IR35 – Are agencies and the public sector prepared?

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Just 4% of UK contractors believe agencies and public sector prepared for 6th April

With only a week before the IR35 changes in the public sector are live, there is still widespread concern in the contracting industry. The final legislation has now been published, which most notably features greater accountability on public sector bodies for determining the IR35 status of their contractors.

Public sector bodies must now provide their determination to the agency, or contractor if direct, on or before the start of the contract, which puts the ESS into question in how the working practices can be assessed prior to working. For those already in contracts prior to 6th April, the determination will need to be provided by the first payment after this date. Failure in the public sector body taking this “reasonable care”, will result in the public sector body becoming the fee-payer.

With such a short time frame for this provision to be added to the legislation, it is of no surprise that despite hopes for fairness when it comes to deciding IR35 status on public sector contracts, just 4% of UK contractors believe recruitment agencies and public sector companies are prepared for changes on 6th April.

As soon as next week, public sector companies will be handed responsibility for determining IR35 status – a move that will leave agencies liable.

Research into 2000 UK contractors has highlighted:

  • Just 4% believe agencies and public sector companies are ready for incoming IR35 changes.
  • 80% of contractors believe recruitment agencies and public sector companies are unprepared for public sector IR35 changes.
  • 16% are unsure how prepared agencies and public sector engagers are.
  • Just over half (50.29%) of agencies and public sector companies have not made contact with contractors regarding the changes.
  • Just under half (49.71%) of agencies and public sector clients have made contact with regards to IR35 changes.

 

The 6th April is only a week away, and many recruitment agencies and public sector companies are still unsure about what to do when IR35 changes come into force.

That almost 1 in 2 contractors has not been contacted by their public sector clients or agencies perhaps signals why confidence is low. Understandably, contractors are concerned about being wrongly caught by the new rules, with 85% planning to leave their public sector roles should they be placed inside IR35.

 Given the sheer number of contractors and agencies concerned, not to mention projects and public sector companies that rely heavily on the contract workforce, the situation needs clarity and a solution. It’s vital that well-informed, accurate IR35 decisions – with input from every party – are made and fast, to put minds at rest.”

The person in receipt of the determination from the public sector body may raise questions in writing to the public sector body and the final legislation now contains a 31 day deadline for the end client to respond. It is worth noting, however, that there is no requirement for the public sector body to provide information beyond the next entity in the contractual supply chain.

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