Businesses have regrets over ‘confusing’ IR35 reform

by Susie Hughes at 12:03 09/08/21 (News on IR35)

Four in 10 businesses impacted by recent changes to IR35 in the private sector have admitted they would approach the changes differently if given the opportunity. Meanwhile, nearly a third are already reviewing their strategy for managing the reform despite the changes only coming into force on April 6 2021.

These organisations - most (56 per cent) of whom have continued to engage contractors outside IR35 if their contract has been assessed as such - also said reform has resulted in confusion, contractors leaving projects, additional costs and project delays. This is according to a study carried out by IR35 specialist, Qdos, in which 59 businesses affected by the reform shared their experiences. IR35 reform saw the responsibility for determining IR35 status shift from contractors to medium and large businesses engaging them. The liability was also transferred, from the contractor to the fee-paying party in the supply chain. When asked how businesses would change their approach, the majority (52 per cent) said they would have started preparations earlier, 10 per cent would not have used HMRC’s IR35 much-maligned online assessment tool (CEST), 10 per cent would reverse contractor bans, 14 per cent would have engaged the help of an IR35 specialist and the remaining 14 per cent cited other factors, including ‘campaigning rigorously against it’. Confusion These firms also highlighted the challenges created by IR35 reform. The overriding ones were confusion around the rules (74 per cent), contractors leaving (59 per cent), indeterminate IR35 status decisions provided by CEST (37 per cent) and project delays (30 per cent). Advertisement As a result, 40 per cent of businesses said IR35 reform has so far had a negative impact on their business. This statistic is somewhat balanced by the 35 per cent that said it has had no negative implications whatsoever. Seb Maley from Qdos said: “Businesses now have the benefit of hindsight and many are already looking to change the way they manage IR35 reform. A growing proportion of firms are aware of the fact that IR35 reform is manageable, which is leading some to rethink needless contractor bans. “There are some positive findings from our study too. That most businesses have continued to engage contractors outside IR35 if their contract is assessed as such is good news - and certainly from where we stand begins to dispel the myth that IR35 reform has destroyed contracting altogether.” Further IR35 information For more information about all aspects of IR35, including the controversial IR35 reforms see Shout99's News on IR35 section. Tweet -- If you wish to comment on this article, please log in and use the Reply button below. Registering is free and easy - see 'Join Shout99'. - Susie Hughes © Shout99 2021

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