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IR35 reform through the eyes of a contractor

The Issues at the Heart of IR35 Reform

Qdos Contractor explores the issues at the heart of IR35 reform with Commercial Consultant and author of The Happy Contractor, Alison Parfitt, who’s optimistic that further changes could be managed.

So, Alison, are you currently engaged in a contract?

“Yes, I am. I currently work with Ascent Flight Training, the business appointed as the UK Ministry of Defence’s Training Service Partner, as a Commercial Consultant.”

And what did you make of last year’s public sector IR35 reform?

“I don’t think the change was well thought out. And as it turned out, the knock-on effects were somewhat predictable, with public sector engagers taking a risk averse approach and making blanket IR35 status decisions, many of which are now proving to be inaccurate.

“Many contractors, myself included, left the public sector for private sector contracts. Some of those who stayed increased their rates to compensate for loss of earnings.

“I have heard that rates in the public sector are now on the rise, to attract contractors back to the public sector. It makes you wonder whether the strategy behind IR35 reform has been properly thought through, doesn’t it?”

You mentioned leaving the public sector; would you ever return?

“That’s right, Iike many others, I took the opportunity to return to the private sector before the new off-payroll rules were introduced. The uncertainty and disruption that followed reform last year suggests it was a good move, and I’ve really enjoyed my private sector work.

“But I would consider working in the public sector again – if the role and the rate were right for me. The dust does seem to be settling, and slowly but surely clients and agencies are making better IR35 decisions.”

Private sector reform looks increasingly likely; do you expect it to materialise?

“Put simply, yes. I think it’ll be announced later this year and come into force in 2019.”

What, if anything, will you do to prepare?

“I will continue to keep an eye on all IR35 developments and I’d suggest that other contractors do the same. You’ll be in a better position to react accordingly with a fair understanding of what’s actually going on.

“Other than that, I’ll ensure I have a strong case for working outside IR35. This means having all my contracts IR35 reviewed by a professional, and making sure my actual working arrangements align to my written contract.”

Has Christa Ackroyd’s recent IR35 case worried you further?

“It’s served as another reminder of the need to protect yourself against falling foul of IR35. But I wouldn’t say it’s told us anything we didn’t already know. And whilst IR35 ranks as a big concern for contractors, it shouldn’t put people off being their own boss.”

We couldn’t agree more. So what would you like to see private sector engagers do in preparation to any incoming changes?

“Again, it’s about education. Clients and agencies need to approach potential reform with an open mind and learn about the IR35 legislation.

“It’s vital they work with one another and us – the contractors they engage – and explore ways to determine IR35 status accurately. Blanket determinations are clearly hugely problematic for everyone involved.

“Failing that, they need to prepare themselves to pay higher rates should their business requirements lead to contractors and working practices falling inside IR35.

“And lastly, don’t rely on HMRC’s CEST tool. Determining IR35 status needs considered opinion based on the unique circumstances of each case, rather than digital logic.”

But are you confident the private sector could manage IR35 reform?

“I am. I genuinely think the private sector would adapt quickly. After all, businesses need the short-term flexible resources that contractors provide.”

Go on…

“In my opinion, the private sector will react in a more astute way than the public sector did, and is therefore better equipped to adapt to IR35 reform.”

“I assume that many public sector organisations were under instructions to follow a risk averse approach from the top. But I believe private sector businesses would engage contractors, and make IR35 assessments, with pragmatism and commercial awareness, focusing on the needs of their individual business.”

In general, what does the Government need to do about IR35?

“It needs to reconsider its objectives around IR35. What is the Government really trying to achieve and at what cost to the economy will this come? Real effort must be made to ensure IR35 is not victimising genuine contractors operating as genuine businesses.”

Finally, despite ongoing uncertainty, will contracting prevail?

“Without question. The contracting market is going from strength to strength as it responds to the UK’s growing demand for skilled, productive, project workers.

“I’m hugely confident that both public and private sector engagers have the ability to adapt to any incoming IR35 changes, like contractors have since the introduction of the legislation back in 2000.”

‘The Happy Contractor’ is available to purchase on

For further information on IR35 and potential reform to the private sector, please visit Qdos Contractor’s IR35 Advice Centre.

By Qdos Contractor


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5 thoughts on “IR35 reform through the eyes of a contractor”

  1. Murray Lambert

    The above was interesting and the actions still apply however increasing rates to meet short fall in wages isn’t always possible in other industries (Oil & Gas for instance) . The possibility to get seriously financially hurt is very possible in a very competitive job market effecting peoples lives.
    I recently asked for a rate review after 5 years and was basically laughed at.

  2. Ying Tong

    “What is the Government really trying to achieve and at what cost to the economy will this come?”

    The Government doesn’t know what it is trying to achieve, in this or in anything. It doesn’t know its own economic philosophy or whether it has one. It has only one guiding light: to get through the end of the day without the roof falling in. There is no strategy at the beginning of any day on how it will achieve that. Fudge and mudge, muddle along and something might turn up. In the meantime, decorate the nether regions of Government horses. One of the very few activities at which it remains world class.

  3. Phil the Pill

    Best not to go down the extreme route of minimum wages and start paying yourselves a salary that incurs Employer and Employee NI. You still get a £3.0K break on Employer NI payments. Given that you only get £2.0K tax relief on dividends is there really a massive advantage and risk the possibility of the HMRC 6 o’clock knock?

    • Ying Tong

      I suspect many people would be happy to settle for a marginally less profitable, quiet life if the government would address the absurdity of one individual paying both employer’s and employee’s NIC.

      A government with an economic narrative would realise it has a ready made definition of this status ready to implement. It’s called a personal service company. A government that doesn’t know from day to day whether it’s fighting the EU, Russia or itself wouldn’t.

  4. I'm a believer

    Although not an expert on the subject I actually think that IR35 reform in the Private sector would be beneficial for the majority of contractors. By holding the client responsible for anyone judged to be working inside of IR35 surely that will force clients to ensure contracts and working arrangments support working outside of IR35 thus protecting the contractor.

    In the event a contractor is judged to be working inside of IR35 does the client then pay the penalty? Or is my reading of the situation wrong?

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