Leading IR35 specialist Qdos Contractor has revealed that nearly nine in ten contractors that have used its IR35 status checker service since the Off-Payroll rules were introduced were assessed to be operating on a self-employed basis.
87% of 9,000 individual contractors tested were found to be self-employed, or “outside IR35”, by the consultancy, which launched its status review service for recruitment agencies and end clients hiring contractors under the Off-Payroll working rules. Under the rules, any contractors determined to be employed for tax purposes must have PAYE income tax and National Insurance deducted from their payments at source by the “fee payer”, which is usually their recruitment agency.
Qdos CEO Seb Maley said: “Now, with less than a year until the changes arrive in the private sector, it’s vital that companies start [prioritising accurate status returns] immediately.”
However, Qdos’ findings were significantly different to those put out by other leading bodies: Multinational law firm Baker McKenzie, told HRReview that ninety per cent of contractors are caught by the IR35 rules, while HMRC have said that they estimate that only ten per cent of people who are caught by IR35 actually pay the right amount of tax and National Insurance.
This suggests there is still a lack of consensus surrounding status determinations, which has prompted a number of major end-clients – such as Vodafone and BAE Systems – to place blanket bans on contractors in a bid to mitigate risk. The IR35 reforms state that end-clients and recruitment agencies are the ones responsible for assessing their contractors’ statuses, with wrong decision making the entire supply chain potentially liable for the tax risk. Therefore, it is ultimately the end-client and recruitment agency that have the final say on whether their contractors are paid via PAYE, even if the contractor has paid for a determination showing they are outside IR35, like the ones from Qdos.
If you find yourself being told to go PAYE by your end-client or recruitment agency then iConsult is here to help. iConsult is a leading UK Umbrella payroll service provider renowned for its expertise in compliance and reliability. It works with recruiters to offer hassle-free payroll for contractors, temporary workers and contractors. It has a fast and easy set-up so that contractors can start getting paid in no time, whilst also taking care of all the relevant legislation, including IR35, to ensure workers are 100% compliant.