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Status determination statements (part 9)

Updated 15 December 2023

Read Purpose, scope and background (part 1) of these guidelines, if you have not already.

Make sure you’ve read Making status determinations (part 8) before you read this part of the guidelines.

You should read these guidelines alongside existing off-payroll working guidance. They are not designed to be used in isolation, or to create an end-to-end process for organisations to comply with the rules.

Your organisation should apply the guidelines to reflect the complexity and scale of your own off-payroll working engagements. Use these guidelines to help make informed decisions, based on individual circumstances.

Valid status determination statements

Once you have made a status determination for an off-payroll worker, you should set out your decision in a status determination statement.

For a status determination statement to be valid:

• it must include the status decision (employed or self-employed for tax purposes)
• it must contain the reasons for that decision, based on employment status indicators
• the client organisation must also have taken reasonable care when reaching its decision

If the status determination statement does not meet all these criteria, it will not be valid and the responsibility for the deduction of tax, National Insurance contributions and Apprenticeship Levy (if due), will rest with the client organisation.

Advertising a worker’s expected employment status for tax purposes may provide some clarity to off-payroll workers when they are applying for roles. On its own, this is not sufficient to be a valid status determination statement.

The output from the Check Employment Status for Tax (CEST) tool is an example of a valid status determination statement. You can issue an output from the CEST tool, with or without further supporting information or documents.

As well as the output produced by the CEST tool, it may be useful for users to provide documents containing further information. This could include providing context, linking your answers to working practices. You may find that providing this information helps workers to understand their employment status decision, resulting in fewer disagreements.

You can provide any form of documentation, as long as it meets the conditions to be a valid status determination statement. If you use a different, third-party tool, you need to make sure the output meets the requirements of a valid status determination statement.

A status determination statement may be a paper or electronic document. Get detailed information on what constitutes a valid status determination statement in HMRC internal manual ESM10013.

Discharging PAYE liabilities

If there is no agency in the contractual chain, the client is the deemed employer. They will be responsible for operating PAYE where the rules apply.

The off-payroll working rules do not legally require you to pass a status determination statement down the labour supply chain. However, until you pass down the statement, you will remain the deemed employer, and are responsible for operating PAYE. You need to pass on the status determination statement to the next party in the supply chain, before any payment is made to them for the worker’s services.

Agencies in the labour supply chain who are not responsible for paying the worker’s own intermediary will need to pass down the status determination statement they have received from the client, to the next party in the chain. If they do not, they will not have discharged their PAYE responsibilities, and will be the deemed employer.

When you pass down a status determination statement, you need to make sure that the next party in the chain is a qualifying person. You need to take particular care if there is an overseas agency in the labour supply chain.

Get more information about qualifying persons, and how the status determination statement passes down the supply chain in HMRC internal manual ESM10017.

You can choose how to share your status determination statement with relevant parties. This could mean sharing physical or electronical copies. However, to discharge the liability, you must make sure that workers receive the status determination statement, or are able to access it.

It’s good practice for organisations to make a formal status determination statement for all off-payroll workers, where they have made a status decision. This ensures that you have robust records of your decision making, both for:

• internal auditing requirements
• supporting evidence of your decision making, in the event of a compliance check from HMRC

Where the worker is deemed as self-employed for tax purposes (outside the rules), you might still want to pass down a status determination statement. This is to make sure everyone in the labour supply chain has a clear understanding of the worker’s employment status.

If you’ve not passed down a status determination statement, and a worker is then recategorized as employed for tax purposes, you will be the deemed employer, and responsible for any PAYE liabilities.

Anyone in the labour supply chain who gets a status determination statement that provides an ‘outside the rules’ determination, should pass it down the chain in the same way as an ‘inside the rules’ determination.

Example

This is an example of how a client organisation effectively shares status determination statements.

A large organisation makes sure that all off-payroll workers are given access to their intranet site. On their first day working for the client, as part of the induction process, off-payroll workers are advised that they can check their status determination statement, through an online portal on the company intranet site.

All off-payroll workers have this portal set as their homepage. The workers get an email from Human Resources (HR), which includes a link to the relevant section of the intranet. The intranet site also includes a Frequently Asked Questions (FAQ) section, which provides:

• context on how the client makes employment status decisions
• some case studies for common roles

The intranet site also provides routes and guidance for workers to raise a disagreement.

All engagements are arranged by agencies, meaning that the client is not the intended deemed employer. Therefore, the client also shares their status determination statements with the relevant agency.

The organisation’s HR team are responsible for this, and send the statements by email. This ensures that they’ve informed all the relevant parties of the status decision, and the agency is both:

• the deemed employer
• responsible for operating PAYE as intended

The next section of the guidelines is Client-led disagreement process (part 10).