Most IT contractors want employment benefits if clobbered with IR35

That'll go down well with full-time Sir Humphreys..

HMRC photo, Gov.uk

The vast majority of IT contractors believe they should receive employment benefits, such as sick pay and holiday leave, if they are to be classed within the IR35 tax clampdown.

Of 1,339 IT contractors surveyed by recruitment firm Qdos Contractor, 89 per cent said they wanted to be offered employment rights when working inside IR35.

Half of those said they would like to receive holiday pay, while 23 per cent wanted a pension contribution and 13 per cent would like paid sick leave.

Many freelancers are being hit with additional tax after the UK government last year shifted responsibility for compliance with the IR35 legislation from the individual contractor to the public body or recruitment agency.

That essentially means they should be taxed as employees, rather than through their personal service companies.

The Treasury has estimated the tax man will claw back £185m for the year 2017/18 as a result of the changes.

Seb Maley, chief exec of Qdos Contractor, said the situation could be "unsustainable" for freelancers. "They are taking all of the risks associated with being a contractor, but are losing the reward of having a higher day rate. They see the potential position of being forced inside IR35 as completely unfair."

However, some departments have been getting round the prospect of losing IT contractors to the private sector by hiking their day rates.

Last year The Register revealed that many Whitehall departments advised self-employed techies to increase their fees by 20 per cent.

That was in response to the serious dearth of tech skills within government – particularly with the challenge of Brexit looming. The National Audit Office has said Whitehall may need to spend £244m on contractors if it is to meet the serious shortfall in skills.

But it seems some are applying a more judicious take on the changes after reports that certain bodies had initially applied a blanket approach.

For example, of the 455 contractors employed by the Department for Work and Pensions, just 22 have been classified within the scope of IR35, according to a Parliamentary response last week.

From July 2017, out of 393 public sector contractors surveyed by Qdos, 44 were placed inside IR35 by their public sector engager following last April's reform (11 per cent).

Nevertheless, it still seems a number of public sector contracts are suffering due to freelancers jumping ship. A separate survey from Contractor Calculator found that 80 per cent of projects had suffered delays as a result of contractors leaving. ®




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