Firms face fallout over IR35 digital tool decisions

More than eight in 10 PSCs would be put off their current contracting set-up if IR35 changes were extended to them with no way to assess their status other than CEST, a poll shows.

The finding comes ahead of a “widely expected” alteration to IR35 in the private sector, set to be based on changes in the public sector that saw PSCs lose their ability to decide status.

Qdos, which ran the poll, added that making private sector outfits and recruitment agencies responsible for setting IR35 status was a process that contractors say they would not trust.

“Eighty-one per cent of contractors would rather not work through a recruitment agency or for a client using only CEST”, warned the firm’s Seb Maley, referring to the IR35 digital tool.

“Question marks still remain over CEST's reliability, and understandably, contractors do not want to be wrongly placed inside IR35 and therefore made to pay similar taxes to an employee, but without any of the benefits.”

He also said the findings indicated a “real threat to staffing in the [private] sector,” given that not even a fifth of the PSCs could say they have “no fears” about CEST’s effectiveness.

“All the signs point towards the announcement of private sector IR35 reform this year,” Maley reflected. “Should private sector changes go ahead, agencies and clients must reassess the way in which they make IR35 decisions.”