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Reasonable care

What does it mean to use reasonable care?

The client is obliged to take reasonable care when creating an SDS. This means making a fair and well considered decision for each contract assessed. The degree of reasonable care that needs to be taken is affected by the capabilities and experience of a client. For large international clients, HMRC expects a high degree of care while for a smaller company operating without a compliance department, the degree of care they’re able to provide may be reasonably less.

It’s unlikely that blanket decisions or assessments on groups of roles, instead of assessing contractors on a case-by-case basis, will demonstrate reasonable care. Consideration to the specific facts of each individual case must be taken. In some instances, where the contracting population can easily be segmented into groups with identical contracts or working practices, a blanket decision could be acceptable.

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Want to know more on delivering an SDS?

HMRC has indicated that engaging a professional firm, such as a regulated law firm to carry out the SDS will satisfy the reasonable care requirement. It will also help ensure that advice is subject to legal privilege and generally non-disclosable. Many organisations are involving advisers whose advice is not privileged and will generally be disclosable to HMRC and potentially others as part of an investigation or any subsequent litigation.

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