Contractors don’t believe private sector is ready for IR35 reforms

More than three in four contractors have little confidence to manage the extension of off-payroll rules into the private sector from April of next year.

Research carried out by IR35 adviser Qdos reveals 77% of contractors have zero or very little confidence that the private sector will be ready to manage IR35 reform from April 2020. 

Qdos’ findings also show:

  • 30% have no confidence in private sector engagers to be ready for IR35 changes, while 47% have little confidence, 11% are undecided and 12% believe engagers will be ready 
  • 61% believe direct clients will be better placed to contribute to accurate IR35 decisions compared to recruitment agencies (39%)
  • 36% also view the chance to work outside IR35 as most important when considering a contract. 

Qdos CEO Seb Maley commented: “Thousands of contractors have been wrongly placed inside IR35 by public sector engagers as a direct result of reform in 2017. Understandably, this has led many independent workers to question whether the private sector will be in a position to administer IR35 accurately next year.

“Private sector clients and recruitment agencies would be wise to pay attention to what are justified concerns of contractors. Businesses rely on the flexibility of the independent workforce, while the recruitment industry, that now finds itself caught up in IR35 reform, depends on contractor placements for most of its turnover.

“The good news is that these companies do have time to prepare, and reform is manageable. But this time does need to be used wisely, and private sector businesses – whether a direct engager or a recruitment agency – should take the initiative and equip themselves with the skills needed to contribute to well-informed IR35 decisions on what will be a huge scale.”

The off-payroll rules make end-clients responsible for determining whether a worker who operates through a personal service company or other intermediary is caught by IR35 or is genuinely self-employed. Where the worker is caught by IR35, the rules also makes the fee payer, which will often be a recruitment agency, responsible for deducting and then paying the worker’s tax, NI and employer’s NI.

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