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Contractors to Leave a Project if Faced with Ultimatum Over IR35

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Seven in ten contractors (72%) would stop working on a particular project if they were given an ultimatum by their client or agency to go PAYE or work through an umbrella company in response to incoming IR35 reform, research carried out by contractor accountancy, QAccounting, in collaboration with resource website, Contractor Weekly, has revealed.

The study, which over 1200 limited company contractors participated in, follows reports that a number of well-known private sector companies are preparing to offer large numbers of independent workers no choice but to become permanent employees, as they prepare for IR35 reform next year.

From 6th April 2020, medium and large companies in the private sector will become responsible for setting the IR35 status of the contractors they engage. As part of these changes, the liability will be shifted from the contractor to the fee-paying party in the supply chain.

The contractors who took part in the research said:

  • 72% would stop working on a particular project if presented with an ultimatum over IR35
  • 18% would opt to work through an umbrella company if there was a possibility to do so
  • Just 10% said they would go PAYE, effectively becoming an employee
  • 91% said they take particular pride in being a contractor
  • Only 9% see it as ‘just a job’

Mike Butchart, CEO of QAccounting, commented on the study:

“The fact that most contractors would stop working on a particular project if they were handed an ultimatum shows how incredibly important it is that agencies and private sector companies approach IR35 reform on the understanding that it can be managed.

“Contractors are proud to work independently and clearly plan on continuing to do so – but outside the scope of IR35. These statistics tell us that very few of these individuals want to become employees. As we approach next year’s reform, this is a message that we urge recruiters and end-clients to listen to.

“The businesses that prepare for incoming changes and present contractors with opportunities to have their IR35 status assessed fairly and accurately will be much better placed to continue engaging them.”

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