With under a year until IR35 reform is extended to the private sector, nearly half of more than 1000 contractors have said they believe independent IR35 reviews hold the key to accurate status decisions, exclusive research carried out by IR35 specialist, Qdos, has revealed.
From April 2020, medium and large businesses in the private sector will become responsible for determining the IR35 status of contractors, with the fee-paying party (often the recruitment agency) set to carry the liability. Similar rules were introduced in the public sector in 2017.
The study, in which over 1000 limited company contractors impacted by IR35 reform participated, showed:
- 48% see independent contract assessments as the key to setting IR35 status accurately
- 24% believe sharing the reasons behind a decision along the supply chain will ensure accuracy. This is something the Government proposed in the recent IR35 consultation
- 22% think that holding engagers responsible for inaccurate decisions is most important. Currently, end-clients will become liable when ‘reasonable care’ has not been taken in setting IR35 status
- 6% see ‘other’ methods as the critical factor, which centre on the need for these parties to be better educated on IR35. HMRC has regularly promised to increase the level of guidance and support it offers the private sector
Qdos CEO, Seb Maley, commented:
“Above all else, these findings emphasise how concerned contractors are about IR35 reform in the private sector. After many contractors were wrongly placed inside IR35 as a result of public sector reform, independent workers simply do not trust private sector clients and recruiters to make accurate status decisions without assistance.
“The fact that nearly half of contractors have called on their clients to seek external and objective advice when assessing IR35 is also another indication of the little faith these workers have in HMRC’s IR35 tool, CEST.
“With further IR35 changes on the horizon, end-clients and recruiters must carefully consider how they plan to contribute to well-informed IR35 decisions – decisions that protect their liability and also ensure contractors have their tax status set accurately.”