Research 'lifts the lid' on IR35 business fears

The majority of senior decision makers in medium and large-sized businesses are concerned about missing out on temporary talent ahead of the introduction of new IR35 regulation, according to research from recruitment specialist Robert Half UK.

Three in five medium and large private sector businesses cite concerns about missing out on skilled contractors and temporary professionals when IR35 is expanded to the private sector from April 6 2020.

After this deadline, every medium and large private sector business in the UK will become responsible for determining the employment status of any contract worker they use. If the contractor is deemed to fall inside IR35, the worker will be required to pay the National Insurance contributions and income tax due via PAYE or via an umbrella company.

Separately, two fifths (42 per cent) of medium and large private sector organisations are concerned about losing current temporary workers to the new IR35 rules if they cannot re-negotiate employment contracts in time. While only 15 per cent plan to offer more competitive pay rates to their contractors to secure them.

Ahead of the introduction of the new regulation, one third say that the demand for temporary workers will increase, with just seven per cent anticipating a decrease.

Concerned

Matt Weston, Managing Director, Robert Half UK said: "Business leaders are concerned about the impending IR35 rules and its potential impact on the UK's temporary talent pool, particularly as firms look for a blend of high performing temporary and permanent employees to pursue growth strategies in 2020.

"A number of businesses are already considering measures to stay compliant with new regulation and finding ways to compete for skilled talent who favour flexibility and autonomy."

Anxiety

Self-employed group, IPSE warned that the research shows the extent of business anxiety about the changes to IR35.

Andy Chamberlain from IPSE said: "This survey lifts the lid on just how worried UK businesses are about the IR35 changes. Ever since the changes were announced, IPSE has warned they will significantly restrict the supply of flexible labour to businesses that rely on it.

"The lessons from the public sector, where these rules have been in place since 2017, are clear to see. Hirers have found it extremely difficult to balance IR35 compliance with retaining and attracting vital specialist resource.

"The next Government must, as a matter of urgency, hit the pause button on this legislation, which will be damaging not just to freelance contractors and the businesses they work with, but to the UK economy as a whole."