HMRC rules are in force already that change how freelancers and clients need to manage IR35 - placing new responsibilities on clients. The legislation applies to services by freelancers who operate via a Personal Services Company (PSC) and to large clients, as there are some exemptions based on the size of a client.
For services taking place for clients after the switchover on 6 April 2021, it will be the client’s responsibility to prove IR35 compliance This includes doing an IR35 assessment and recording it in a document called a Status Determination Statement (SDS) and providing that to YunoJuno and the PSC freelancer.
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’. This assessment will affect the tax obligations for a PSC freelancer for that assignment.
There are some clients who will not be required to do an SDS due to their size. Those exemptions are detailed here if the client is exempt, the PSC freelancer will be subject to the existing rules.
In the run up to 6 April 2021, and beyond, all clients who are not exempt must provide an SDS, in PDF format, before the client can offer the assignment to the PSC freelancer.
PSC freelancers also have a statutory right to challenge an SDS if they think it is not factually correct. If a PSC freelancer does this, the client must consider and respond within 45 days.
How do I get an SDS?
It’s up to you as a client to choose how you carry out an IR35 assessment. The critical element is that whatever tool or service you use, you need to take a high level of care to do it properly - if you don’t, there could be consequences with HMRC at a later date. Our platform will guide you when you are required to carry out an IR35 assessment during the booking process, but you may want to do a provisional assessment for a particular assignment to familiarise yourself with the new obligations via the tools below.
For our IR35 Safe clients, you will have access to our custom integration with the Kingsbridge Assessment Tool.
HMRC also have their own IR35 assessment tool called CEST (Check Employment Status for Tax); you may follow our guide on how to get an IR35 assessment via HRMC's CEST.