In IR35

A chorus of expert criticism has been gathering momentum in the aftermath of Transport for London’s announcement early this week that new IR35 rules had caused an exodus of skilled contracting professionals, thereby delaying a critical train refurbishment programme.

Aging London Underground rolling stock operating on the Bakerloo Line, some of it dating back to 1972, was scheduled for replacement by new trains in November 2018. But the departure of skilled weld project contractors after the reformed IR35 legislation came into effect in April has pushed the expected completion date back by months, to April 2019.

TfL announced the setback to the project in a progress report published this week, and it is the most significant category of delay recorded in the document.

Upon the announcement, Simon McVicker, director of policy at the Association of Independent Professionals and the Self Employed (IPSE), criticised blanket approaches to determining IR35 status. TfL, for instance, cut its contracting/agency workers by almost a half in the aftermath of the IR35 reforms, hoping to make cost savings. But the effect, as many experts had warned, has been to generate acute skills shortages and deferred engineering projects.

The delays arising from these blanket bans, Mr McVicker warned, are likely to drive costs up rather than down. IPSE, he said, has reports that many contractors across the public sector have already left.

Now IPSE’s Deputy Director of Policy, Andrew Chamberlain, has joined the fray, stating that the TfL report simply confirms what experts have known all along: IR35 reforms have damaged the ability of public sector bodies to draw in the talent they need and complete projects on schedule.

For its part, TfL has said that it is “currently working on mitigations to reduce the impact on the project” of IR35 rule changes.

The news arises in the same week that unions representing medical professionals (the Locum Doctors Union and the Healthcare Professionals Union) have instructed a solicitor to embark on an application for judicial review of the controversial legislation.

Mr Chamberlain added:

“There is mounting evidence that the IR35 changes in the public sector are causing significant disruption. IPSE is renewing its call for a comprehensive review of the impact of this measure across the public sector.”

Earlier this week, Seb Maley, CEO of contractor tax specialists Qdos Contractor, responded to the TfL delays by warning that blanket approaches and inaccurate IR35 determinations will continue to force contractors from the public sector. He added:

“That HMRC adamantly denies any public sector skills shortages because of reform is hugely worrying, particularly when public sector organisations are beginning to speak out too.”

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