If you work for an NHS trust through your own limited company, the trust, not you, decides whether the off-payroll working rules (IR35) apply to each engagement. That decision is set out in a document called a Status Determination Statement, or SDS. It drives whether you are paid through PAYE with tax and National Insurance deducted at source, or paid gross into your company.
The trouble is that locums often never see one. The shift comes through on the payslip, the explanation does not, and by then the engagement is already running on someone else's say-so.
This guide is for locum doctors and other healthcare contractors working through a personal service company. It explains who owes you an SDS, how to ask for it, what a valid one has to contain, and what to do if you think the trust got it wrong.
If you would rather have this handled, that is what we do for locum doctors and healthcare contractors.
Does an NHS trust have to give a locum an SDS?
Yes. An NHS trust is a public authority, so it has been responsible for applying the off-payroll working rules since 6 April 2017, the date the public sector reform took effect. The small-company exemption that lets some private-sector clients off the hook does not apply to public bodies. Every NHS trust must determine status, whatever its size.
What is a Status Determination Statement?
A Status Determination Statement is the trust's formal, written decision about your tax status for a specific engagement. It tells you whether, if you were engaged directly rather than through your company, you would be treated as an employee for tax purposes.
In plain terms, it answers one question: inside IR35 or outside IR35?
If the SDS says inside IR35, the party that pays your company (the fee-payer, which in the NHS is often the trust itself or an agency in the chain) must deduct Income Tax and National Insurance through PAYE before paying you. If it says outside IR35, your company is paid gross and you handle the tax yourself in the normal way.
The SDS is not optional and it is not a courtesy. It is a legal document the trust is required to produce, with reasons, and to pass down the chain to you and to any agency before you are paid.
When and how do I request my SDS from the trust?
In principle you should not have to ask. The rules require the client to pass the SDS to the next party in the supply chain, and ultimately to you, before any payment is made for your services. In practice, on a busy ward rota, that step gets missed.
If you have not received one, here is how to chase it cleanly:
- Ask in writing. Email the trust's procurement, medical staffing or off-payroll compliance team. A short, dated request creates a record of when you asked, which matters if there is a dispute later.
- Reference the specific engagement. Name the post, the department, the start date and your personal service company. An SDS is engagement-specific, so a general "what is my status" question is harder to answer.
- Ask for it before you start, or as early as possible. The determination should exist before the first payment. Getting it up front means you know how you will be paid and taxed from day one.
- Keep the chain in mind. If you work through an agency, the trust passes the SDS to the agency and the agency must pass it on to you. Either party can be the one sitting on it, so copy both where you can.
You are entitled to the determination and the reasons behind it. A trust that holds a worker's role determination but will not share it has not properly discharged its duty.
What does a valid SDS have to contain?
This is where many NHS determinations fall down, and it is worth knowing the test, because an invalid SDS is not just untidy. It changes who is liable.
For an SDS to be valid, HMRC's guidance says it must do three things:
| Requirement | What it means in practice |
|---|---|
| State the conclusion | It must say whether you would be an employee (or office-holder) for tax if engaged directly, in other words inside or outside IR35. |
| Give the reasons for that conclusion | It must explain the decision against the employment status indicators (control, substitution, mutuality of obligation and so on), not just assert an answer. |
| Be reached with reasonable care | The trust must have taken reasonable care in making the determination. A blanket, role-wide decision applied without looking at your actual working arrangements can fail this test. |
Miss any one of those three and the statement is not a valid SDS. A bare "you are inside IR35" with no reasoning does not count. Neither does a determination the trust produced carelessly.
The consequence is significant. Where the client does not take reasonable care, or does not pass the SDS down the chain, the client remains the deemed employer and is responsible for operating PAYE, including the tax, National Insurance and Apprenticeship Levy. The liability stays with the trust until it puts a valid statement in your hands.
What if the trust never gave me one?
First, request it in writing, as above. Most gaps are administrative rather than deliberate, and a clear written request usually shakes it loose.
If the trust still does not provide a valid determination, the position works in your favour on liability. The duty to operate PAYE correctly sits with the client until a valid SDS is issued and passed down the chain. That does not mean you can ignore the engagement, but it does mean the trust cannot simply default you to inside IR35 by silence and leave you carrying the consequences of a determination you never saw.
