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Dear and,
Status determination for IR35 purposes
For the purposes of your engagement with us as , we have made the following determination of your status on .
We have determined that, for tax purposes, your engagement falls IR35 - that is, we have decided that.
If you disagree with this status determination
You can appeal against this status determination at any time, as long as we receive the written representations for your appeal before the final payment is made in relation to your engagement. If you wish to appeal, please send your representations to at and we will respond within 45 days.
Queries or concerns
If you have any queries or concerns, please do not hesitate to contact me or the HR Department.
Yours sincerely,
CLIENT
Client name | (the Client) |
Name of the contact at the Client | |
Email address of the contact at the Client |
WORKER
Worker name | (the Worker) |
Personal services company details |
(PSC) |
DESCRIPTION OF THE ENGAGEMENT
Status determination
Reasons for the status determination
In making our determination, we have taken into account the terms of the Engagement, as set out in the.
We have applied guidance from HM Revenue & Customs (HMRC) on determining status in order to reach our determination:
We reached this determination using HMRC's online Check Employment Status for Tax (CEST) tool.
If you disagree with the status determination
The Worker can appeal against the status determination if they disagree with it. If the Worker seeks to appeal this status determination, representations must be made to us in writing, and include full details of the reasons for the Worker disputing the determination.
Representations are to be sent to at . We will consider your appeal and may contact you if we have any queries or need clarification about your representations. We will respond within 45 days of receipt of your appeal.
Please note that any representations must be received by us before the final payment is made in relation to the Engagement.
Reviewing the statement
We may review the determination in this statement at any time. We will typically review it every months from. Should the Worker become aware of any changes to their working practices that may affect this status determination statement, the Worker must contact us immediately.
Receiving a copy of this statement
We have provided a copy of this statement to the Worker and to the entity we contract with in relation to the Engagement, namely:.
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This IR35 Status Determination Statement template includes and covers:
a cover letter
the worker’s details
the client’s details (ie your business’ details)
the details of the person responsible for completing the Status Determination Statement
the worker’s status
the reasons for the worker’s status
whether the Government’s CEST (Check Employment Status for Tax) tool made a status determination
appeals
how often the Status Determination Statement will be reviewed
who will receive a copy of the Status Determination Statement
Since 6 April 2021, clients have needed to determine the employment status of a consultant every time they agree to a contract with a worker (or agency).
Use a Status Determination Statement when you are determining a worker’s (also referred to as a 'consultant' or 'contractor') employment status for IR35 purposes. IR35 is a law that tackles tax avoidance achieved by workers’ supplying their services to clients via an intermediary. This Status Determination Statement allows you to set out whether a worker is inside or outside of IR35 (ie whether they are classed as self-employed or as an employee for IR35 purposes) and the reasons for reaching this conclusion.
For more information, read IR35.
Self-employed workers tend to provide their services through a limited company intermediary, known as a personal services company (or 'PSC'). An intermediary is a party that makes arrangements for or pays an individual to work for a third party, when the individual doing the work would otherwise be an employee. For more information, read IR35.
To determine a worker’s employment status for IR35 purposes, all relevant facts need to be considered and evaluated. Clients should consider a variety of factors including:
whether the worker is obliged to accept work provided by the client
whether the client is obliged to provide work to the worker
whether the worker has a right to appoint a substitute, and
the degree of control the client has over the worker
For more information, read IR35 status determination.
When determining a worker’s status, clients should use HMRC’s CEST (Check Employment Status for Tax) service, which helps clients identify whether workers should be classed employed or self-employed for tax purposes. HMRC will stand behind a CEST decision unless a compliance check finds that the information provided is not accurate.
If HMRC’s CEST service cannot make a determination as to a worker’s employment status, the client will need to use an alternative method to make such a determination (eg seeking assistance from a specialist advisor). Where CEST could not make a determination, this should be expressly in the Status Determination Statement as evidence that the worker’s engagement required further consideration.
The CEST report must be attached to the Status Determination Statement as evidence of the determination.
The client’s answers when using the CEST service, along with the overall determination outcome, should be stored with the relevant tax records for future audit purposes.
Status Determination Statements should be made and reviewed on an ongoing basis. The client should have a review process in place, revisiting status decisions regularly and making new decisions when:
changes are made to the working practices
changes are made to the contractual arrangements
contracts are renewed
new contracts are entered into
If the worker becomes aware of any relevant changes that may affect the Status Determination Statement, they should make the client aware of this as soon as possible. For example, any changes to the worker’s working practices.
A copy of the Status Determination Statement must be sent to the parties the client is contracting with, regardless of the determination’s outcome. This will always include the worker and either:
the worker’s personal services company, if the client and worker contract directly through this company
the agency, if the worker provides their services via an agency
the fee-payer (ie the party paying the worker), if the client or agency do not pay the worker, or
any other organisations the client contracts with as part of a complex supply chain
It remains the client’s responsibility to deduct tax and National Insurance Contributions (NICs) until they tell the worker and, where relevant, the other parties they contract with, the status determination and the reasons for it.
Failure to provide the relevant parties with the Status Determination Statement results in the client becoming liable for the worker’s tax and NICs.
If the worker disagrees with the Status Determination Statement, they should appeal to the client. Such an appeal can be raised until the last payment is made for the worker’s services.
Once an appeal has been made, the client has 45 days to respond. While the client should consider any appeals received, they are under no obligation to change their mind regarding the determination. However, the client should let the worker know the outcome of an appeal, regardless of whether or not they changed their mind.
