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IR35 reform poses biggest threat to contractors business
by Susie Hughes at 12:10 17/11/20 (News on IR35)
Freelancers and contractors pinpoint IR35 reform as the biggest concern and greatest threat to their businesses despite COVID-19 threat and ongoing Brexit uncertainty.
With five months until changes to the off-payroll working rules (IR35 reform) are enforced on 6th April 2021, contractors have said the reform poses a bigger threat to their business than COVID-19 and Brexit combined in the next year, according to research carried out by IR35 specialist, Qdos.

Despite the ongoing pandemic, 62 per cent of more than 750 contractors said IR35 reform in the private sector is their biggest concern in the next 12 months. This nearly doubles the 33 per cent who believe the economic impact of COVID-19 on their business will have a worse impact, and is well ahead of the five per cent who fear Brexit most.

On April 6 2021, unless contractors are engaged by a small private sector business, they will no longer have the power to determine their own IR35 status (employment status for tax). The responsibility will be passed to medium and large businesses, with the ‘fee-payer’ (recruiter or hiring organisation) to carry the liability. This is similar to reform in the public sector, which was introduced in 2017.

Regardless, nearly half (45 per cent) of contractors intend to continue working this way post-IR35 reform. 17 per cent may become employees in response to the changes, while 19 per cent are considering closing their company due to IR35 changes. The remaining contractors are weighing up retirement or 'other' options, such as expanding their business.

Qdos CEO, Seb Maley, said tht the findings emphasise how important it is that businesses reverse contractor bans and take a pragmatic approach to the changes:

“While COVID-19 poses an imminent threat to contractors, most of whom all but miss out on Government support packages, it is IR35 reform that independent professionals are most concerned about.

“Some contractors have been told by risk-averse clients that they will no longer engage with them as contract workers, giving them no choice but to work on the payroll or face having their contract cancelled. This is a short-sighted, unnecessary and, in some cases, a non-compliant approach that should be avoided at all costs.

“With only five months to go until IR35 reform, the onus is on hiring organisations and recruitment agencies to prepare for the changes. Contrary to speculation, IR35 reform is manageable, but the work must start immediately.”

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Susie Hughes © Shout99 2020

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