IPSE’s research is changing to keep up the pressure on IR35

Measuring the impact of IR35 reforms: 2021-2022

Since the extension of the off-payroll working reforms to the private sector in April 2021, our research focus pivoted towards measuring the real-world impact of the reforms, ensuring HMRC couldn’t get away with sweeping IR35’s flaws under the rug.

This is exactly what we achieved with our ‘Taking Stock’ report in October 2021, which confirmed many of our prior predictions; that many contractors would be prompted to leave self-employment, stop working or even retire as a result of the reforms.

It also exposed huge issues in how clients approached the IR35 determination process; six months on from the reforms, one in five (21%) contractors we surveyed reported being subject to a blanket inside IR35 determination; a further 11 per cent were moved onto a payroll without an assessment by their client; and two in five (38%) reported that their client hadn’t provided a Status Determination Statement.

Similarly, our research into the attitudes of umbrella company contractors corroborated an awkward truth about the growth of umbrella company payrolls – that very many of these new joiners were not there by choice, but because their client had insisted upon it in response to IR35 reforms.

In fact, more than two thirds (69%) of respondents told us that this was the reason they were working via an umbrella company at the time. Of those, three quarters reported being dissatisfied with the arrangement, and 70 per cent said they felt they had lost their independence at work as a result.

With labour shortages and economic inactivity being such topical issues today, provoking such negative perceptions of one’s working arrangements feels like the last thing government should be doing.

How our research approach is changing

IPSE’s campaigning against the off-payroll rules has seen us invited before parliamentary select committees and radio show hosts to explain the findings of our research; and notwithstanding wider turmoil surrounding the mini-Budget, it even helped win the argument.

But nearly two years on, the dust has firmly settled around the private sector reforms. That means our research focus needs to change. The research will now switch from highlighting the immediate impact on contractors to instead tracking the long-term damage of these reforms to both contractors and clients alike – and ultimately reminding government that opposition to the legislation is not going away.

This is exactly what IPSE aims to do with the launch of its new annual IR35 survey. Put into the field for the first time this week, the survey will track key metrics related to IR35, including the ways contractors work, their client’s approach to the rules and the success rate of contractor’s appeals against their client’s determinations.

Over time, this work will set out the reality of IR35’s long-term impact on the contractor sector and – we suspect – demonstrate the need for government to take a fresh look at how these rules work in practice and break free from its current path dependent approach.

We’re aiming for this research to become the leading source of insight into IR35, capturing industry, media and political attention – but to do that we need your help.