Around 200 contracting professionals have opted to leave their roles in the Home Office rather than face a major tax hike resulting from changed IR35 rules, IT news source The Register reports.
The exodus of contractors, most of whom are IT experts, comes at a critical time for the Home Office. Its CIO, Sarah Wilkinson, has just stepped down from her role after two years in the job. Her departure arises at a point when the department is undergoing major overhauls to a range of mission- and life-critical programmes. It is also facing a number of major challenges in delivering its IT systems.
The Home Office’s e-Borders project, which is widely perceived as crucial to national security, is currently scheduled to arrive eight years late at minimum and is estimated to cost the taxpayer more than £1bn. The programme, which was initiated in 2007, seeks to collect and retain data on passengers and crew entering and exiting the country, checking names against terrorist and criminal checklists kept on the e-Borders database.
The project was abruptly cancelled by the previous Coalition Government after £260 million had been spent, leaving the Home Office with a fee of £150 million to pay to its supplier, Raytheon, and legal costs of £35 million.
Presently, e-Borders appears to be running into further difficulties, with one source informing The Register that the Infrastructure Projects Authority recently heavily criticised its slow progress.
The contractor exodus, then, has occurred at an especially difficult time, not least because the Home Office (along with HMRC) is one of the most exposed Central Government departments to Brexit. Among the 200 IT contractors who have left due to IR35 changes are both of the lead architects of the Common Data Platform.
Some of these workers have returned on contracts that are outside IR35, but the department is still left with a substantial IT skills shortfall as a result of the exodus, which began early in the year as contractors began to grasp the scale of the tax hike that they would face.
Large numbers of contracting professionals in Central Government departments are likely to be affected by the changes and may yet choose to migrate to the private sector. Central Government has 18,000 digital contractors alone on its books. In February, The Register learned that 87 contractors engaged on defence-related IT projects had already abandoned their roles, and the numbers have climbed since.
An earlier survey by freelancers’ website ContractorCalculator, taken before the changes became law, found that 90 per cent of UK Government IT contractors would rebel either by not paying the new taxes or by leaving.