What is a status determination statement for IR35?
Answered 11 March 2026
Here is a comprehensive answer on what a Status Determination Statement (SDS) is for IR35 purposes.
What the law says
A Status Determination Statement (SDS) is defined in ITEPA 2003, s.61NA as a statement made by the client (the end-client engaging the worker's services) that either:
- (a) states that the client has concluded that the off-payroll working condition (s.61M(1)(d) — i.e., that the worker would be an employee if engaged directly) is met in the case of the engagement, and explains the reasons for that conclusion; or
- (b) states (even if incorrectly) that the client has concluded that the condition is not met, and explains the reasons for that conclusion.
Crucially, a statement is not a valid SDS if the client fails to take reasonable care in coming to the conclusion stated in it.
Consequence of not issuing an SDS
Until the client gives an SDS to the worker, the client itself (rather than the fee-payer in the chain) is treated as making the deemed direct payment to the worker and bears the PAYE/NIC liability.
Passing the SDS down the chain
Once issued, the SDS must be passed down the contractual chain. A person in the chain only qualifies as the "deemed employer" (and thus takes on the liability) if they have been given the SDS by the person immediately above them in the chain.
Disagreement process
If the worker or deemed employer believes the SDS conclusion is incorrect, they may make representations to the client. The client must then, within 45 days, either:
- Confirm the original conclusion with reasons; or
- Issue a new SDS with a different conclusion, stating the date from which it applies and withdrawing the previous SDS.
If the client fails to respond within 45 days, the client itself becomes liable as if it were the fee-payer.
Withdrawal if client ceases to be medium or large
If a non-public-authority client that has issued an SDS subsequently ceases to qualify as medium or large, it must withdraw the SDS before the start of the relevant tax year. Failure to do so results in the client being treated as medium or large and bearing the deemed employer liability.
HMRC guidance / practice
HMRC guidance confirms that a Status Determination Statement is what end-clients must issue to a worker if they determine that the off-payroll working rules apply to an engagement.
- Small clients are exempt: A small organisation is not required to provide an SDS. In that case, the worker's intermediary (usually their personal service company) must itself consider whether the off-payroll rules apply.
- Non-small clients must issue an SDS where the off-payroll rules apply to the engagement.
- HMRC's Check Employment Status for Tax (CEST) tool can assist clients in making the employment status determination that underpins the SDS. HMRC will stand by a CEST result provided the information entered is accurate and used in accordance with HMRC guidance.
Summary
In short, an SDS is the formal written conclusion of a medium or large client (or public authority) as to whether a contractor engagement falls within the IR35/off-payroll rules, together with the reasons for that conclusion. It must be made with reasonable care, issued to the worker (and passed down the supply chain), and triggers the allocation of PAYE/NIC liability to the appropriate party in the chain.
Citation sources
You will able to review the answers before you get to the results page on CEST. Please note that CEST does not have a ‘save and return’ function. If you close CEST without finishing the questions, you will need to start from the beginning. In most cases, CEST will provide you with a result. HMRC will stand by the result provided the information is accurate and it is used in accordance with our guidance. Where there are subsequent material changes to contractual or working arrangements, the infor
Part 2 Employment income: charge to tax CHAPTER 10 Workers' services provided through intermediaries to public authorities or medium or large clients Client-led status disagreement process 61T 1 This section applies if, before the final chain payment is made in the case of an engagement to which this Chapter applies, the worker or the deemed employer makes representations to the client that the conclusion contained in a status determination statement is incorrect. 2 The client must either— a giv
This template can be used to respond to a request from a worker or party you contract with to confirm your size. You are required to respond to such a request within 45 days of receiving it (see ESM10011A). For Small Organisations as defined by the off-payroll working rules On [date request received] we received a request from you to confirm the size of our organisation for the purposes of the off-payroll working rules for the tax year [tax year]. In accordance with Section 60H of the Income Tax
Part 2 Employment income: charge to tax CHAPTER 10 Workers' services provided through intermediaries to public authorities or medium or large clients Worker treated as receiving earnings from employment 61N 1 If one of Conditions A to C is met, identify the chain of two or more persons where— a the highest person in the chain is the client, b the lowest person in the chain is the intermediary, and c each person in the chain above the lowest makes a chain payment to the person immediately below t
and 61WA , if— a the client has given a status determination statement to the worker, b the client is not the fee-payer, and c the fee-payer is not a qualifying person. 6 If there is no person in the chain below the highest and above the lowest who is a qualifying person, subsections (3) and (4) have effect as if for any reference to the fee-payer there were substituted a reference to the client. 7 Otherwise, subsections (3) and (4) have effect as if for any reference to the fee-payer there were
ll for the purposes of the off-payroll working rules, we are required to determine whether the off-payroll rules apply to your engagement and therefore whether it should be treated as a “deemed employment” and PAYE applied to payments to your intermediary (usually your limited company). As we are not small, we should provide you with a Status Determination Statement if the off-payroll working rules apply.
Part 2 Employment income: charge to tax CHAPTER 10 Workers' services provided through intermediaries to public authorities or medium or large clients Meaning of status determination statement 61NA 1 For the purposes of section 61N “ status determination statement ” means a statement by the client that— a states that the client has concluded that the condition in section 61M(1)(d) is met in the case of the engagement and explains the reasons for that conclusion, or b states (albeit incorrectly) t
Part 2 Employment income: charge to tax CHAPTER 10 Workers' services provided through intermediaries to public authorities or medium or large clients Duty for client to withdraw status determination statement if it ceases to be medium or large 61TA 1 This section applies if in the case of an engagement to which this Chapter applies— a the client is not a public authority, b the client gives a status determination statement to the worker, the client's agent or both, and c the client does not (but