IR35 reforms: Contractor poll highlights lack of faith in new UK government

The IT contracting community claims the UK government under-appreciates the positive economic contribution of the work contractors do, a new poll suggests.

In a survey of 1,200 contractors – 70% of whom work in IT – conducted by contracting-focused accountancy firm QAccounting and recruitment website Contractor Weekly, 91% of respondents said they did not believe that the government views their contributions as conducive to economic growth.

Also, 85% said they had no reason to believe that HM Revenue & Customs (HMRC) understands the negative impact the government’s plans to push ahead with extending the IR35 reforms to the private sector in April 2020 will have on the contracting community at large.

Under the reforms, medium to large private sector businesses will assume responsibility for determining whether the contractors they engage with should be taxed in the same way as salaried workers (inside IR35) or off-payroll employees (outside IR35). Previously, it was down to the contractors themselves to make such declarations.

Mike Butchart, CEO of QAccounting, said the fallout from the introduction of similar reforms in April 2017 in the public sector continues to loom large in the memories of many contractors, which is why so few have confidence in HMRC’s ability to oversee similar changes in the private sector.

“Given HMRC’s heavy-handed approach to IR35 compliance in recent years, you can understand why contractors have next to no confidence that the tax office grasps the possible negative implications of incoming changes to the rules,” he said.

For this reason, Butchart and others are now calling on new prime minister Boris Johnson to demonstrate an appreciation of the work contractors do in supporting the UK’s flexible economy by calling for some kind of intervention.

“With a new prime minister now in place, the fact that the majority of independent workers have questioned HMRC’s competence should be for food for thought for Boris Johnson – as should the news that contractors do not think the government appreciates this vital sector of the workforce as a tool for economic growth,” said Butchart.

“Looking ahead to the introduction of IR35 reform next year, it is vital that HMRC shows contractors that it will take a considered approach when implementing and policing the rules and that recruiters and engagers take on board the details of the draft legislation while preparing for changes.”

Seb Maley, CEO of IR35 consultancy Qdos Contractor, echoed Butchart’s comments, and urged Johnson to do more to show his support and appreciation for the contracting sector.

“Where previous prime ministers have failed, we urge Mr Johnson to focus on the way the government and HMRC treat the UK’s growing self-employed workforce – from sole traders to contractors operating through their own limited companies,” said Maley.  

“Amid Brexit uncertainty, it would certainly be in the prime minister’s interest to support independent professionals.”