In the aftermath of 2017’s public sector IR35 reform, recruitment agencies and organisations paid the price for their lack of communication with the contractors they placed or engaged in the run up to changes.
Without any meaningful dialogue, end engagers were – in many cases – not in a position to make accurate IR35 determinations the day changes were enforced.
Given many public sector engagers lack experience when making IR35 assessments, structured conversations with contractors would have assisted. However, many end engagers chose instead to protect their liability by making knee-jerk and blanket IR35 determinations – simply deterring contractors.
New research has highlighted as many as 96% of 1510 private sector contractors are yet to hear from their agency or client regarding widely expected IR35 changes.
Of course, private sector reform is yet to be officially confirmed by the Government. That said, the overriding feeling is that an announcement will be made in the Autumn Budget, with a view to implementing changes in April 2019.
Granted, this might be over 12 months away, but lessons must be learnt from the public sector. Private sector engagers need to be able to make accurate IR35 decisions on a large scale, that is, if they hope to retain and continue to place vast numbers of independent workers.
Should reform go ahead, end engagers will carry the IR35 liability, which can reach colossal figures of almost £420.000, as former BBC presenter, Christa Ackroyd, recently found out.
Put simply, private sector engagers would be wise to open a dialogue with contractors – to get a firm understanding of the worker’s contract and actual working practices – before they are possibly required to set IR35 status
All 2million UK contractors saw the chaos following public sector reform, while many experienced it first-hand. Initiative shown by a private sector engager reflecting a degree of understanding could also give these workers much needed confidence that their agencies and clients are taking IR35 compliance seriously