Empowering the Freelance Economy

Slack IR35 communication could spur contractor walkouts and skills shortage

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More than half of the 1400 contractors surveyed by IR35 compliance specialist, Qdos, said that they had not been contacted by their end client regarding IR35. With less than three months to go before IR35 reform is active should contractors prioritise clients and agencies that have their IR35 plans in order?

  • 57% have not been contacted by their end client regarding IR35 reform.
  • 15% have received a Status Determination Statement (SDS), outlining their perceived IR35 position. 
  • Of those who have had their contract assessed, 56% have been determined as outside IR35, with 44% deemed inside the legislation. 
  • 28% have been informed of their end client’s strategy for the changes but are yet to be issued with an SDS.
  • 70% believe businesses see IR35 reform as the biggest barrier to engaging contractors
  • The introduction of IR35 reform is less than 3 months away (6th April 2021). 

To avoid contractor walkouts at a critical time in the UK’s economic health, businesses impacted by IR35 reform have been urged by Qdos to inform contractors of their strategy for the changes immediately.

“IR35 reform is rapidly approaching and businesses – whether end clients or recruitment agencies – yet to inform contractors of their plans should do so right away,” said Qdos CEO, Seb Maley. “Leaving contractors in the dark over IR35 could prove to be a big mistake, particularly in the current climate,” he said.

As of 6 April, the reform will mean medium and large businesses in the private sector will become responsible for determining the IR35 status of contractors they engage. As part of the changes, the liability will be transferred from the contractor to the fee-paying party in the supply chain, which is either the end client or the recruitment agency placing the worker. 

The reform mirrors changes introduced in the public sector in 2017, that saw all public sector bodies required to assess IR35 status. 

“Right now, the last thing any business wants is skills shortages, as they look to navigate another lockdown,” said Maley. “With less than 3 months to go until the changes, I urge firms to ramp up their preparations for IR35 reform and keep contractors updated.”

“Contractors want reassurance that their IR35 status will be assessed fairly by a client or that their agency is doing everything they can to ensure compliance,” he said. “If they aren’t told about this soon, they may take on projects elsewhere, with clients or through agencies who have made clear their strategy for the reform.” 

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