Public sector disapproves IR35 plan

Seven in ten HR managers at public sector outfits believe that the government’s IR35 proposals will have a negative impact on councils, hospitals and schools.

In fact, a survey of 95 HR managers in June and July this year shows that 69.5% fear that the proposals will either put up such outfits’ wage bills or reduce their ability to attract talent.

The managers said the proposal puts the public sector’s ability to attract and afford the senior contractors they need in doubt, found the Recruitment & Employment Confederation, which ran the survey.

“At a time when the public sector is struggling to recruit talent because of a declining pool of people with the right skills, this [proposal] could really spell trouble for the effective running of the NHS and other vital public services,” warns REC’s chief executive Kevin Green.

Andy Chamberlain, deputy director of policy at the Association of Independent Professionals and the Self-Employed (IPSE), says the research shows “just how worried public sector employers” really are about the IR35 reforms.

“The recruitment industry, the freelancer industry and even HMRC all have evidence that this proposal is a bad idea,” he said. “It will prevent the public sector from accessing the specialist skills it needs to deliver vital public services. IPSE urges the government to reconsider”.

Mr Green also wants the government to change tack, such as by stepping up enforcement of the existing rules in the public sector or by going back to the drawing board with IR35.

“HMRC should be enforcing the rules better,” he said. “We believe that the government should conduct a wholesale review of IR35 and at the very least, delay the implementation of this proposal – rather than rushing it in for April 2017.”

However not all of the REC’s findings will disappoint the government. According to the survey, only one in eight of the HR managers regarded the April rules as "unclear."

Between now and then (and assuming the IR35 burden does in fact shift from the worker to the party paying the worker), businesses paying public sector contractors are being advised by ‘big four’ accountancy firm EY to take a range of actions.

According to the firm’s executive director John Chaplin, these actions include identifying the population in scope; carrying out an impact assessment; putting in place a policy for engaging and paying contractors and running contract reviews (so the “paperwork doesn’t let you down”). 

Also in a post on LinkedIn, Mr Chaplin recommends using technology to drive efficiencies, such as in the policy creation process, and undertaking staff training but potentially client training too.

Editor's Note: Related Reading -

Contractors' Questions: How to prepare for April's IR35 changes?

Aug 15, 2016