Accountants of contractors get affected by the IR35 reform wave

Accountants of contractors get affected by the IR35 reform wave

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Posted ByAdmin

No matter what anyone says, it is pretty obvious that the IR35 reforms are hurting the public sector flexible workforce. Along with the contractors, the end clients and agencies have also been tasked with determining the employment status of the contractors and processing taxes, if the contractor is deemed to be inside IR35, respectively.

But there is one more community that seems to have taken a hit due to the newly implemented off-payroll rules, and that comprises contractor accountants. As of today, over 30% of contractors will find it hard to remain outside IR35. Many accountants, therefore, will find themselves losing their clients.

How, you ask?

There are agencies with little or no prior experience with IR35. Many organizations have limited capacity to process taxes or test the IR35 status. And, end-clients who don’t want to take a risk will make blanket decisions and follow a “no limited company contractors” policy.

This is the reason many long-term contractors caught by IR35 are accepting an “inside IR35 status” to be able to keep their current contracts. And if they are not caught by IR35, they are forced inside it due to blanket decisions.

This is the reason why accountants are losing contractor clients.

Another reason is that the contractors who have been placed on payroll will now have to incur the income tax and NICs that will be deducted at source. This really contravenes the benefits of running a limited company, and having an accountant.

As the off-payroll rules haven’t still landed in the private sector, the accountants still have a range of clientele to work for. But that too doesn’t attract much work for a long term, as the taxman will soon move their attention to the private sector contractors, and set the IR35 reforms in motion.