IR35 changes have come at ‘worst possible time’, say IPSE

With the new IR35 rules having come into play on Tuesday 6^th April, the IPSE has said that the timing for these changes has come at the ‘worst possible time’ for the UK’s self-employed.

Research carried out by the Association of Independent Professionals and the Self-Employed (IPSE) found that 50% of those surveyed said the changes will mean they’ll stop contracting in the UK – unless they can find contracts unaffected.

Instead, they plan to:

• Seek contracts abroad (24%)
• Stop working altogether (12%)
• Look for employed roles (17%)
• Retire within the next year (11%).

Andy Chamberlain, Director of Policy at IPSE, commented, “The changes to IR35 would do serious harm to the self-employed sector at the best of times, but now they are adding drastic, unnecessary damage to the financial carnage of the pandemic – undermining the UK’s contractors at the worst possible time.

“The crucial problem with IR35 is still its complexity: in fact, it is so complex that HMRC has lost the majority of tribunals on its own legislation. And there remain serious doubts about the CEST tool HMRC designed to supposedly cut through this complexity – above all that it still does not account for one of the crucial deciders of IR35 status: mutuality of obligation.”

Andy added, “Now the changes to IR35 are shifting this complexity from contractors themselves onto their clients. The result is clear: chaos. Many clients are pushing all their contractors inside IR35 – against the rules of the legislation. Many more are only engaging contractors through umbrella companies, while others are scrapping their contractor workforces altogether – just when, as the economy opens up, they will need them most.

“IPSE have campaigned long and hard against these disastrous changes, securing delays and important concessions, but the government is determined to bring them in. We continue to urge government to rethink the changes. But now, as well as supporting our members, our other key concern is pushing government for a root and branch review and reform of self-employed taxation in the UK. IR35 is not an isolated problem: it is a marker of a tax system that was not built with the self-employed in mind. It is this that has to change – to make IR35 redundant and finally make taxation fairer and simpler for the self-employed.”

To find out more about contracting please contact Jaime on 01442 795 100 or email jaime.thorpe@dolanaccountancy.com.