Research by Cool Company into the impact of IR35 legislation has found the impact might not have been as devastating as many had feared with most contractors finding ways to mitigate the impact of the new rules, including working with umbrella companies. The company’s research has found that in the last eight months, 93 per cent of contractors have considered using an umbrella company specifically to avoid IR35, and more than half (53 per cent) have done so. The highest percentage of these workers has been in the property and construction sectors, where 72 per cent of contractors have begun working with umbrella companies.
Other contractors have moved their services to an overseas client base. 65 per cent of UK contract workers have looked for more work from EU clients, with 83 per cent of contractors from the transport and logistics sector making that move. Meanwhile 52 per cent have begun searching for clients from non-EU sources – those working within the legal sector accounted for 89 per cent of these.
Despite the disruption that contractors have faced in 2021, two thirds (67 per cent) still rated their overall experience of the IR35 changes as positive. With only 15 per cent categorically saying that they have had a negative experience – 19 per cent of these respondents were from a marketing, PR, and advertising background.
However, 6 in 10 (58 per cent) contractors are still considering leaving this way of working, including 83 per cent of respondents from the property and construction sectors. 61 per cent of contractors say that they have taken a permanent role in response to IR35 with 83 per cent of these respondents were from the performing arts industry.
“Overall, there has been something of a mixed response to IR35,” suggests Cool Company’s country manager, Kris Simpson. “Contractors and businesses are both discovering that there are ways to simplify legislation compliance. For contractors this has meant changing their client base, accepting permanent work, or finding a compliant umbrella
company to work with.
“For businesses, there are similar options,” Kris adds. “They can either juggle the additional administration and legalities of working with a contract workforce, face the same administrative issues of taking on permanent employees, or take on the services of an umbrella company.
“The latter provides the simplest solution with the smallest amount of disruption and it’s going to be very interesting to see how businesses and contractors adapt in 2022,” Simpson concludes.
