Contractors express grave concerns over Off-Payroll private sector rollout

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Contractors express grave concerns over Off-Payroll private sector rollout

77% of contractors have little or no confidence that private sector engagers will be ready to facilitate IR35 assessments when Off-Payroll rules are rolled-out to the private sector in April 2020, according to a recent survey.

Prior to 2017, IR35 meant that contractors were responsible for self-assessing their employment status and paying tax accordingly.  Reforms to IR35 were introduced in 2017 that will shift this responsibility to private sector end-clients and/or recruitment agencies next year.

IR35 reform, known as the Off-Payroll rules, has already been rolled-out in the public sector, and has led to chaos within Public Sector Bodies such as the NHS and BBC, due to lack of guidance from HMRC and many clients having to rely on an online IR35 status checker tool plagued with inaccuracies and false positives.

Industry professional bodies advised the Government against rushing the alignment of the rules to the private sector, and the Treasury did announce in the last Budget that private sector implementation would be delayed by twelve months to April 2020.  However, it remains unclear exactly what level of guidance will be given to private sector companies who will suddenly find themselves responsible for making the complex assessments.

A survey of 1,400 contractors by tax consultancy Qdos showed:

  • 30% have no confidence in private sector engagers to be ready for Off-Payroll
  • 47% have little confidence in private sector engagers to be ready for Off-Payroll
  • 11% are undecided
  • 12% are confident that private sector engagers will be ready for Off-Payroll

The results also showed that 61% of the contractors surveyed believed that end-clients would be best placed to make accurate IR35 assessments, whereas only 39% thought that recruitment consultancies would be make the most accurate decisions.

36% of contractors said that the ability to work outside of IR35 was the most important feature of a potential contract when considering new roles.

Qdos CEO, Seb Maley, said: “Thousands of contractors have been wrongly placed inside IR35 by public sector engagers as a direct result of reform in 2017. Understandably, this has led many independent workers to question whether the private sector will be in a position to administer IR35 accurately next year.

“Private sector clients and recruitment agencies would be wise to pay attention to what are justified concerns of contractors. Businesses rely on the flexible of the independent workforce, while the recruitment industry, that now finds itself caught up in IR35 reform, depends on contractor placements for most of its turnover.

“The good news is that these companies do have time to prepare, and reform is manageable. But this time does need to be used wisely, and private sector businesses – whether a direct engager or a recruitment agency – should take the initiative and equip themselves with the skills needed to contribute to well-informed IR35 decisions on what will be a huge scale.”

25th February 2019.