In IR35

A new survey from the leading tax advisory consultancy for contracting professionals, Qdos Contractor, has found that more than three quarters (76%) of the contractors polled believe that a rollout of IR35 reforms to the private sector will be announced this year. A significant majority, 61%, believe that the reforms will prove unmanageable and will merely repeat the chaos they inflicted in the public sector when they were hastily imposed in April last year.

The reforms in the public sector made public sector bodies responsible for determining whether contractors should be taxed identically to salaried permanent employees (in which case they would be deemed “inside IR35”) or as independent, off-payroll workers (“outside IR35”).

The new data has arisen during a period of intense uncertainty about the future of this controversial legislation as the government prepares for a consultation on IR35 which, despite the absence of any firm date as yet, is expected to occur within the next few months. The findings of the consultation will indicate whether the government intends to steam ahead with the rollout.

The latest survey from Qdos poll surveyed 1503 UK-based contracting professionals, 90% of whom work in IT, and yielded the following key results:

  • 76% of respondents expect the government to declare an extension of IR35 to the private sector before the end of the year, with a likely implementation of the reforms in 2019.
  • Just 24% do not believe this is likely.

Of 1,440 contractors:

  • 61% believe they will be unable to go on working outside IR35 in the private sector if, as seems likely, the reforms are introduced.
  • 39% remain optimistic that prospective changes can be managed.

Commenting on the findings, Qdos Contractor’s CEO, Seb Maley, described the government’s ongoing silence about its next moves in connection with IR35 as predictable but rather unhelpful. Regrettably, he observed, the longer the silence persists, the more probable it appears that the private sector will face IR35 reforms.

He added:

“Understandably, many contractors fear reform, and they don’t trust end engagers – or HMRC’s IR35 tool for that matter – to make accurate IR35 decisions. The upheaval following last year’s public sector changes has not been forgotten.

“However, should clients and recruitment agencies begin preparations now, potential IR35 reform is in fact manageable. But mistakes made in the public sector cannot be made again. We hope such obvious contractor concern sends a message to private sector engagers that unless they equip themselves for reform, they risk losing the contractors they clearly rely on.”

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