Search

How can we help?

Icon

Can an IR35 decision be challenged?

The IR35 private sector reforms are due to come in on 6 April 2021. If after a status determination statement (SDS), the contractor is found to be employed for tax purposes, then they will have to pay tax and national insurance contributions (NICS) as if they were an ordinary employee.

Contractors will likely not challenge an SDS where they are found to be self-employed. However, they will challenge the decision when they are found to be a deemed worker or employee as they will pay more tax and NICS.

Contactors will be aggrieved as they will taxed as an employee but not receive any of the other employee benefits such as a permanent contract. The IR35 rules requires the client to have a dispute resolution method that will allow the contractor to challenge their SDS.

What is the dispute resolution method? 

The dispute resolution method is client led. Indeed, there is no tribunal or court a contractor can bring their SDS challenge too. The IR35 rules simply require the client to have a dispute resolution method for the SDS to be challenged. Once a challenge or appeal has been received then the end user must review the SDS.

If the SDS has not changed then the client must give a written statement to the contractor confirming that they have reviewed the decision and it is correct. That statement must set out the reasons why that decision is correct.

If on review the client has incorrectly made an error on the SDS. Then the client must give a new SDS confirming there is a new conclusion from the previous SDS. That SDS must state the date from which they consider the conclusion in the new SDS became correct and when the previous SDS was withdrawn.

The client should take all SDS challenges seriously. The contractor can contact HMRC direct and ask them to be treated as self-employed. HMRC may open an IR35 enquiry and the SDS correspondence will likely be sent to HMRC.

IR35 is complex and legal advice should be taken prior to the SDS being made.  Please do get in contact with us if you would like more information on IR35.  You can give us a call on 0118 958 5321 or email us at contact@clarkslegal.com

Contactors will be aggrieved as they will taxed as an employee but not receive any of the other employee benefits such as a permanent contract. The IR35 rules requires the client to have a dispute resolution method that will allow the contractor to challenge their SDS.

About this article

Disclaimer
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

About this article

Read, listen and watch our latest insights

art
  • 27 February 2024
  • Employment

Changing Attitudes to Menopause

We have set out some answers to the frequently asked questions that employers ask when considering how to support a menopausal employee.

art
  • 22 February 2024
  • Employment

Time to take the heat off menopausal women

On 22 February 2024, the EHRC released guidance and resources for employers designed to help employers understand their legal obligations in relation to supporting workers experiencing menopausal symptoms.

Pub
  • 22 February 2024
  • Employment

Talking Employment Law: What to do if you’re at risk of redundancy

In this podcast, Harry Berryman and Rebecca Dowle, members of the employment team, will talk through the steps that need to be taken for a redundancy to be fair and the range of criteria that can be used when determining which employees will be made redundant.

art
  • 12 February 2024
  • Employment

The World of Work in 2024- What Can HR Expect?

In many senses, 2024 is unlikely to be a year with radical ruptures from those that have gone before it. The significance of 2024 though, is that it is likely to build upon those megatrends impacting the world of work, which have been emerging for some time now and are only likely to strengthen as we move on in time.

art
  • 30 January 2024
  • Employment

Large-scale Redundancies – What to expect as an employee

In today’s uncertain economic environment, it is rare to see a week go by without a major employer announcing redundancies, be they as a result of a restructuring, a contracting business or a merger or acquisition.

art
  • 23 January 2024
  • Employment

Navigating Redundancy: Top Tips for Employers Considering Redundancies

Redundancy law in the UK can be tricky to get right. With that in mind, here are our top tips for employers who are considering making redundancies.