A survey by status advisory specialists Qdos has indicated that the divisive reforms to IR35 will result in limited company contractors abandoning public sector contracts.
Of almost 2000 limited company contractors polled, 85% expressed their intention to terminate their contracts with public sector bodies and move across to the private sector, in order to avoid blanket decisions to find them inside IR35 from April.
ContractorUK reported that the latest findings are at odds with previous claims that come April, “rather than leave the public sector” PSC directors will “look to increase fees and day rates to cover the losses”.
The figure of 85% of those surveyed was qualified by Qdos as being dependent on whether or not their “outside IR35” status remains once they have been assessed under the new rules.
Qdos CEO, Seb Maley, reflected on his company’s findings: “The contractor workforce intend to maintain their independence but the public sector may not see the benefits. Understandably, contractors are feeling threatened so many are planning to stop working on public sector contracts should they be found caught by the new IR35 rules”.
Any day now, HMRC is due to launch a public beta test of their online tool to assist public sector clients determine IR35 status. This will give limited company contractors the clearest indication yet if their IR35 status is likely to change under the new rules.
Notably, IPSE – the Association of Independent Professionals and the Self Employed – have expressed grave concerns about the tool, not just in terms, but over the tight timescale, branding it as “unrealistic”.
Are you tempted to step away from the public sector in the face of April’s changes?
Talk through the options before you make any decisions. Our specialist team is here to help and support you.