End-clients fail to update contractors over IR35 reforms

A specialist tax, IR35 and insurance adviser is warning that businesses affected by IR35 reforms could face contractor walkouts if they fail to inform contractors of their strategy to deal with the changes.

Research suggests that more than half of contractors have not yet received any communication regarding April’s changes.

Released exclusively to recruiter.co.uk, Qdos’ survey of over 1,400 contractors to be affected by IR35 reform revealed:

  • 57% have not been contacted by their end-client about IR35 reform.
  • 15% have received a Status Determination Statement (SDS), outlining their perceived IR35 position.
  • Of those who have had their contract assessed, 56% have been determined as outside IR35, with 44% deemed inside the legislation.
  • 28% have been informed of their end-client’s strategy for the changes but are yet to be issued with an SDS.
  • 70% believe businesses see IR35 as the biggest barrier to engaging contractors.

When the reforms go into force in April this year, medium and large businesses in the private sector will become responsible for determining the IR35 status of contractors they engage. As part of the changes, the liability will be transferred from the contractor to the fee-paying party in the supply chain, which is either the end-client or the recruitment agency placing the worker. 

The reform mirrors changes introduced to the public sector in 2017, with all public sector bodies required to assess IR35 status.

Qdos CEO Seb Maley urged businesses to remember: “Communication is key. Contractors want reassurance that their agency is doing everything they can to ensure compliance. If they aren’t told about this soon, they may take on projects elsewhere, with clients or through agencies who have made clear their strategy for the reform.”

Maley added: “Right now, the last thing any business wants is skills shortages or to lose revenue, as they look to navigate another lockdown… I urge firms to ramp up their preparations for IR35 reform and keep contractors updated.”

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