…in the wake of IR35 public sector tax reforms
The public sector has been decimated following the controversial IR35 tax reforms that came into effect earlier this year. 76 per cent of departments have lost highly skilled contractors and 71 per cent of projects have been delayed or cancelled. These are just two of the findings of a survey of more than 1500 contractors conducted by leading contracting site ContractorCalculator.
It has been four months since the public sector changes were implemented and the survey results reveal the impact:
- 27 per cent of public sector contractors left the public sector
- 47 per cent of projects lost at least a quarter of their contractors
- 61 per cent of contractors left because they refused to work under IR35 rules
- 52 per cent of contractors who left the public sector are yet to be replaced
- 50 per cent of contractors have said they will now never work in the public sector if caught by IR35 & 46 per cent will only do so if the Government effectively pays the extra tax.
Commenting on the fallout and the alarming results of the survey, Dave Chaplin, CEO and founder of ContractorCalculator said: “These findings should be a wakeup call to Government and serve as a prompt to repeal the entire legislation. HMRC was warned that this would happen and now we have the evidence that shows just how damaging the changes have been – diminished access to the flexible workforce has caused irreperable damage to multiple vital public services, projects have been cancelled and others are running over budget by millions of pounds.
“What’s more, we expect that HMRC is planning to roll out the reforms in the private sector which just goes to show how far removed from reality the taxman is. Action is needed to prevent further decimation of our public sector services and stop a private sector roll out which will cause further chaos for contractors, businesses and the UK economy overall.”
A HMRC spokesperson said: “The survey is based on an unrepresentative sample.
“There is no evidence of a drift from the public sector and there have been no delays to IT projects due to the new rules. There is no change to contractor pay other than to make sure the correct tax is paid.”