Research suggests that the majority of contractors impacted by IR35 reform will continue to operate as independent workers even though they will typically lose the right to determine their own tax status from April 2020.
The data, released by IR35 specialist, Qdos, shows that more than half (51%) of the 1100 contractors they surveyed intend to carry on working independently when the changes are enforced next year. 39% are uncertain of their plans but just 10% said they expect to stop contracting when medium and large private sector firms start administering the rules.
Such is the level of concern surrounding next year’s changes, that most contractors have said they will not stop shows the “tremendous resilience” of independent professionals, explained Qdos CEO, Seb Maley:
“Amid reports that banks will scrap contractors due to IR35 changes, independent workers are showing tremendous resilience. It’s clear contractors want to and plan to continue working independently, despite IR35 reform.”
While an IR35 review has been promised by the Chancellor, Sajid Javid, private sector firms are being instructed to prepare for changes regardless. And the statistics released by Qdos show how important it is that these companies are ready, explained Mr Maley:
“These findings send a clear message to businesses. Forcing these workers – most of whom will be genuine contractors – onto the payroll is short-sighted and will mean these companies lose the skills, flexibility and savings enjoyed when compliantly engaging contractors outside IR35.”
In addition to demonstrating contractors’ intentions, Qdos’ research also shows how little confidence independent workers have in the Government to scrap changes.
A telling 73% of contractors said they believe there is either no chance (16%) or it’s very unlikely (57%) that IR35 reform will be cancelled. 21% of contractors surveyed aren’t sure if a potential IR35 review will result in a U-turn from the Government, while only 5% think changes will be reversed before 6th April. To an extent, this view is also shared by Qdos CEO, Maley, who urged contractors to get ready for reform:
“An IR35 review is a positive step in the right direction, but contractors must work off the basis that reform will go ahead regardless. From ensuring their own IR35 compliance before 6th April to discussing the changes with their clients when possible, we advise independent workers to take a proactive approach to reform.”
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