HMRC defends interviewee numbers in research into IR35 changes

HM Revenue & Customs has defended research published last week into the impact of Off Payroll Working Rules on recruitment agencies as “robust”.

Its statement comes following questions about the number of interviews involved in the study.

The report based on the research, ‘Effects of the off-payroll working reforms on agencies’, said that a total of 34 agencies were interviewed about anticipated impact of the Off-Payroll Working Rules being imposed in the private sector from 6 April. Of the 34, 22 work with private sector clients only. Twelve agencies that work with public sector clients were interviewed about the effects of the 2017 IR35 reforms. Conducted by IFF Research on HMRC’s behalf, the research was carried out between November 2020 and January 2021. 

The research report said that most recruitment agencies have experienced “no impact” as a direct result of the upcoming 6 April reforms. Discussing the 2017 reforms, most comments in the report referenced a variety of experiences of “some” agencies.

Last year, during parliamentary discussions about further delays to imposing the reforms beyond 2021, HMRC was criticised for not having previously carried out research on the effects on agencies, contractors and employers of the 2017 implementation of the Off-Payroll Working Rules in the public sector.

Responding to a Recruiter enquiry about the comparatively low number of interviewees, HMRC responded: “The research report is based on in-depth interviews with 34 employment agencies. The purpose of this qualitative research is not to produce quantifiable and statistical conclusions but to gain detailed insight into perceptions, feelings and behaviours. 

“For this reason, qualitative research does not require the higher number of respondents that quantitative research requires. The number of employment agencies interviewed is robust in this context.”

However, HMRC said it has focused funding on quantitative research with clients “since they are required to make the most changes, including making status determinations”.

(Editor’s note: HMRC has also released a report on the effects of off-payroll rules on education clients using contractors, which will report on this week.)

Industry observers were critical of the numbers of interviewees invited to take part in the recruitment agencies research, one noting that the number reflected the views of “0.17%” of the estimated 20,000 agencies expected to be affected. Another also questioned the research’s reliability, based on the low number of interviewees. 

A Recruiter reader, commenting online, characterised the report as “very inaccurate. Not sure what recruitment companies the HMRC spoke that had ‘no Impact’; they must have been perm recruitment companies. This legislation has had a huge effect on the industry, not to mention all of the additional administration that comes with it. We have seen clients terminate all contractors (Feb 2020) only to replace them in the EU zone...”.

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