Failure to respond to an appeal within 45 days results in the client becoming liable for the worker’s tax and NICs.
The cover letter provides the worker and the party with which the client contracts (ie the PSC, the agency or the fee-payer) with a brief overview of the status determination carried out by the client and its result.
Making an IR35 Status Determination Statement online is simple. Just answer a few questions and Rocket Lawyer will build your document for you. When you have all of the details prepared in advance, making your document is a quick and easy process.
To make your IR35 Status Determination Statement you will need the following information:
Party details
What are the client’s details (ie your legal structure, name and registered address)?
Does the client operate from an address other than its registered address? If so, what is the address?
If the client is a partnership, LLP or company, who will sign the Status Determination Statement on its behalf?
What are the worker’s details (ie name and address)?
What are the details of the personal services company (ie its name, company number and address)?
Does the client contract with the worker through an agency? If so, what are the agency’s details (ie name and address)?
Payment
If the client doesn’t contract with the worker through an agency, does the client pay the worker directly?
If not, what are the fee-payer’s details?
If the client contracts with the worker through an agency, does the agency pay the worker directly?
If not, what are the fee-payer’s details?
Is the fee-payer the contracting entity?
Status
Is the worker's status being determined either before or during the provision of services? If so:
What is the start date for the provision of services?
What is the end date for the provision of services?
What is the date of the original services agreement?
Provision of services
What is the worker's role?
What services does the worker provide?
What projects are the services being provided for?
Status determination
What are the details of the person responsible for issuing the Status Determination Statement?
When was the status of the worker decided?
Is the worker self-employed or an employee?
If the worker is an employee
What are the reasons for determining that the worker is an employee?
If relevant, what control does the client have over the worker?
If relevant, why does the worker have to provide the services personally?
If the worker is self-employed
What are the reasons for determining that the worker is self-employed?
Further assistance
Was HMRC's CEST tool able to determine the worker's status?
Was advice sought from a qualified professional adviser? If so:
What is the adviser’s name?
Will a copy of the advice be attached to or set out in the Status Determination Statement? If the latter, what advice was given?
Appeal
Who should appeals be sent to?
Dates
How many months after the start of the contract will the worker's status be reviewed?
On what date are the cover letter and Status Determination Statement being sent to the worker?
IR35 Status Determination Statements are used to determine and set out the employment status of consultants. Typically, provisions of an IR35 Status Determination Statement include:
Cover letter
Status determination for IR35 purposes
The cover letter provides a brief overview of the Status Determination Statement. This includes details of the worker’s role, when the determination was made, and the result of the status determination and what this means.
If you disagree with this status determination
This section of the cover letter provides details of what the worker should do if they disagree with the status determination. This includes how an appeal should be made, within what time period, and to whom.
Queries
This section of the cover letter sets out to whom any queries or concerns should be addressed.
The Status Determination Statement
Client
This table sets out the client’s details. This includes their name, registered address, trading address (if relevant) and the name of the worker’s contact in the client’s business.
Worker
This table sets out the worker’s details. This includes their name, the details of their personal services company and, where relevant, the agency’s or fee-payer’s details.
Description of the engagement
This section of the Status Determination Statement sets out the details of the status determination. This includes:
the status determination itself (ie whether the worker’s services fall inside or outside of IR35)
the reasons for the status determination (ie what things were considered when making the status determination, what HMRC’s CEST tool determined and, where relevant, any specialist advice sought)
the worker’s option of disagreeing with the outcome (ie what steps the worker should take if they disagree with the client’s status determination)
review provisions for the Status Determination Statement (ie when the document will next be reviewed)
receiving of a copy of the Status Determination Statement (ie to who else a copy of this document will be provided)
If you want your IR35 Status Determination Statement to include further or more detailed provisions, you can edit your document. However, if you do this, you may want a lawyer to review or change the Status Determination Statement for you, to make sure it complies with all relevant laws and meets your specific needs. Ask a lawyer for assistance.
Know when you need to carry out an IR35 Status Determination Statement
IR35 applies whenever a consultant provides services to a client through an intermediary (eg a PSC) but the consultant would be classed as an employee if they had contracted directly with the client. Since April 2021, all public authorities and medium and large-sized clients have been required to determine the employment statuses of any consultants they engage in such a way. For the rules to apply, the client must meet at least two of the following:
they have an annual turnover of more than £10.2 million
they have a balance sheet total of more than £5.1 million
they have more than 50 employees
If the client’s business has a turnover of more than £10.2 million and is either a company, LLP, an unregistered business, or an overseas company, the IR35 rules always apply. If the client’s business does not meet these criteria, the client is considered a small-sized client and assessing the worker's status for IR35 will be the intermediary’s responsibility.
For more information, read IR35.
Understand how to determine a worker’s status for IR35
Whenever a client contracts with a worker who is providing their services through an intermediary, the worker’s employment status must be determined. Carrying out an IR35 status determination involves considering and evaluating all relevant facts and the basic features of the relationship. Examples of the types of things that should be considered include:
the terms and conditions of the engagement
whether there is mutuality of obligations
if there is a right to terminate the agreement
For more information, read IR35 status determination. If you are not sure how to determine a worker’s status or require assistance determining a worker’s status, use our IR35 status determination service.
Understand when to seek advice from a lawyer
For bespoke legal advice on determining a consultant’s status, read IR35 status determination advice. You should also Ask a lawyer if you have any other questions or concerns. For example, if:
the document doesn't meet your needs or cover what you want
you need specialist advice
you cannot determine a worker’s employment status
you are part of a complex supply chain
