Off-payroll working rules: who decides your IR35 status
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Two regimes run side by side, and which applies decides who carries the status risk.
Chapter 10 — medium and large clients
Since 6 April 2021, medium/large end-clients must assess status and issue a Status Determination Statement (SDS): the conclusion and the reasoning. Without a valid SDS, the client itself holds the tax liability. The fee-payer (usually the agency) operates PAYE on caught contracts.
Chapter 8 — small clients
Since 6 April 2024, small-client engagements moved to the worker+agency checking their own status under the pre-2021 model (the client's size per Companies House tests decides). "Small client" status also matters because clients can claim the 2017 reform's repayments mechanism — and because assessments still need reasonable care.
What this means day to day
Demand the SDS (or written status position for small clients), read the reasoning, and match it against the evidence guide. Disagreement routes are in the next guide. Tax consequences of each outcome: inside IR35 explained.
The size thresholds, precisely
A client is "small" (Chapter 8 territory) if it meets two of: turnover ≤ £10.2m, balance sheet ≤ £5.1m, ≤ 50 employees — measured on the whole group, not the hiring entity, and re-checked each year. Public authorities are always in Chapter 10 regardless of size. When a client crosses the threshold mid-relationship, the regime changes at the next tax year — one more reason status is a per-engagement, per-year question.
The SDS, dissected
A valid SDS has three parts: the status conclusion, the reasons, and the client's name. Missing any part = invalid = liability stays uphill. Keep it with the contract; a challenge (see options guide) starts by quoting its own reasoning back against the working practices.
The client-liability waterfall
Chapter 10 liability flows: client (who received reasonable-care SDS) → if the client failed care, the client holds it; the fee-payer next; the worker last. Practical upshot: the party closest to you with the liability (usually the agency) has real incentive to demand proper assessments — their money is stacked under yours.
Historical liability: the 2021-2023 window
Liability under Chapter 10 sits with the party that should have taken reasonable care, and that can be revisited years later — the reason SDS quality matters now is that a thin SDS from 2023 can migrate liability back up the chain tomorrow. If you're relying on an old assessment for a long-running engagement, ask for it refreshed; the ask costs one email and re-prices the risk honestly.
What workers still self-assess
Small-client engagements (Chapter 8): the worker and agency carry status checking, CEST or specialist opinion, and the liability. The practical workflow is identical to pre-2021 — which makes the evidence checklist and your archived status file the whole game on those engagements.
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