Covid puts six in 10 contractors in the dark about client IR35 policy

The covid-19 response is likely behind more than half of contractors being prevented from getting details off their clients on private sector IR35 reform in just 84 days.

So despite the new off-payroll rules being only 12 weeks away, almost six in 10 contractors say end-clients still have not sent them “any communication” about the new framework.

“Covid is taking up the resources and attention of businesses who have been solely focused on survival for the best part of a year,” Qdos, the firm behind the finding told ContractorUK.

“To a degree, this is understandable. But the fact of the matter is that reform arrives in less than three months. The changes will not be delayed, and businesses must prepare.”

'Still planning to go ahead with IR35 reform on April 6th'

Having heard from Revenue officials directly, Brookson says it can confirm that the off-payroll rules will be introduced on April 6th, almost regardless of the pandemic’s severity.

“Despite the ongoing impact of Covid-19, the IR35 changes are still planned to go ahead…[as] we contacted HMRC about this [and officials said]:

"‘The government has been clear that the reform will be introduced on 6th April 2021. Organisations should continue to prepare for the reform on this basis.’

“‘HMRC is well underway in delivering an education and support programme, and is actively working with stakeholders, industry and contractors to help them prepare for the reform.’”

'Startling lack of communication caused chaos before'

Online yesterday, develop, a software engineering recruitment agency, directed contractors to its own questionnaire to -- “discover how ready you are for the new legislation.”

But with only 15% of the 1400 contractors polled by Qdos being in receipt of their end-user’s Status Determination Statement, it might be clients who need to do the discovering.

“Looking back on the problems experienced in the public sector in 2017…the startling lack of communication between businesses and contractors contributed towards the chaos,” said the firm’s Nicole Slowey.

“In the coming weeks and months, businesses need to inform contractors of their strategy for IR35 reform. After all, the approach taken could have a huge impact on a contractor's income. Firms that fail to communicate with contractors risk losing them.”

'Uncertainty helps no one prepare'

But the pandemic might not be solely to blame.

“It’s a shame we've ended up with a situation where the legislation needs 'fixing',” says JSA’s Chris James, referring to HMRC blundering the drafting of the off-payroll rules by framing umbrella companies as ‘intermediaries.’

“[Although] I remain impressed by HMRC's speed in working on this…[fix for the legislative error], uncertainty around the changes, and the vacuum that creates, helps no one prepare”.

'Contractors should take matters into their own hands'

Asked what contractors should do if they are still none the wiser about their end-user’s IR35 reform stance, Qdos’ CEO Seb Maley said sitting back was not an option.

“Contractors should take matters into their own hands if they haven’t yet heard from their client,” he said last night.

“Reach out to them and get answers to the important questions, such as what is your strategy for IR35 reform? How will you determine my IR35 status? When are you planning on doing this? What happens if I don’t agree with your decision?’”

'Pick up the phone, or send an email'

But the IR35 expert stopped short of saying contractors should instruct their agency that they will not renew beyond March 2021 if the client fails to answer the four questions.

“I certainly wouldn’t advise contractors to give an ultimatum, particularly in this economic climate,” said Mr Maley, sounding mindful of the pandemic’s grip on the labour market.

“For all we know, their client may be gearing up to assess IR35 status in a fair and compliant manner. My advice is to pick up the phone, or send an email that addresses your concerns and outlines why it is so important that you have an idea of your client’s approach to the incoming changes.”

'Tough times'

An IR35 advisory which works on the agency-side and client-side, ReLegal Consulting reflected: “It is still possible to use off-payroll contractors and freelancers but, work [still] needs to be done to ensure compliance.

“HMRC has confirmed that the reforms will go ahead so, action needs to be taken now. We have to say, though, we feel for those companies caught up in Brexit, Covid and Off-Payroll 2021. Tough times.”