Research conducted by IR35 specialists Qdos has found that the controversial tax regime is still the highest concern of offshore contractors.
“Despite the raft of tax hikes introduced this month, on the two-year anniversary of private sector IR35 reform, the legislation still tops contractors’ concerns,” Qdos writes.
At the beginning of this year, Qdos named off-payroll tax legislation as the biggest concern of 2023 for contractors, despite the rising cost of fuel bills.
The most recent research carried out by the firm shows that this is still the case.
Over a third, 35%, of the 800 self-employed workers surveyed view IR35 as the issue which has the most potential to impact their business negatively.
This ranked above the recent hike in corporation tax, from 19 to 25%, or the additional-rate income tax threshold dropping from 150,000 to £125,140.
Only 25% of contractors questioned named these tax changes as their highest concern, with the remaining 32% saying that the cost-of-living crisis was the top of their list of concerns.
Off-payroll legislation was reformed in the private sector in April 2021 and makes all medium to large-scale businesses responsible for determining the IR35 status of contractors they hire.
In last year’s Mini-Budget, it was announced that the off-payroll working rules would be repealed effective from 2023/24 tax year, before the newly appointed Chancellor, Jeremy Hunt reversed this decision.
Just 7% of contractors surveyed by Qdos are ‘confident’ that the reform will be repealed in future. 43% are ‘not at all’ confident and 39% are ‘not very confident’.
Qdos chief executive, Seb Maley said: “The tax burden on the UK’s smallest businesses is spiralling yet it is IR35 which worries freelancers and contractors most – this is saying something.
“The government’s heavy-handed way of tackling IR35 compliance has understandably put freelancers and their clients on edge.
“HMRC has a scattergun approach to IR35 compliance, pursuing cases for years only for it to be found that the freelancer has done nothing wrong.
“Take Gary Lineker, who HMRC wrongly believed owed £4.9m in tax. The same goes for Adrian Chiles, who had a £1.7m IR35 bill hanging over his head.
“With the off-payroll rules in force, HMRC is ramping up its compliance activity among businesses. And if the tax office’s policing of IR35 among freelancers and contractors is anything to go by, compliance must remain a priority for organisations engaging these flexible workers.”
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