IR35 Status Determination Statement Template (UK)

A status determination statement (SDS) is the written decision an in-scope client must issue when it engages a contractor working through their own limited company or another intermediary. It records whether the off-payroll working (IR35) rules apply and, crucially, the reasons for that conclusion. Our IR35 status determination statement template pairs the statement with a short controls procedure: who assesses status, what evidence is kept, who must receive it, and how disagreements are handled.

The legal work is about liability. Under Chapter 10, Part 2 of the Income Tax (Earnings and Pensions) Act 2003, responsibility for deducting Income Tax and employee National Insurance — and paying employer National Insurance — stays with the client until the determination and reasons have reached both the worker and the party the client contracts with. HMRC's guidance on section 61NA sets three tests for a valid statement: it must state the conclusion, give the reasons for it, and be made with reasonable care. Fail any one of the three and HMRC treats the statement as invalid, leaving tax, National Insurance and the Apprenticeship Levy with the client.

Public authorities are in scope at any size

"In scope" means one of two things. HMRC's Employment Status Manual puts the duty on a client that is either a public authority or a medium or large-sized non-public sector organisation — so a public authority is covered whatever its size, and being small only takes you outside the rules if you sit outside the public sector.

The controls procedure in this template earns its keep in exactly these situations:

You are in scope and engaging a contractor who invoices through a personal service company, and nobody owns the status decision.
You hire through an agency and the statement must travel down the chain to whoever pays the contractor's company.
A contractor disputes an inside-IR35 decision and you need a documented process with a deadline.
Working practices have drifted mid-engagement — more direction, less substitution — and the original decision no longer matches reality.

What an IR35 status determination statement should cover

Engagement details. Parties, role, dates and contract references — a determination attaches to a specific engagement, not a job title.
The conclusion. Whether the worker would be an employee or office holder for tax and National Insurance purposes had the client engaged them directly, without the intermediary in the middle.
The reasons. How the real working arrangements — control, any right to send a substitute, who carries financial risk — led to the conclusion. Reasons are part of what makes the statement valid; a bare verdict is not an SDS. This page stays on the statement and its process: for how those status factors play out in the underlying engagement, see our contractor and freelancer agreement guide.
A reasonable-care record. What was reviewed: the contract, day-to-day practices, any output from HMRC's Check Employment Status for Tax (CEST) tool. Reasonable care is the third validity test, so a well-argued conclusion reached carelessly still fails.
A distribution log. Who received the statement and when — until the worker and your contract counterparty both have it, the deductions responsibility stays with you.
Chain hand-off wording. Where agencies sit in the middle, an agency that is not itself the deemed employer has to pass the statement further down the supply chain, and no fee-payer becomes the deemed employer until the statement actually reaches it. Long labour chains are the norm on building projects — our construction contract template guide covers the contracts those chains run on.
A disagreement procedure. The worker or the deemed employer can challenge the decision; the client must respond within 45 days of being told, either maintaining the determination and saying why or issuing a new one.
Re-assessment triggers. Named events — renewal, role change, new working pattern — that force a fresh determination, and where records are kept.

Common mistakes

Blanket determinations. HMRC's own examples of behaviour falling short of reasonable care include deciding that every worker engaged through an intermediary is caught, without weighing the facts of each case.
A conclusion with no reasons. "Inside IR35" on its own is not a valid statement, so it does not move responsibility anywhere.
Telling the worker but not the agency — or the reverse. Both must receive it before responsibility moves.
Sitting on a disagreement. Miss the 45-day response deadline and the worker's Income Tax and National Insurance become the client's responsibility.
Assuming "small" is a way out. It is not one at all in the public sector, where size is irrelevant. Elsewhere the company test takes two of three — turnover, balance sheet total, employees — across consecutive financial years, and the Companies Act thresholds it borrows increased for financial years beginning on or after 6 April 2025. Size needs re-checking, not remembering.

England & Wales, Scotland and Northern Ireland

HMRC administers off-payroll working across the UK and its guidance sets out a single SDS duty, a single 45-day response window and a single size exemption, with no separate England and Wales, Scotland or Northern Ireland versions. The procedure in this template does not need regional variants.

One devolved point does bite, at the payroll end rather than the decision. HMRC's manual says devolved powers affecting tax codes apply as normal to off-payroll workers, giving Scottish rates of income tax as its example, and that the worker should give a home address rather than a business address so the right regime is picked up. A contractor living in Scotland who works for a client in Cardiff or Belfast is taxed on the Scottish regime; the statement itself does not change.

An SDS settles tax treatment only. GOV.UK is explicit that a person may have a different employment status in tax law, so an inside-IR35 conclusion does not decide holiday pay, unfair dismissal or anything else on the employment-rights side — that is a separate question under different legislation.

Frequently asked questions

What is an IR35 status determination statement?

The client's written decision on whether the off-payroll rules apply to an engagement, with reasons. It must reach the worker and the party the client contracts with before deduction responsibility moves down the chain.

Who has to receive the SDS?

Both the worker and the person or organisation the client contracts with — typically an agency, or the contractor's own company where the engagement is direct. In a longer chain, the statement is passed down until it reaches the fee-payer.

How long does a client have to respond to a disagreement?

45 days from receiving it. HMRC's guidance is blunt: fail to respond in time and the worker's Income Tax and National Insurance become the client's responsibility.

Do small companies have to issue status determination statements?

Small organisations outside the public sector do not; public authorities are in scope whatever their size. HMRC currently treats a company as medium or large where at least two of these are met for two consecutive financial years: turnover of more than £10.2 million, a balance sheet total of more than £5.1 million, an average of more than 50 employees. Partnerships and other undertakings are judged on turnover of more than £10.2 million alone. Where the client is small and outside the public sector, HMRC's guidance leaves the status decision with the worker's own intermediary. The underlying Companies Act thresholds rose to £15 million and £7.5 million for financial years beginning on or after 6 April 2025; on a usual 12-month financial year, HMRC says the earliest tax year that transitional change affects a client is 2027/28.

Is a CEST result the same as an SDS?

No. CEST output can form part of the evidence behind a determination, but the SDS is a separate document that must state the conclusion and reasons and actually be issued to the right recipients.

Statutory references on this page were checked against primary sources (legislation.gov.uk, GOV.UK, HSE, ICO and Acas) on 8 August 2026. Our templates themselves are not solicitor-drafted — see the note below.

This page is legal information, not legal advice.

Dogetlawyer is a Legal-Technology platform, not a law firm.

Our templates are not solicitor-drafted and have not been checked against primary sources. They are starting points to adapt, not finished documents.

This page describes the law of England and Wales unless it says otherwise. For anything significant, consider taking advice from a qualified professional.

A status determination carries real tax consequences for the client, the agency and the worker, so take professional advice before relying on one for anything significant.

How to get the template

Our IR35 status determination statement template sits in a library of around 114 free UK legal templates. Every title is public on the free A–Z template index; downloading takes a free account, not a payment. For the wider engagement, the contractor and freelancer agreement covers the underlying contract.