HMRC rules changed how contractors and clients need to manage IR35, placing new responsibilities on clients. The legislation applies to services provided by contractors who operate via a Personal Service Company (PSC) and generally applies to medium and large clients. There are exemptions based on the size of the client.

For services provided to clients after the switchover on 6 April 2021, it became the client’s responsibility to determine IR35 status. This includes carrying out an IR35 assessment and recording it in a document called a Status Determination Statement (SDS), and providing that to YunoJuno and the PSC contractor (as well as any agency involved in the supply chain).

An SDS is a document that records the result of an IR35 assessment for an assignment, with the result being either ‘Inside IR35’ or ‘Outside IR35’. The SDS must also include the reasons for the determination and demonstrate that the client has taken reasonable care when making the assessment. This determination affects the tax obligations for a PSC contractor for that assignment.

There are some clients who are not required to produce an SDS due to their size. Where the end client qualifies as a “small company” under the Companies Act, the off-payroll working rules do not apply and the responsibility for determining IR35 status remains with the contractor’s PSC. These are detailed here.

From April 2025, a company is generally considered “small” if it meets two or more of the following conditions:

If the client is exempt under these rules, the PSC contractor will be subject to the original IR35 legislation and must assess their own status.

For engagements where the off-payroll rules apply, clients must provide an SDS before the engagement begins and must pass it to both the contractor and any agency in the contractual chain.

PSC contractors also have a statutory right to challenge an SDS if they believe it is incorrect or does not reflect the actual working practices. If a PSC contractor raises a disagreement, the client must consider the challenge and respond within 45 days, either confirming the original determination or issuing a revised SDS.

Our platform will guide you when you are required to carry out an IR35 assessment during the booking process. The critical element is that you must take reasonable care when completing the assessment, if you do not, there could be consequences with HMRC at a later date.

You may want to carry out a provisional assessment for a particular assignment to familiarise yourself with the obligations using the tool below.

HMRC provides its own IR35 assessment tool called CEST (Check Employment Status for Tax), which can help determine whether a contractor’s engagement is likely to fall inside or outside IR35.