Under the IR35 rules, does an organisation have to provide a status determination statement to all the contractors it engages?

Under the IR35 rules (also known as the off-payroll working rules) in place from 6 April 2021, an organisation within the scope of the rules (the client) is required to assess the employment status of contractors that it engages via an intermediary to provide services.

Under the relevant legislation, the client is required to issue a status determination statement (SDS) only to contractors that it has concluded are inside IR35 (ie they would have had employee status had they been engaged directly rather than through their intermediary). However, it is good practice for clients to provide a status determination statement to all contractors that they engage via an intermediary, including where they conclude that the engagement is outside IR35, to ensure clarity for both parties. Government guidance advises clients to provide a status determination statement "whether your determination shows that the off-payroll working rules will apply or not."

A further reason for providing a status determination statement for an "outside IR35" assessment is that the client will be liable for the contractor's tax and national insurance until it has issued a statement (the requirement to issue a statement is met if the client issues an "outside IR35" determination statement that is later found to be incorrect, provided that the client used reasonable care in reaching its conclusion).