Keep your records. The date you asked, who you asked, and what came back are exactly the evidence you would need if your tax treatment is ever questioned. In our experience the most common locum mistake here is verbal-only chasing. A determination discussed in a corridor is much harder to rely on than one requested by email.
How do I dispute an SDS I disagree with?
You do not have to accept the trust's conclusion. The legislation gives you a formal route, known as the client-led disagreement process, and the timings are firmly on your side.
Here is how it works:
- You raise the disagreement. You can do this verbally or in writing, but in writing is far safer. You must give your reasons by reference to the employment status indicators, not just "I think this is wrong." Point to the genuine facts: whether you can send a substitute, who controls how you work, whether there is any obligation to offer or accept further shifts.
- The clock starts. The trust has 45 calendar days to respond, counted from the day it receives your disagreement, not from when the original SDS was issued.
- Your tax treatment is frozen. While the trust considers your representations, it must leave your tax treatment unchanged.
- The trust must give a reasoned answer. It either confirms the original outcome with reasons, or issues a new SDS to all relevant parties stating the date the new determination applies.
- Missing the deadline has teeth. If the trust fails to respond within those 45 calendar days, it becomes the deemed employer for PAYE purposes and is responsible for the tax, National Insurance and Apprenticeship Levy until it does respond.
One limit to be aware of. If you raise the same disagreement again with no new facts or evidence, the trust can stand by its determination and close the matter, pointing you back to its earlier response. So put your best evidence in the first time.
Illustrative example: a locum challenges an inside-IR35 determination
Illustrative example. Dr Amara works a series of consultant locum shifts for an NHS trust through her own limited company. On her first payslip she sees PAYE deductions she was not expecting, but no SDS ever reached her.
She emails the trust's medical staffing team and asks for the Status Determination Statement and its reasons for her specific post. The trust sends back a one-line statement: "This role is inside IR35." There is no reasoning and no sign that her actual working arrangements were considered.
That statement is not valid. It states a conclusion but gives no reasons and shows no reasonable care, so it fails two of the three tests.
Amara raises a written disagreement, setting out that she provides her own indemnity, can in principle send a suitably qualified substitute, and is under no obligation to accept further shifts once a booking ends. The 45 calendar day clock starts from the day the trust receives that email. While it considers her points, her tax treatment stays as it is. The trust reviews the facts, agrees the engagement sits outside IR35, and issues a fresh SDS stating the date the new determination applies.
These figures and facts are illustrative. Status turns on the real terms of each engagement, and two locum posts at the same trust can land on different sides of the line.
If you want a second opinion before you challenge a determination, our team reviews IR35 status for contractors working through a limited company and can pressure-test the trust's reasoning against your actual contract.
Not sure whether your NHS engagement is really inside IR35? Book a free call with a Zmartly accountant and we will review your SDS and your contract before you sign anything.
Frequently asked questions
Who decides my IR35 status, me or the NHS trust?
The trust does. As a public authority it has been responsible for determining status under the off-payroll working rules since 6 April 2017. Your job is to make sure you receive the determination, that it is valid, and to challenge it through the disagreement process if you think it is wrong.
What makes an SDS invalid?
An SDS must state the conclusion, give reasons for it, and be reached with reasonable care. If it does any one of those three things badly, for example a blanket inside-IR35 label with no reasoning, it is not a valid SDS, and the trust remains responsible for operating PAYE until it issues a valid one.
How long does the trust have to answer my disagreement?
45 calendar days, counted from the day it receives your disagreement. If it fails to respond in that window, the trust becomes the deemed employer for PAYE purposes and is liable for the tax, National Insurance and Apprenticeship Levy until it responds.
Can the trust just put all its locums inside IR35?
A genuine role-based determination is possible, but a blanket decision applied without considering individual working arrangements risks failing the reasonable care test. If your actual terms differ from the assumed ones, that is exactly the ground to raise in a disagreement.
Does it matter whether I work through an agency?
The trust still makes the determination, but the SDS travels down the chain: trust to agency, agency to you. Either link can be where it stalls, so chase both. The fee-payer that actually pays your company is the one that operates PAYE if the determination is inside IR35.
