Contractors not consulted about IR35 changes

On the day that the IR35 consultation closes, a survey shows that nine out of ten contractors have not yet been contacted by either their client or recruitment agency to discuss next year's IR35 reform.

From April 2020, medium and large private sector companies will become responsible for setting the IR35 status of the contractors they engage. Reform will also see the liability shift from the contractor to the fee-paying party in the supply chain - often the recruiter.

Since 2017, similar rules have been in place in the public sector, which are still coming in for considerable criticism, particularly for making 'blanket inside-IR35 decisions'.

The survey from IR35 adviser, Qdos, shows that:

• 92 per cent have not been contacted by either their client or agency regarding IR35 reform, while just eight per cent have.
  
• Only 14 per cent of contractors have faith in clients and agencies to contribute to accurate IR35 decisions. A third are undecided, while just over half do not believe these parties can manage next year's changes.
  
• 86 per cent of contractors would challenge 'inside IR35' decisions made by their clients, while only 14 per cent would not.

Seb Maley, Qdos CEO, said: "With the IR35 consultation closing, the ball is now firmly in the Government's court. HMRC has an opportunity to listen to our sector's various concerns regarding reform. Whether any of the points raised are addressed, however, is another thing altogether.

"Therefore, we urge the businesses engaging contractors and the agencies placing these workers to start preparing for IR35 reform now, irrespective of any potential tweaks to the legislation.

"Accurate IR35 decisions are made with joined-up thinking and input from each party in the supply chain. In other words, agencies and end-clients need to open up a dialogue with contractors.

"Agencies, in particular, must take the initiative and reach out to the contractors they place. It's vital they work with contractors and end-clients to ensure accurate IR35 decisions are being made. After all, it is the recruiter that could be left with a huge tax liability despite not being the party that makes the final IR35 decision."