IPSE responds to IR35 research

• 29 May 2019

IPSE has responded to research by Qdos and Brookson Legal in light of the IR35 consulation which closed yesterday, 28 May 2019.

Qdos revealed that 92% of UK contractors have not yet been contacted by either their client or recruitment agency to discuss next year’s IR35 reform, and Brookson Legal found that 59% of UK fims are planning to take a blanket approach to their IR35 assessments when the legislation is extended to the private sector.

From April 2020, medium and large private sector companies will become responsible for setting the IR35 status of the contractors they engage. Since 2017, similar rules have been in place in the public sector.

The surveys by both companies revealed:

• 92% of contractors have not been contacted by either their client or agency regarding IR35 reform, while just 8% have.
• Only 14% of contractors have faith in clients and agencies to contribute to accurate IR35 decisions. 34% are undecided. 52% do not believe these parties can manage next year’s changes.

• 86% of contractors would challenge ‘inside IR35’ decisions made by their clients. 14% would not.
•  48% of UK businesses admit that they would reduce the amount of contractors they hire because of the changing ‘off-payroll’ tax rules.

Andy Chamberlain, IPSE’s Deputy Director of Policy, commented: “This research demonstrates exactly how big a mountain UK business has to climb to catch up with the off-payroll rules. There is a very real risk that contracting, which is a proven driver of innovation and productivity, will be pushed into decline in the UK at the time that it is needed most.

“It is no surprise that clients haven’t spoken to their contractors about these impending changes, they simply don’t know what the new rules will be. We are all waiting to see the draft legislation and that won’t be published until July at the earliest. What we have seen so far is too complex, totally unfit for purpose, and with so many variables that haven’t been decided.

“I am at a loss how businesses are expected put processes in place in less than a year when HMRC fails to make correct determinations after 20 years. April 2020 is an unrealistic deadline – implementation should be delayed for at least another year.

“That a majority of firms are planning a blanket approach to IR35 assessments, is deeply alarming – and in direct contravention of the government’s stated intention. The government needs to hit the pause button. It cannot push ahead with the reform while there are clear indications that businesses will not be able to comply with the new rules.”

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