.

We had to jump through hoops to cover ourselves in the old days and nothing has changed just because the client makes the determination. Even more so in your case as you've filled it in and they've approved. I'll bet every penny I have if they had filled it in it wouldn't look like yours. I do despise this method as it makes no sense to me and I can envisage this falling appart at the seams should their ever be an investigation. Will the client understand and agree with the RoS you put in? Do you understand RoS? I'll bet at least one of those answer is no and boom, you've got a false determination. No offence to the OP but some contractors knowledge of IR35 and what they do as a job has a lot to be desired so to leave the IR35 decision up to the contractor is flakey at best.

A quick google would have answered this question and might also have added extra learning you maybe didn't know. The first result I got for IR35 SDS says the following in the first paragraph.

Amendments to the IR35 legislation introduced within the Finance Bill 2020 require that clients provide an IR35 ‘status determination statement’ when assessing the IR35 status of contractors, before a contract begins. A ‘Status Determination Statement’ (SDS) is a comprehensive statement from the client which:

You still need to be diligent and this includes knowing the very basic rules of the legislation and what is required. It's kinda your job to know.

[l35kee]

CEST != SDS

SDS is a document issued by the client and is a formal verification of the IR35 status.

CEST is just an assessment tool.

Yeah I understand that, CEST is effectively a tool to help hem make the determination (ignoring the issues of CEST). My question is, is there a formal SDS document (I can't see there is), so is the client sending me and outside confirmation with CEST output as their reasoning sufficient?

[Lance]

So I've been given the result of a CEST questtionate from my future client suggesting the gig is outside IR35. Does this constitute them giving me an SDS? Previously ??I've been asked to go through the QDOS assesssment myself, which is then "approved" by the client.

Just checking if SDS is a thing in itself, or literally just any formal confirmation of the status (so CEST determination would suffice)

CEST != SDS

SDS is a document issued by the client and is a formal verification of the IR35 status.

CEST is just an assessment tool.