Home Business NewsBusinessBusiness Growth IR35 seen as ‘biggest threat’ to £300bn contracting sector in 2022

IR35 seen as ‘biggest threat’ to £300bn contracting sector in 2022

by LLB Finance Reporter
25th Jan 22 12:10 pm

Despite confidence beginning to return to the contractor market, recently enforced IR35 reform in the private sector is seen by the majority of contractors as the biggest threat to their business in 2022 – a finding that companies engaging these workers have been urged to pay close attention to by IR35 insurance firm, Qdos.

A survey of more than 1200 contractors revealed attitudes towards the contracting landscape in 2022, with 61% highlighting IR35 reform as the ‘biggest threat’ to this way of working, which is said to contribute over £300bn (IPSE) annually to the economy.

This is more than 10 times the number of contractors most concerned about the impact of Covid (6%) or Brexit (6%) on their prospects this year. Incoming dividend tax increases (18%) were earmarked as the second biggest threat, but three times fewer contractors viewed this as concerning as IR35.

The introduction of IR35 reform on 6th April 2021 saw the responsibility for assessing IR35 status shift from the contractor to the medium or large business engaging them. As part of this reform, which mirrors changes introduced in the public sector in 2017, the liability also shifted, from the contractor to the fee-paying party in the supply chain (either the recruitment agency or client).

Qdos CEO, Seb Maley said, “IR35 reform has created a plethora of challenges for contractors, jeopardising this way of working for thousands. The fact that contractors still see IR35 as the stand-out threat in 2022 – and by some distance – tells you everything you need to know about the journey ahead, along with the progress that needs to be made this year.

“It’s important to highlight that more businesses are taking a fair and pragmatic approach to recent reform, signalled by the 83% surge in contractors deemed outside IR35 since the changes were rolled out.

“Even so, far too many businesses are insisting that contractors work on the payroll, regardless of their true IR35 status. Not only will this see businesses struggle to attract the flexible talent they need to recover from the pandemic, but forcing genuinely self-employed people onto the payroll will also result in significant and needless cost rises.”

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