IPSE has formulated a response for Brookson Legal and Qdos’ research regarding the IR35 consultation that was terminated on 28th May 2019.
Qdos unveiled the fact that around 92% of contractors in the UK did not hear from either their recruitment agency or client for discussing the IR35 reform, expected to come into effect in 2020. On the other hand, Brookson Legal revealed that 59% of firms in the UK have made up their minds about using a blanket approach for the IR35 assessments after the legislation expands to the private sector.
After April 2020, private sector organisations—both medium and large companies—will bear the responsibility to adjust their engaged contractors’ IR35 status. The legislation was already implemented in the public sector since 2017.
According to the surveys from Qdos and Brookson Legal:
- 14% of contractors believe that their agencies and clients will evaluate their IR35 decisions accurately while 34 are uncertain. Additionally, 52% are not confident that these parties are prepared well enough for managing the changes that are expected to occur in 2020.
- 86% of contractors intend to resist their clients’ ‘inside IR35’ decisions.
- Almost 48% of businesses in the UK have acknowledged that they plan to cut down on the number of hired contractors, mainly because of the ‘off-payroll’ tax regulations.
Andy Chamberlain who is the Deputy Director of Policy in IPSE explained that the research shows the massive mountain that businesses in the UK are required to climb up to become compliant for the off-payroll rules. Also, there is a huge risk regarding contracting—a major driver of productivity and innovation—which is feared to be thrown into a nosedive, particularly when the country needs it the most.
Mr. Chamberlain expressed a lack of surprise that clients have not communicated with their contractors for these expected adjustments, perhaps because they are unaware of the new rules. He is currently waiting to have a look at the draft legislation, estimated to be published by July. He stated that “What we have seen so far is too complex, totally unfit for purpose, and with so many variables that haven’t been decided.”
Furthermore, he was a loss of words on how it is expected from businesses to introduce processes within less than a year despite HMRC’s 20-year failure in carrying out the right determination. Therefore, he concluded that a deadline of April 2020 is unrealistic and one more year is required for thorough and proper implementation.