A survey of more than 1200 contractors carried out by Qdos has found 61 per cent highlighting IR35 reform as the ‘biggest threat’ to this way of working. This is more than 10 times the number of contractors most concerned about the impact of Covid (6 per cent) or Brexit (6 per cent) on their prospects this year. Incoming dividend tax increases (18 per cent) were earmarked as the second biggest threat, but three times fewer contractors viewed this as concerning as IR35.
The introduction of IR35 reform on 6th April 2021 saw the responsibility for assessing IR35 status shift from the contractor to the medium or large business engaging them. As part of this reform, which mirrors changes introduced in the public sector in 2017, the liability also shifted, from the contractor to the fee-paying party in the supply chain (either the recruitment agency or client).
“IR35 reform has created a plethora of challenges for contractors, jeopardising this way of working for thousands,” Qdos CEO, Seb Maley, comments. “The fact that contractors still see IR35 as the stand-out threat in 2022 – and by some distance – tells you everything you need to know about the journey ahead, along with the progress that needs to be made this year.
“It’s important to highlight that more businesses are taking a fair and pragmatic approach to recent reform, signalled by the 83 per cent surge in contractors deemed outside IR35 since the changes were rolled out,” he added. “Even so, far too many businesses are insisting that contractors work on the payroll, regardless of their true IR35 status. Not only will this see businesses struggle to attract the flexible talent they need to recover from the pandemic, but forcing genuinely self-employed people onto the payroll will also result in significant and needless cost rises.”
Qdos’ research also shows;
• On average, contractors rate HMRC’s IR35 tool 2 out of 10 when asked their level of trust in the software
• 39 per cent are ‘confident’ about their prospects for 2022, however 37 per cent are either ‘concerned’ (25 per cent) or ‘very concerned’ (12 per cent)
• There has been an 83 per cent rise in contractors deemed outside IR35 by their clients (from April to November 2021)
