How recruitment will be affected by the IR35

How recruitment will be affected by the IR35

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For better or worse, Government legislation introduced yesterday will change how the industry operates forever.

 

IR35 has gone down as well as a Celebrations box full of Bounty’s!

 

We spoke to those in the industry, about how these will affect the sector’s state of play, and how they can harness the legislative upheaval.

IR35

The R35 refers to the United Kingdom’s anti-avoidance tax legislation designed to tax “disguised employment” at a rate similar to employment.

95% of public sector contractors fear the public sector will suffer as a result of these reforms, according to research conducted on 2,000 UK contractors from Qdos Contractor.

A lack of preparation, 80% of contractors do not think their clients are prepared and the disregard for the IR35 tool. Qdos Contractor’s CEO, Seb Maley, said: “Relying so heavily on new, relatively untried and untested tool is a big risk – particularly when taking into account what’s at stake here” – appear to be creating a perfect storm that will only frustrate the current skills shortage.

 

John Payne, Managing Director at Churchill Knight predicted the effect of IR35 on the recruitment industry: “We’ve already seen a departure of contractors from key industries such as IT and transport and, as contractors realise they are being assessed as inside IR35, [the remaining contractors] will likely either look for rate increases or leave the public sector altogether.

“Recruiters could struggle to place highly skilled workers in off-payroll roles in the public sector, and average rates for contract roles in the private sector could decrease as we see more and more public sector contractors attempting to go private – eventually resulting in an oversupply.”

HMRC’s approach seems “rushed,” Edwards confided, and, going forward, he “would like to see contracts assessed on a fair, case-by-case basis rather than the blanket assessments that we’ve seen from big public sector companies as of late”.

He detailed this thinking further: “We believe it should be acknowledged that contractors working off-payroll through their own PSCs naturally take on more risk, such as downtime between contracts. They also don’t get the benefits that regular employees do, such as holiday and sick pay – this seems to have been forgotten.”