It was feared - and predicted - that contractors would choose to leave public sector work rather than face draconian and sometimes contradictory measures imposed under new IR35 restrictions.
Prior to IR35 reform, a survey showed that 85 per cent of contractors surveyed were prepared to leave the public sector should they be found inside IR35.
Despite claims to the contrary by HM Revenue and Customs, there are delays to critical Trasnport for London Underground repair work due to the exodus of public sector contractors.
TfL recently revealed a ‘significant number’ of contractors stopped working on projects as a result of IR35 changes – a move which has led to skills shortages and the significant delay to critical repairs.
HMRC has been claiming that IR35 reform is not impacting on contracting and the public sector, HMRC Tax Assurance Commissioner Jim Harra stating: “This has not happened. HMRC has been monitoring this. Contractors come and go, and the market is naturally fluid, but it would be wrong to suggest that the public sector has significant recruitment gaps because of this reform.”
Contractor tax specialists, Qdos Contractor CEO, Seb Maley said: “That a vital TfL project faces delays is obviously a concern. It also further contradicts HMRC’s claim that IR35 reform has not affected contracting and the public sector itself. When will HMRC admit the mistakes they’ve made with regards to IR35 reform?
“Blanket and inaccurate IR35 determinations will continue to force contractors from the public sector. That HMRC adamantly denies any public sector skills shortages because of reform is hugely worrying, particularly when public sector organisations are beginning to speak out too.
“The success of vital public sector projects rest heavily on contractors. It’s therefore essential that accurate IR35 decisions are made. This will become all the more important should reform be extended to the private sector.”
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Susie Hughes © Shout99 2017