The headlines show that:
- More than half of contractors (57 per cent) see IR35 as their biggest challenge – over a year since the reforms came into force
- 52 per cent of contractors found their most recent contract was deemed inside IR35 – up from 24 per cent in the previous year
- 46 per cent say IR35 has had a negative impact on their business
- 82 per cent of contractors have opted to switch to umbrella because of the off-payroll reforms.
The off-payroll reforms were Introduced in April 2021 following a one-year delay because of the COVID-19 pandemic. They mean that medium and large-sized private sector businesses hiring personal service company contractors (PSCs) are now responsible for determining the IR35 status of their contracts and issuing a Status Determination Statement (SDS). The new rules also apply to all public sector organisations.
In light of these changes, many contractors expressed concerns about the accuracy of the determination of IR35 status in the survey, with 40 per cent of those surveyed believing that their end-hirer did not assess their IR35 status fairly.
The survey revealed that 52 per cent of contractors found their most recent contract assessed as inside IR35, marking a significant increase on the previous year, where only 24 per cent of contracts were inside IR35.
Joanne Harris from SHD Accountancy said: “There’s no doubt that the IR35 reforms in 2021 have had a significant impact on how contractors work and the initial reaction from many businesses caused a huge shift to umbrella employment.
“However, many seasoned contractors have opted to also keep their limited companies open. This dual option offers them the flexibility to choose between working umbrella or as a PSC depending on the IR35 status of the assignment.”
Further to this, insights revealed that two thirds of contractors said they had been impacted by IR35 in some way, with 46 per cent describing the impact as being 'very negative'.
Joanne said: “Now that some time has passed since the rules were introduced, we are starting to see more confidence and some settling down across many sectors. However, further education is needed for end hirers on IR35 to ensure contractors feel fairly treated and have confidence that their status is being accurately determined for every assignment.”
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Susie Hughes © Shout99 2022