IR35 and status determinations

What the law asks

The off-payroll working rules are Chapter 10 of Part 2 of the Income Tax (Earnings and Pensions) Act 2003. Where the end client is not small, the client must decide whether the engagement would be employment if the worker's company were not in the way, and give a status determination statement with its reasons to the worker and to the next party in the chain (s.61NA). If the statement says inside, whoever pays the worker's company, the fee-payer and very often the agency, must treat the payment as employment income and operate PAYE on it (s.61N). Where the client is small under the Companies Act 2006 s.382 test, none of that applies: the worker's company assesses itself under Chapter 8, as it did before 2021.

The guide covers where the risk sits in more depth. The rules themselves are on gov.uk under Understanding off-payroll working (IR35).

What BookKept holds

Every placement through a worker's own company shows an IR35 position in its rail and on the IR35 tab of the compliance screen. It is one of a small set of states, each with a sentence saying what it means and a sentence saying what to do next:

• Client size not stated. Nobody owns the determination until the agency says whether the client is small. The record shows unknown as unknown; it never assumes either way.
• Small client, no statement due. Chapter 8 applies: the worker's company assesses itself. No statement is due from the client and none is asked for.
• No status determination. The client is not small and nothing is on file. This is the position that costs agencies money.
• Outside or inside the off-payroll rules, from the client's statement.
• Disagreement open, and client's answer overdue once the 45 days have run.

The client's size lives on the client record in the directory, with the s.382 test beside the two buttons, so it is answered once and applies to every placement at that client.

Recording the statement

When the client's statement arrives, the desk records it against the placement: the outcome, the date it was issued, who at the client signed it, and the reasons given. The wording itself, pasted from the document or the email it came in, is kept as a document on the placement under a six-year retention category, and appears in the evidence pack. Recording writes an audit event; a later statement supersedes the earlier one, which is kept, never overwritten.

A statement without reasons is recorded as such and shown as such. Reasons are what make a determination one that was reached with reasonable care, and their absence is a fact worth seeing rather than a gap worth hiding.

Disagreements and the 45 days

A worker or the agency can disagree with a determination. BookKept records the day the disagreement was raised and shows the client's response date, 45 days later under s.61T. When the client answers, the desk records whether it kept or changed its determination; a changed one is followed by recording the new statement. An answer that has not arrived by the due date is flagged on the dashboard, in the Monday post, and in the register.

Where it bites: self-billing

Self-billing a company gross is the moment the fee-payer risk crystallises, so it is where the record is checked. BookKept refuses to raise a self-billing invoice for a company placement when the client's size is unstated, when the client is not small and no statement is on file, or when the statement says inside. The refusal names the placement, says why, and says what to record. An inside determination is not a payroll problem for BookKept to solve: the placement runs through an umbrella or PAYE, and the system generates no deemed payment and runs no payroll (that is a decision, not a gap).

What BookKept does not do

It does not decide status. It does not run CEST for you, score a placement, or suggest an answer; the determination is the client's, with reasons, and this system records what was given and shows where it is missing. Where an agency wants a specialist determination, that passes through at cost, and the result is recorded here like any other statement.

Where it appears

The placement rail, the IR35 tab of the compliance screen, the dashboard's exceptions, the What is changing tab (the off-payroll rules sit there as a standing obligation with the placements still to settle), the Monday book digest, the getting-started list for a new book with company placements, the Key Information Document for a company placement (which states the position the record holds), and the evidence pack, which carries the position, the statement, its reasons and every earlier statement.

What changes when the rules change

The figures the product applies, the client's 45 days to answer a disagreement and how long a statement is kept, ship as a dated rule pack with its source rather than as code, like the AWR, right-to-work, KID and umbrella figures before them. The small-company test is deliberately not reduced to numbers: the Companies Act thresholds moved on 6 April 2025 and when the new figures bite for the off-payroll rules turns on the client's own financial years, so the product asks the agency to state the client's size and points at the current test rather than computing an answer that could be a year out.