The IR35 yoyo

By Matt Hayes | 8th November 2022

What the… fiduciary?

It’s been a month. Particularly for contractors. The IR35 yoyo left businesses and contractors confused. That’s down to the crippling indecision from the government, tearing up the mini-budget yet again. Therefore, leaving the self-employed to pay the price.

So, we were just settling into the new ‘typical’ and then, a perplexing (but pleasant) surprise emerged. Inspired by growth and simplification of the UK tax system, the mini-budget revealed the plan to reverse the 2017 and 2021 off-payroll working rules. Aka IR35.

Contractors’ elation was short lived as new appointed Chancellor, Jeremy Hunt, announced the government’s U-turn on this decision.

The IR35 knee-jerk

Before the scramble could even begin for contractors, businesses and recruiters to figure out what this meant going forward, the Chancellor’s decision left us with a clear message. As you were.

Is the IR35 U-turn a massive oversight?

The U-turn poses a threat to both contractors and the supply chains in which they operate. Because, there are many who believe that the reforms have allowed tax avoidance schemes to thrive in the UK.

According to Accountancy Age, Seb Maley, CEO of IR35 specialist consultancy firm Qdos, says the move to reverse the repeal of the IR35 changes is “the wrong decision at the wrong time”.

Seb Maley goes on to say that “IR35 reform damages the flexibility of the UK labour market, which is key to economic growth”.

While the IR35 reform introduced to the public sector in 2017 saw all public sector bodies become responsible for determining the IR35 status of contractors, the reform in the private sector, in 2021, applied only to medium and large companies.

What’s next for IR35?

Is this the final spin of the IR35 yoyo? And what’s next for IR35?

We’d love to tell you. But does anyone really know?

What we do know is that the reforms cause a lot of complexity and issues for contractors, recruitment agencies and the businesses who engage these workers.

If you’re an IT contractor looking for your next contract or a business recruiting tech talent, get in touch with our tech recruiters today.

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Matthew Hayes