Firms 'would rather dismiss contractors than deal with IR35', research suggests

22 Nov 2019

20% of UK businesses would rather dismiss their contractors than have to deal with IR35, according to research published by recruitment consultancy firm Harvey Nash.

The research found that 17% of contractors plan on increasing their rates in order to offset the tax burden. Meanwhile, an additional 60% of contractors stated that they have experienced increased levels of anxiety as a result of stressing over the new rules.

In 2017, HMRC introduced new off-payroll rules to the public sector, which saw some contractors' net income cut significantly. HMRC also shifted the responsibility for compliance from the individual contractor to a public body or recruitment agency.

From 6 April 2020, new tax rules will use the 2017 changes as a starting point for the extension to medium and large organisations in the private sector.

'This insight from both contractors and private sector businesses points to a perfect storm on the horizon,' said Colin Morley, Professional Services Director at Harvey Nash.

'Both sides in the contractor-client relationship will be affected. Contractors need to establish their status and take the necessary steps to secure their livelihood, while businesses need to make their IR35 strategy crystal clear to their contractors.'