What is the Purpose of SDC?
SDC is used to determine employment status in a collection of legislation that has become known as the ‘agency legislation’. The Agency Legislation requires an agency or an employment intermediary to consider an individual’s self-employed status. Should they be subject to SDC, then they must be placed on the payroll and are not allowed to be processed or paid as self-employed.
What is Supervision, Direction and Control?
Supervision to apply there must be someone overseeing another person doing the work to ensure that they are actually doing it and that the work is being done correctly to the required standard. Supervision can also involve aiding or assisting someone to develop their skills and knowledge.
Direction – someone making another person do their work in a certain way, generally by providing instructions, guidance and advice as to how the work is to be done. Someone providing direction will often coordinate how the work is done as it is being undertaken.
Control is where you have someone dictating what work a person does and how they should go about doing that. This also includes the power to move the worker from task to task as priorities change.
SDC in Practice
HMRC’s guidance can lead contractors to believe that something as simple as taking a brief or specification can put a contractor inside SDC. This is not necessarily how it actually works in practice.
If the client wants the work produced in a particular way, but not necessarily giving detailed instructions as to how the contractor goes about doing the actual work, then SDC is not present.
When engaging skilled professionals, it should not be necessary to stipulate how work is completed. Specifications and guidelines can be given, but the idea is to leave the experts to achieve the desired result.
Don’t get Caught Out
A Contractor can still be caught by SDC if any one of the three elements apply. So, a contractor may not be directed or controlled, but if they are supervised according to the above criteria, or if there is the right of supervision, then SDC applies.
