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85% of contractors do not trust HMRC's IR35 tool, research reveals

Qdos Contractor has revealed that 85% of UK contractors do not trust HMRC’s ESS Tool to make accurate decisions about the IR35 status of public sector contracts.

Public sector IR35 changes were enforced on 6th April. Just one month in, and research into 1508 UK contractors highlighted:

  • 85% of contractors asked do not trust the tool to make accurate IR35 decisions
  • 88% of public sector bodies and agencies have now contacted contractors, a 30.29% increase compared to before 6th April
  • 62% of contractors have not seen any change to their IR35 status
  • 31% have had their IR35 status changed
  • 7% have not had a determination

Qdos Contractor CEO, Seb Maley, commented, “That such a high proportion of contractors just don’t trust the very tool used by many public sector clients and agencies to determine their IR35 status is worrying. On release, the tool was found to give inconsistent results, and regular changes and on-the-go updates have hardly helped.

“While many contractors surveyed have not seen any change to their IR35 status, that isn’t to say any tweaks made to the ESS Tool going forward won’t change the initial decision. We’re noticing that contractors undertaking very similar projects are being given completely different results, along with some blanket decisions given to entire contractor workforces. Given how much rests on this, it’s important that a fair, accurate and proper test is carried out, with each case looked at individually.

“That the vast majority of agencies and public sector employers have now contacted contractors about their IR35 changes is positive news however. Clear, direct communication between the contractor, the public sector employer and - if involved - the agency can only improve the situation.”

When asked about the ESS Tool, contractor responses included:

“It's in a constant state of flux. I understand the advantages of Agile delivery, but if ever there was an example of something that needed to be finished before it was released, this is it. How can I trust that a decision that the tool gives me today will still be valid tomorrow?”

“They keep tweaking it, which constantly moves the goalposts.”

“It might provide an indication but doesn't take into consideration the unique circumstances of each contract.”

“Since it was introduced it has changed many times. It’s so difficult to get a definitive baseline. Not convinced.”

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