The year is still young, but we have already been reminded of the challenges that businesses can encounter when assessing the IR35 status of contractors. Some things never change, do they? 

In late January, news broke of a staggering tax bill handed to the Post Office, relating to this public body’s mismanagement of the off-payroll working rules – in short, because it had misadministered the IR35 status of contractors. 

To be exact, the Post Office has been hit with a £104,441,881 tax liability, which it expects to settle this tax year. This will be funded by the Department for Business and Trade because the Post Office isn’t “in a position to fund it.” 

Now, these are figures that you associate with football transfers. It’s only a touch under the £100m that – if you’re an Aston Villa fan like me – sadly saw Jack Grealish depart for Manchester City.

But believe it or not, for many contractors, neither the news nor the sum was surprising. Why? Well, the Post Office is just the latest government body in a long line to have been issued a massive tax bill because of non-compliance.

At last count, the tax bills and penalties handed to government bodies since the roll-out of the off-payroll working rules in the public sector in 2017 exceeded £250m. Defra; The Department for Work and Pensions; The Ministry of Justice; The Home Office. The list goes on.

But, surprising or not, the news has done little to reassure contractors that their clients are capable of accurately determining IR35 status.

This was reflected in our latest research. IR35 and, specifically, fears around limited opportunities to work outside the clutches of this legislation are contractors’ number one concern this year. 

To put that into perspective, the legislation is perceived by contractors to be more of a threat to their income than potential tax hikes, the impact of AI and, almost unbelievably, not being able to work due to illness. 

But it’s easy to see why.

We’ve been here before, of course – a few times. A public sector body is handed huge bill for getting the off-payroll working rules wrong. The response? Mandate that all contractors work on the payroll, irrespective of their actual IR35 status – a costly decision, in more ways than one.

In times gone by, we’ve seen a ripple effect. By this, I mean other businesses following suit. But while in previous years, a tax bill of this size may have influenced how a private sector firm goes about managing the off-payroll working rules, the landscape is quite different now.

In the five years since the roll-out of these rules in the private sector, there are far fewer so-called blanket contractor bans in play than there once were – and knee-jerk reactions to government departments getting things wrong are much less commonplace. 

While things are far from perfect, the number of businesses adopting a fair, pragmatic, and compliance-led approach to IR35 has increased. This can only be good news for contractors.

All that being said, there’s plenty of room for improvement. It’s one of the reasons why we are asking you to share your views and experiences around IR35 and the off-payroll working rules. 

Your feedback will be invaluable in helping Qdos and IPSE keep IR35 firmly on the radar of policymakers and help create positive change. 

So, if you have a moment or two, please complete this anonymous survey below - closing soon.