A new survey by tax advisory consultancy Qdos Contractor has found that rumours of new public sector IR35 rules migrating to the private sector has topped the league table of concerns for the country’s contracting professionals.
Many recruiters and HR professionals point out that a rollout of the rebooted IR35 rules to the private sector is inevitable, despite the fact that they have caused havoc and significant damage in the public sector since their introduction in April. Numerous personal service company contractors working in the public sector have either left after being swept up by the new regulations or pushed up their fees to compensate for the loss of income resulting from new tax obligations.
For their part, public sector bodies reliant on the project-by-project flexibility of contracting professionals have offered higher pay rates to attract and retain them for this vital work, which by its temporary nature is not suitable for permanent employees. Wage inflation has been one major unintended result, despite warnings from many professional trade associations during the consultation phase that the new rules would have seriously negative effects. Critics included Umbrella Company bodies PRISM and the Freelancer and Contractor Services Association (FCSA) as well as APSCo and the REC.
The new survey reveals that:
- 48 per cent of contractors cite rumours that IR35 will migrate to the private sector as their primary concern.
- 18 per cent cite competition for contracts as their foremost concern.
- 17 per cent remain concerned about the lack of support for self-employed professionals.
- ten per cent remain concerned about the effects of public sector IR35 changes.
On the issue of whether IR35 would deter them from contracting in the private sector:
- 36 per cent (the largest group) say that they would not be deterred.
- 33 per cent say that they would consider employment, thereby depriving businesses of the flexibility and agility that they need to remain competitive.
- 19 per cent report that they would consider a different career to contracting.
- 12 per cent would consider emigrating overseas or early retirement, options that would also deprive UK businesses of vital flexibility and agility advantages.
Seb Maley, CEO of Qdos Contractor, urged the Government to learn swiftly from its previous errors and put a rapid end to the uncertainty and confusion surrounding IR35. That a third of the contractors polled say that they would move to employment “sends a clear, strong signal to Government that reform to private sector IR35 should be avoided.”
He added: “Recent changes to public sector IR35 caused panic among contractors, public sector engagers and agencies. And while the dust has somewhat settled as hirers begin to get to grips with reform, a repeat performance in the private sector would not be wise.”