In IR35

A new survey has found that almost half of the freelancing and contracting professionals polled source new contracts through referrals and their own personal networks.

48% of the 641 freelancers and contractors surveyed reported this method of sourcing new work, compared to 44% who used jobs boards and recruitment consultancies to find employment opportunities.

The new study of freelancing and contracting professionals (who worked predominantly in the IT and technology sectors) was conducted by the tax advisory service for contractors, Qdos Contractor. The main findings were as follows:

  • 48% find new contracts via referrals or their personal networks
  • 44% do so through jobs boards and recruitment firms
  • 5% use “other methods” to source new work
  • Only 3% make “cold contact” with clients by approaching them though telephone calls and emails.

The study suggests that recent IR35 reforms to tax avoidance legislation in the public sector may be deterring some contracting professionals from sourcing work through recruitment firms. Under the new rules, agencies are obliged to become involved in helping public sector end clients to determine the employment of any contractor they place.

HMRC’s new online test – now called “CEST” (“check employment status test”) – has been used by public sector bodies and recruiters approximately 450,000 times to help determine contractors’ employment status, despite concerns raised by professional experts that it is exceptionally inaccurate and unreliable.

Recent research from Qdos Contractor found that the vast majority of contracting professionals, 85% in fact, distrust the tool to make accurate employment status determinations. An even greater proportion, 88%, did not believe that public sector end clients or recruiters were capable of making accurate IR35 determinations without the input of the individual contractor concerned.

Commenting on the latest survey, Qdos Contractor’s CEO Seb Maley said that at first sight, the preference for finding new work through referrals and personal networks, rather than through agencies, may seem narrow. He added that flexible workers would have worked hard to build these contacts over their careers.

However, he emphasised that recruitment companies, which are able to consistently offer independent contracting professionals relevant work opportunities, continue to play a major role in how contractors source work.

He continued:

“For agencies to attract even greater numbers of contractors though, they must show independent workers they are doing everything in their power to help public sector clients make well-informed IR35 decisions. Understandably, contractors will want to know that their agency is working closely with their client to help set an accurate employment status.

“Should IR35 reform be extended to the private sector – which looks increasingly likely – this will become even more important.”

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