Businesses advised to ramp up IR35 preparations after contractors cite concerns

IR35, Off Payroll Reform

With off-payroll reform on its way, businesses must ensure they are prepared for IR35 changes

Contractors have a lot on their mind at the moment. With the clock ticking towards IR35 reform in the private sector, the Coronavirus pandemic contributing to huge economic uncertainty and, who could forget, the Brexit saga yet to reach its long-awaited conclusion, running a business in the current climate has its challenges. 

But while it is the pandemic that has understandably dominated most conversations and media headlines since March, and Brexit continues to rumble on in the background, contractors do not view either of these landmark events as the biggest threat to their business in the coming year. 

Instead, and perhaps understandably, the arrival of IR35 reform on 6th April 2021 is contractors’ major concern – and by some distance too. According to our most recent research, nearly two-thirds of contractors (62%) are most worried about the off-payroll changes, which will see medium and large businesses become responsible for determining IR35 status.

This group of contractors nearly doubles those who pinpointed the economic impact of Coronavirus as their main fear (33%). And despite fresh revelations over the Government’s Brexit legislation, the UK’s departure from the European Union (5%) is much less of a pressing matter.

But why do contractors perceive IR35 reform to be a bigger threat than the pandemic and Brexit combined? And what should businesses, who will soon be tasked with assessing IR35 status, take from these findings?

 

Contractors remain sceptical of IR35 reform

Firstly, contractors worry that their clients and, when involved, recruitment agencies, will not be ready to accurately assess IR35 status by April. They also fear that some businesses will simply stop engaging them as a workaround to the reform. These concerns have been fuelled by reports that a collection of companies, most of them banks and financial services firms, are expected to scrap their contractor workforce in the months leading up to reform.

Needless to say, this has impacted contractors’ future plans. Of those who took part in our study, the largest group (45%) will continue contracting beyond April 2021, but 17% are considering employment as an alternative. 19%, meanwhile, may even close their personal service company as a direct result of the changes. The remaining contractors told us retirement is a possibility, as is growing their company or exploring other business opportunities. 

 

A clear message to businesses preparing for IR35 changes 

This brings us on to what recruitment agencies and hiring organisations can deduct from our research. That IR35 reform is making contractors think carefully about continuing shows they are yet to be convinced that businesses can manage the changes. 

Above all else, contractors’ concerns regarding reform should incentivise businesses to ramp up their IR35 preparations. After all, should these companies want to enjoy the skills, flexibility and savings experience when engaging genuine contractors outside IR35, being ready for IR35 reform is paramount. 

As our CEO, Seb Maley, told Computer Weekly, while there isn’t long left until the changes land, by acting quickly and by prioritising fair and well-informed IR35 status decisions, businesses can approach the changes with confidence:

“With less than five months to go until IR35 reform, the onus is on hiring organisations and recruitment agencies to prepare for the changes. Contrary to speculation, IR35 reform is manageable, but the work must start immediately.”

 

Qdos is supporting over 2,200 businesses, helping them navigate changes to the off-payroll working rules. The Qdos Status Review facility provides a range of expert IR35 solutions, including IR35 status reviews and IR35 insurance, to allow businesses to compliantly place and engage contract workers. For more information, please email info@qdoscommercialservices.com or phone 0116 478 3390.

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