Qdos Contractor research has highlighted that 74% of UK freelancers and contractors consider tax protection and IR35 insurance now as ‘vital’ or ‘fairly important’ to their business.
Recent changes to the public sector off-payroll working rules, which many consider a pilot for private sector reform has made it increasingly important for independent workers to have an IR35 contract assessment carried out on their behalf, regardless of which sector they work in.
Of the 656 contractors surveyed, 35% of contractors see IR35 insurance as vital to their business, while 39% believe it is fairly important. 18% feel it is of average importance, while just 8% do not perceive it to be important at all.
Updates to IR35 legislation which has shifted the responsibility for determining employment status from a contractor across to their client in the public sector means tax and IR35 insurance is no longer seen as a luxury by contractors, it’s increasingly considered a necessity and a vital component of the modern day contractor’s toolkit.
Prior to reform in April of this year, 85% of contractors revealed they did not trust HMRC’s CEST tool to make accurate employment decisions, while 88% did not believe well-informed IR35 decisions could be made without their input – a view Qdos Contractor strongly agrees with.
Given contractors’ clear and understandable concern surrounding recent and potential reform, it’s little surprise that almost three quarters value protection.
This is echoed by 60% of contractors who have each new contract IR35 reviewed.
For contractors working in the private sector, and given the undeniable complexity of the legislation, independent IR35 contract assessments help accurately set employment status.
That said, just 35% of contractors go the extra lengths to get their actual working practices reviewed. In the event of an IR35 investigation, HMRC will typically favour actual working practices over contract arrangements, given they reflect the true reality of a working relationship, rather than what was initially contractually agreed.
Should a contractor be wrongly placed inside IR35 by HMRC, they must be able to put forward a strong case to overturn the decision. From contract and actual working practices reviews, through to gathering evidence, the more a contractor has to dispute an IR35 decision the better.
For contractors working in the private sector, IR35 liability rests squarely on their shoulders. With further IR35 changes widely expected in the not too distant future, the need for the UK’s 2million contractors to safeguard themselves has never been greater.
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