It is quite obvious that the IR35 reforms, set to come into force from 6 April, are going to have a not-so-positive impact on the public sector. Contractors, agencies and end-clients are going to have a tough time keeping their heads above the water once the off-payroll rules are rolled out.
While the onus of deciding the employment status of contractors falls on the end-clients, the HR professionals functioning in the public sector are concerned about losing out on talent once these reforms take effect.
According to a Qdos study, one out of four contractors will move to the private sector as they predict UK’s major tax-funded projects will get a hit if the PSC workers walk out of the sector because of the off-payroll rules. In fact, the same article states that the NHS has told its entire PSC workforce that they will fall inside the legislation. Naturally, the news that 85% of PSCs will quit if their client deems them to be inside IR35 is not surprising at all!
Unfortunately, it doesn’t seem like HMRC gave this “exodus” a lot of thought, which is why in a last minute effort to rectify the errors found in the off-payroll rules, The Association of Recruitment Consultancies (ARC) have written to all the MPs, except to the ones within the HMRC, requesting them to fix the anomalies such as rise in the value of NICs and tax and “fee-payer” bearing the responsibility of assessing the IR35 status, and delay the implementation of the IR35 reforms.
This is because the number of contractors walking out of the public sector is only going to increase – and of course – we don’t need any survey or reports to make this statement!