Contractor sector rolls up its IR35 sleeves ahead of new off-payroll liability in just 10 months’ time

Practical considerations rather than another round of lobbying are dominating the contractor sector’s response to private sector IR35 reform not being delayed until April 2023.

A senior manager at Anderson Anderson & Brown LLP perhaps summed it up best when she said in an online post following Thursday’s failed attempt to postpone the reform:

“Off-payroll reform…will go ahead as planned in April 2021 as confirmed in tonight’s Finance Bill.

“My heart goes out to every single legitimate contractor who is going to be unfairly hit by this.

“And [it also goes out to all] those businesses that are already struggling with the impact of Covid-19 and will have to add HMRC's job [of IR35 status testing] to their ever growing admin burden,” said the manager, Charlotte Edwards.

'Re-assess'

At Hays, managing director Simon Winfield sees the green light for off-payroll reform intertwining in the same way with coronavirus – part of what MPs have called a “triple whammy.”

“As private sector organisations continue to feel the impact of Covid-19 on their business, they will need to take the next 12 months [to] further re-assess their business, plan for growth and come back stronger.”

He added: “Navigating the complex reforms in less than 12 months’ time puts unnecessary pressure onto private sector organisations and contractors, causing further disruption and distraction.”

'Only ten months to go'

But if only there were 12 months to prepare. “Recruitment agencies and hiring organisations have [only] 10 months until they become responsible and liable for IR35,” says Nicola Slowey, operations director of Qdos.

“With reform now a certainty, it’s crucial that private sector businesses… prioritise well-informed IR35 status assessments and avoid needless, risk-averse decisions.”

“Don't shoot yourselves in the foot with gross risk-aversion,” echoed Kingsbridge Group's Andy Vessey, addressing engagers directly,

“It’s now of utmost importance that all points of the supply chain set preparations for the reform in motion, take the time to understand the risks associated by not having the correct processes in place, and educate themselves how to assess contractors fairly.”

'You can still use outside IR35 contractors'

Vessey believes that due to covid-19, “now more than ever”, flexible workers will be vital to getting the economy’s “engines firing again” throughout the “post-pandemic landscape.”

At accounting group JSA Services, boss Chris James is also addressing end-clients directly. “You can still use outside IR35 contractors,” he wrote in an online update.

“But [your] whole supply chain needs to commit to doing proper case-by-case status assessments.”

Sounding aware of the ten-month countdown, he added: “Let’s get on with this!”

'Couple of things contractors can do'

As to how contractors ought to get on, Qdos had some tips for a contractor wondering on LinkedIn what MPs’ all-clear to move the IR35 status decision to engagers means for him.

“There are a couple of things you can do”, reassured the advisory’s CEO Seb Maley.

“Despite the fact your client will soon make the decision, make absolutely sure your contract belongs outside IR35.

“[Next], discuss the changes [to the off-payroll rules] with your client and/ or agency and stress the importance of them making well-informed assessments. And, compile other ‘evidence’ showing you are a legitimate business-owner.”

'The IR35-Covid-Brexit burden'

But a niche IT consultancy-owner, Philip Harris, doesn’t think there will be many operators of his size left – for UK plc or HMRC.

“Small businesses [will] collapse under the burden of IR35, Covid-19 and Brexit,” he says. “I cannot begin to think where HMRC believe the money will come from.”

Dean Sadler, founder of Tribepad reflected: “Businesses need a contingent workforce, especially as we currently face the unknown.

“With many businesses unable to afford immediate full-time staff, the self-employed will remain an important asset for businesses looking to bounce back after the pandemic."

'Utterly shameful'

The recruitment software boss added: “If the government had any sense, they would rethink their IR35 strategy as now is not the time to make matters worse for the UK job market.”

But taking to Twitter, one contractor said the government isn’t listening: “Unless a full and independent IR35 review is held or IR35 is scrapped, then I will never vote Conservative again. The way they are blindly ignoring truthful, educated advice and reports [like that of the House of Lords], is utterly shameful.”