IR35 delay leads to blanket ban U-turn: more employers hoping to ‘get it right this time’

The delay to the private sector IR35 roll-out has encouraged more employers to ‘get it right this time around’, with staffing companies reporting that over a third of hirers (35%) were making a U-turn on non-PSC decisions. That’s according to a recent survey of recruitment businesses carried out by Kingsbridge Contractor Insurance.

The survey also revealed that the extension has encouraged more employers to move away from HMRC’s widely criticised determination tool (CEST). While 31% of respondents revealed they were using it in the run-up to April 2020, just 18% are planning to use it this time round.

Respondents further reported that the extension had provided more time to better protect the entire recruitment chain, with 71% of participants indicating that they would now only use a tool that’s backed up by insurance. A further 79% of those surveyed cited having a policy in place that covers the end-client as a high priority, an encouraging statistic for employers as they prepare for the extended deadline in an uncertain economy.

Thomas Wynne, Managing Director, Kingsbridge Group, commented:

“It’s hugely encouraging to see so many employers reversing the blanket bans that were originally imposed, and we hope that more follow suit as organisations begin working with staffing companies to prepare and truly get it right this time around. With contingent labour likely to play an even bigger role in the UK economy over the coming few years as companies seek flexible resources in an uncertain market, it is more critical than ever that robust processes are in place that allow talent to be engaged in a compliant way and put in place relevant insurance cover to mitigate these new risks.

“It is important to remember that even when using HMRC’s own statistics, the vast majority of PSC contractors are, and will remain, genuinely self-employed and therefore “outside” IR35 following the planned reforms. What changes is that the responsibility for determining IR35 status will pass from the individual contractor to the end-client and the tax liability, should that determination later be shown to be wrong, will fall to the fee-payer.

“What certainly came through loudest and clearest of all from our survey, though, was the fact that the entire recruitment supply chain was crying out for an integrated insurance solution. We have therefore invested in and enhanced our entire proposition to give customers what they really want: a scalable automated status assessment tool enhanced by expert IR35 consultancy services and backed by market leading levels of insurance cover.”

Ann Swain, CEO of the Association of Professional Staffing Companies (APSCo), who provided the survey forward, added:

“While the Government has delayed the rollout until next year to avoid economic disruption during the Covid crisis, we believe that this is simply delaying severe disruption to the self-employed workforce and is likely to further damage an already fragile economy. Given that Covid-19 has dramatically changed the economic landscape, many politicians continue to call for the changes to be scrapped in favour of legislating change to employment status as recommended by the Taylor Review. However, at the time of writing, the roll out into the private sector will happen as planned, though APSCo will continue to lobby the Government to review the employment and tax status of independent contractors to ensure it is fit for purpose in today’s economy.”

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