Half of all public PSCs to quit over IR35 change
Jonathan Bentley, a member of the Association of Independent Professionals and the Self-Employed (IPSE), whose 20-year career has posted him to many state bodies, is one such IT contractor.
“This [proposal] has created a decision point for my company,” says Bentley, a co-director of Redwood Technology Limited.
“There will be no further engagements with government bodies as the rules have the potential to expose the company unnecessarily; this is a risk we have decided to avoid without exception.”
Specifically, 31% say they will leave behind working for taxpayer-funded bodies regardless of whether they would be required to pay the same tax and NI as employees, IPSE found.
Only two per cent of PSCs plan to continue supplying public bodies if the proposal is implemented, which IR35 experts fear could pave the way for its eventual introduction in the private sector.
IPSE, which says such an extension would be “beyond disastrous”, also found that of the 54% PSCs who plan to quit public sector workplaces, 81% will seek work elsewhere and 5% will take early retirement.
Meanwhile, almost four in ten PSCs indicated that they would have no choice but to increase their daily pay rate to compensate for any additional tax liability if the proposal is enacted.
IPSE chief executive Chris Bryce said: “This proposal will damage not only the affected 26,000 personal service companies working in the public sector, which contribute £3.5 billion to the economy, but their clients and agencies too.
“Public services will ultimately suffer most from this proposal. Public sector bodies, seeking to salvage and maintain large scale projects, would have to find alternative resources - or hire PSCs at an increased rate – leading to significant cost to the taxpayer. Even HMRC’s own published research has shown it to be a bad idea.”