Extension of IR35 number one concern for many contractors

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Rumours that IR35 will be extended from the public to the private sector is the number one concern of contractors, according to a survey by Qdos Contractor.

Some 48% of contractors rated the  rumoured change to private sector IR35 as their number one business concern, far ahead of the next ranked concern about competition for contracts which only 18% of contractors said was their biggest worry.

Issues such as the lack of Government support for the self-employed (17%), ongoing fear over public sector IR35 changes (10%) and a variety of other pressing business concerns (7%), are also considered far less important to UK contractors.

R35 is the short name used for the ‘intermediaries legislation’, introduced in 2000 with the aim of countering tax avoidance and specifically aimed at the limited company contractors that organisations hire. It is designed to combat ‘disguised employees’ – which HMRC believes would be employees of the client if they did not work through a limited company.

New legislation introduced for the public sector on April 6th 2017 moved the onus of evaluating IR35 tax status from the worker’s own company to the public sector body hiring the worker and they (or the agency if there is one) are now liable for collecting taxes and ensuring compliance. Contractor organisations say the switch in the public sector was rushed and chaotic.

Qdos Contractor says: “To rush through similar changes to private sector IR35 is not advisable, given the concern voiced by the UK contracting community, not to mention the recent chaos caused by changes to public sector IR35.

“The level of support the Government gives to the self-employed is already under close scrutiny, with the Taylor Review highlighting the need for extra help in different forms for the UK’s 4.8million freelancers, contractors and self-employed people.

“And while the crucial economic role of the self-employed is often highlighted in Party manifestos and pledges, it’s crucial the Government now listens to the independent workforce, who together contributed £119bn to the UK economy last year. Ultimately, it’s in their best interests to do so.”

While the largest proportion of contractors surveyed (36%) revealed they would continue contracting regardless of private sector IR35 reform, 33% of contractors stated they would consider heading into employment.

Around one in five contractors (19%) are prepared to consider a different career altogether should private sector IR35 be reformed, while 12% have alternative plans – the most common of which include retiring early, or emigrating to continue contracting overseas without the danger of IR35 hanging over their head.

Qdos Contractor says: “The vast majority of the UK’s independent workforce choose to work this way for the freedom and control it brings, rather than the tax advantages.”



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