In IR35

The Association of Independent Professionals and the Self Employed (IPSE) has published the personal experiences of contracting professionals regarding the proposed extension of public sector IR35 reforms to the private sector.

The individual insights into the impact of IR35 arose during a series of focus groups that IPSE conducted over the last few months to gather the views of its member contracting professionals.

The contractors’ viewpoints are being published just weeks after IPSE, in collaboration with the CIPD, published a major study itemising the immensely disruptive impact of the reforms in the public sector since their imposition in April last year. These included a mass exodus of highly-skilled contracting professionals, major disruptions to crucial TfL projects and the marked exacerbation of an already serious staffing crisis in the NHS.

One contractor observed that the mere the proposal to extend the rules was itself having a “chilling effect” on individual contractors, commercial enterprises and the wider economy.

Since many former public sector contractors now work in the private sector, extending the rules there could, as IPSE’s Senior Press and PR Officer Tom Hayward notes, force them to decline work completely, compounding the economic difficulties Britain faces during Brexit.

Another contractor said that he would decline any contract that designated him inside IR35 and would continue a contracting career abroad if necessary. His views were echoed by many others.

As another contractor put it, such outcomes would deplete the already insufficient pool of highly skilled talent in Britain even further, damaging the economy at a crucial time. He added: “People are in different financial circumstances and developing legislation to tax everybody as a direct employee is prohibitive to keeping many of us in the workplace.

“It would cause a fall in tax revenue to HMRC as we would no longer be working. Corporation tax receipts and VAT collected through our limited companies would cease.”

Other contractors noted that while they, as freelancers, were acutely aware of the impact of the reforms, many private sector employers appeared blissfully ignorant of the scale of the administrative burdens that will be placed on them and were woefully unprepared. This raises the prospect of how many will react as some public sector end clients did and impose improper blanket IR35 determinations on their contractors, potentially unfairly and wrongly taxing thousands of them.

Still others, said one contractor, may avoid individual contracting professionals altogether and rely instead on one of the big four consultancies – a decidedly anti-small business outcome.

As Hayward concludes: “If the Government wants to be taken seriously in its promotion of the ‘good work’ agenda, it must ditch its hellbent pursuit of such inhibiting policies.”

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