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SDC: Supervision, Direction and Control. Here’s What You Need To Know.
SDC (another acronym to remember!) is a set of rules, published and implemented by HMRC designed to determine the employment status of an individual in conjunction with ‘agency legislation’. But what does SDC actually mean? Well, in a nutshell, to be caught within SDC the following may be true:
Supervision:
Pretty self-explanatory… it means that there is a supervisory party overlooking the assignment and checking for quality/quantity of output. It can also involve enablement of skill development or knowledge when on the job.
Direction:
Again, not rocket science… it means that there are direct instructions being given as to how to undertake an assignment (or a task within an assignment). I.e. advice or guidance as to how to fulfil a role/job/piece of work.
Control:
A dictating party is in place controlling the way an assignment is conducted. It can also mean that an individual party has the ability to prioritize tasks for the individual sad to be undertaking the work.
Yep, there is some cross over and room for interpretation, but it all gets at the same core message – if you’re being actively managed on a task then perhaps you’re not actually fulfilling the role of a contractor, you’d be closer to being an actual employee.
SDC and IR35
As you’ve probably already worked out, a review of SDC within an assignment contributes heavily towards IR35 determination. SDC focuses on how the work is being done. Who is calling the shots? It asks if the contractor has autonomy, freedom of choice when it comes to assignment completion.
Of course, if a contractor (or the way they are operating within an assignment) is caught inside SDC rules then it leans them heavily towards being inside IR35 (I.e. they need to operate with an employed status via PAYE). SDC, however, is only one part of an IR35 determination.
But surely all assignments have a direct spec to follow?
Yep, you’d be right, there is a level of direction in every assignment that a contractor fulfils, if there wasn’t they wouldn’t know what their objectives were. But that doesn’t necessarily classify the assignment within scope of SDC.
For example, an IT contractor is given a brief that asks them to build a new, bespoke piece of software for an end client. This brief may state what the software is to achieve, a projected completion date and the processes/features that are to be considered throughout that apply to the user. This would not deem the assignment parameters inside SDC. However, if the same assignment came with consistent, specific direction throughout the design process, daily working hours or place of work were specified or the “contractor” was being guided as to how to complete the task then it would be found within SDC.
Essentially, what a contractor needs is the end client to outline the assignment then let them do what they do best, produce results using their skillset and expertise – they shouldn’t need managed throughout.
In the eyes of UC Contractors:
The basic assumption is that, unless it is shown otherwise, all workers are under SDC in the manner in which they provide their services (in general, this is how an individual carries out the duties of their role). Where there are procedures, methods and instructions which must be followed (written, verbal or implied), then it is likely there will be SDC over the manner in which the services are provided.
Should you have any questions or concerns regarding SDC please do not hesitate to contact us.
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